Four steps to launch a small business
To contact the University of Houston-Victoria Small Business Development Center, call 361-575-8944 or visit www.sbdc.uhv.edu.
We introduced the Business Model Canvas map in a recent article.
For those who missed it, the Business Model Canvas is essentially a roadmap to developing and analyzing a current or potential business idea.
The Business Model Canvas has nine components, four of which will be covered here.
Every business needs customers to produce sales and profits. Therefore, the first component of the Business Model Canvas is customer segments.
Customer segments are the different types of customers that need the products/services of your business. This can be broken down into many different segments. For instance, segments could consist of age, income level, gender, relationship status, education level, etc.
The more refined and detailed the customer segments, the higher the likelihood of determining the feasibility of the business model. The goal of this component of the Business Model Canvas is to identify all of the top customer segments you will target.
The next step is to establish the value your business will provide to the different customer segments. This component is known as the value proposition to your customer.
Two ways a business creates value:
By solving problems for the customer.
Satisfying the customer's needs.
Adding value to your business products and services is a vital step in your business model. Otherwise, why will the customer decide to buy from you?
So far, you have established the customer segments you will target and the value proposition you will deliver.
We now need to connect the customer segments with the value of your product or service. This component is known as the channels your business will use in order to reach your customer segments.
When trying to reach your customer segments, there are many questions to consider. They include: What areas are you currently advertising in? Are these cost-effective methods? Are you advertising based on the daily routines of your customer segments?
The last step in the first four components of the business model canvas is customer relationships. This consists of the retention of the customers you attract.
One of the first questions to ask, according to the Business Model Canvas, is what type of relationship or customer service does your customer expect. This will likely vary depending upon each customer segment you identified.
Once you identify these four components, you will then want to work through the remaining five components. The end result of the business model will be to determine how well the business can obtain profits from delivering the products and services to the identified customer segments.
The Business Model Canvas can be downloaded free from www.businessmodelgeneration.com.
We introduced the Business Model Canvas "map" in last week's article.
Stephen Kilgore is a senior business advisor for the University of Houston-Victoria Small Business Development Center. Contact him at email@example.com.