How to Assess the Viability of a Startup: Analyzing the Business Model Canvas

Business Model Canvas

A business model is a brief description of a business that includes its essence, strengths, vulnerabilities, and development vector. The Canvas tool helps to create such a business model for any company — from a startup to a long-established large business.

1. List of partners. Here you should not only list the list of counterparties, but also indicate the form of cooperation. For example, to designate who is the key supplier and who is the information partner. This will help you understand what support the business can count on and what partners are missing.

2. Business processes. In this cell, we write what actions the company is taking to retain old customers and partners, attract new ones, and increase revenues.

3. Key Resources. Here you need to write what resources will help the company increase revenue and attract customers. These can be monetary, reputational, informational, and human resources.

4. Unique value proposition. This is what problems you help the customer solve: what they will get from interacting with your brand. It is important to understand what needs people are satisfied by the business. Perhaps you offer the best price, or you have the friendliest staff and are a pleasure to contact. Or maybe your product and service are not much different from competitors, but your company is eco-friendly or engaged in charity, and it is by these key values that a certain audience chooses you.

5. Consumers/customers. Here you need to segment the target audience: write down who you work for and which consumer segments are a priority.

6. Relationships. This paragraph is dedicated to how the company's interaction with customers goes. Maybe you have personal service or, conversely, self-service? Do you sell a finished product or work together with a client? All these details need to be described.

7. Communication channels and distribution channels. Where do you communicate with existing and potential consumers? Maybe it's social networks, in-app advertising, support service? And how can people purchase your products and services?

8. Structure of expenses. Determine what your biggest costs are. Which of them are key for business, and which can be dispensed with.

9. Funding/Income. What revenue streams does a business have? Maybe it's sales of finished products, paid subscriptions, rent, or advertising? It is worth mentioning the main sources and the principle of pricing.

Canvas is useful for building a business model at any stage of a business's existence: it helps to determine the further vector of development. Even at the startup stage, it is already possible to fill out such a table when the business is just starting or has not even started yet. This will help to highlight the weaknesses and strengths of your business or ideas and adjust them in time. And now let's look at a specific example of how to fill out a Canvas for a startup.

How to Write Canvas: A Business Model with a Meditation Service

Let's look at a specific case: building a business model for a startup meditation app. It will have short online lessons with breathing practices and meditation sessions that can be taken anywhere and anytime. Let's imagine that we are composing a Canvas at the stage of searching for a software development partner.

1. Partners. The key partner at the startup stage is the software development team, they will participate in testing hypotheses, improving and developing the application. Secondary media partners are bloggers who promote a healthy lifestyle and will promote the app to their subscribers.

2. Business processes. To attract new customers, our startup conducts advertising campaigns on social networks and offers a free trial version of the application. To retain existing customers, it ensures the smooth operation of the application, regularly publishes useful content on the topic of a healthy lifestyle.

3. Key Resources. The startup has a small budget for development in the first six months and a cool team of 5 professionals. Among them are well-known experts in breathing practices, so there is also a reputational resource.

4. Unique value proposition. The application is relevant for residents of megacities who regularly experience stress. There is not always time and opportunity to attend face-to-face yoga and meditation classes. The application makes it possible to restore the resource in a few minutes of breathing practices anywhere. What sets us apart from our competitors is the high level of experts who record our video and audio lessons.

5. Consumers/customers. Young people from 20 to 35 years old with medium and high incomes are interested in the application. There are two key segments of the target audience. The first group of clients are people who are prone to nervous tension and are looking for new ways to cope with stress. The second segment is people who are already interested in breathing practices, yoga, meditation, and want to practice online. The third secondary segment of the audience is young people who just love to try everything new.

6. Customer relations. Basically, communication takes place through the application interface: everything in it is clear, understandable and convenient.

7. Communication and distribution channels. Communication with customers takes place through social networks and email newsletters, and our startup provides services through an application that can be downloaded from the App Store and Google Play.

8. Structure of expenses. The largest expense item is the development, development, and support of the application. The second is content: filming video lessons and recording audio, inviting various speakers and trainers. The third item of expenditure is advertising. And, finally, salaries to employees.

9. Funding/Income. The startup's sources of income are a paid subscription to the premium version of the app, and ads that are shown in the free version.

From this Canvas, you can see that with a limited budget and the fact that the startup monetizes content through the app, you need to invest in improving the app and creating high-quality video and audio lessons. In such conditions, the advertising budget can be reduced by expanding the list of barter partnerships with bloggers: they advertise our product on social networks, and we invite them to our broadcasts so that our audience knows about them. Since the product is still new to the market, most users will not risk buying a paid subscription right away, they need to realize the value of the product. So, at first, it is also worth focusing on the advertising model of app monetization.

We once worked with a similar project: at the beginning of the pandemic, we developed an application for online meditation classes. We don't know if the client was Canvas, but it would definitely be useful. We managed to develop the application in 5 months: look what was implemented!

6 Reasons to Make a Canvas for a Startup

Even when you only have an idea and a rough idea of the market, you can already create a Business Model Canvas. This is useful for a startup for several reasons:

1. You will have a clear visualization. It's good when descriptions of target audience segments, USPs, and monetization options are spelled out in a table, and not just stored in your head. Writing everything in words on paper or in a Word document is much more efficient.

2. A prescribed business model will help you communicate more easily with colleagues, partners, and investors. You will not have to explain your own thoughts in a confused way – you will be able to show clear theses. The Canvas table is an easy way to introduce all the right people to the essence of the business.

3. Canvas will help you find business vulnerabilities even before creating a product. There are points in the "canvas" that you might not have thought about deeply at the start. For example, who are your key partners, how relationships with customers will be built.

4. Canvas is a living tool, you don't have to fill it out once and for all and hang it in a frame. Indicate, for example, that there are few partners and they are unreliable – this will show that you need to urgently look for new ones. And when you find them, put them in the table.

5. It is at the start of the business that there are more risks, and you need to calculate everything carefully. A well-known large company that has long established itself in the market may not need Canvas as much as a startup.

6. Describing your business model in Canvas at the startup stage is a good way to decide on the main thing — the essence of your business model. You will understand how to optimally monetize your product.