How to create a business model canvas, with a worked example

To create a business model canvas, take one business model and fill in its nine blocks on one page. Start with customer segments and value propositions, work through channels, customer relationships and revenue on the right, then activities, resources, partners and costs on the left. Next, check that the blocks agree with each other, and mark the guess that would do the most damage if it's wrong.

Strategyzer, the company behind the canvas, describes it as a way to describe "how your business creates, delivers, and captures value on one page". Its advice to "fill it once for one business model, not for the whole company" is worth following from the start. This guide spends most of its time after the boxes are full, checking whether they agree.

We make Prompt Board, and our business model canvas template opens on the invented repair service below. Sticky notes on a large sheet work too.

The nine blocks, as questions

These questions are our wording. The text of Strategyzer's public page groups the blocks without listing them, so check the book if you want the authors' own definitions.

The table runs in the order we fill it in, which is also the order on our template's page. Strategyzer's page doesn't set an order. It does say the right side is the market, the left is "what it takes to serve that market", and "cost structure and revenue streams only hold if the seven blocks above them are right". Filling in the market first means you only list activities you've got a reason to do.

A bike repair subscription

Everything in this section is invented: the business, its customers, the prices, the costs and the visit rates. No such company exists, and the figures aren't market data.

A mechanic wants to offer bike repairs at the customer's door for a monthly fee. The notes below are the ones on our sample board.

It takes half an hour, and it looks complete. Now she checks whether the boxes agree.

Check one: does the promise match the price?

The value proposition says "Flat monthly price". The revenue block says "Parts at cost + 20%". A customer with a new chain and cassette pays €19 and a parts bill, so the price isn't flat. Either the fee has to cover parts or the promise has to change. She changes the promise to "Flat monthly price for labour", which is what the revenue block already says.

Check two: do the costs and revenue meet?

She puts a rough figure on each van with its mechanic, fuel and insurance: €5,000 a month. Three vans cost €15,000. At €19 a month, she needs 790 subscribers to cover that from fees alone, before any margin on parts.

Check three: can the vans do the work?

Say each van makes six visits a day on 21 working days. That's 126 visits per van, or 378 a month for all three.

The whole business depends on a number that isn't on the canvas: how often a subscriber books. That's also where the two customer segments stop looking alike. A commuter might call a few times a year. A delivery rider, who's on the bike all day, could call every month. Strategyzer's warning fits here: "Move a customer segment and the channels, activities, and costs all have to move with it."

Check four: does the channel reach the segment?

"Company bike schemes" can reach commuters through their employers. It's less clear how it reaches delivery riders, who may not be on a company's scheme. A segment with no channel needs either a new channel or removing from the canvas. She takes delivery riders off this version and saves the old one, since Strategyzer also advises you to "date and version the canvas".

The guess to test first

The template's last step is to colour your assumptions and pick one to test first. She colours five, then asks which would do the most damage if it were wrong.

The booking rate goes first, since it decides how many vans she needs. She doesn't need an app to test it, so the "App booking" note stays a plan and she takes bookings by phone.

What to do with a finished canvas

Put a date on it and keep it where people can find it. When a test changes a note, save a new version, so you can see what you believed before. Strategyzer's phrase is to "redraw it as evidence comes in".

A canvas describes a model. It won't tell you whether to start the business or supply a financial plan, and the figures in check two are only as good as the guesses behind them.

Business model canvas or lean canvas

That split is our own reading, and our lean canvas example says more about how the two relate.

Where it came from

Strategyzer says the canvas "comes from the best-selling book Business Model Generation". Wiley's listing gives Alexander Osterwalder and Yves Pigneur as the authors and July 2010 as the publication date. We haven't read the book, and this guide relies on Strategyzer's public page and our own template.

Frequently asked questions

Which block of the business model canvas do you fill in first?

We start with customer segments and value propositions, since the other blocks depend on them. Strategyzer's public page doesn't state an order.

How long does it take to create one?

A first draft can take about half an hour. Checking that the blocks agree takes longer, and testing the guesses can take a season, as in the example.

Can one company have several canvases?

Yes. Strategyzer says to fill it in "for one business model, not for the whole company", so a company with two ways of making money can use two canvases.

What is the difference between a business model canvas and a business plan?

A canvas is a one-page description of how the model works, written to be changed. A business plan usually adds the detail a lender or investor asks for, such as financial forecasts. You might draft the canvas first and write the plan once the main guesses have been tested.

Is a business model canvas useful for an existing business?

Yes. You can use it to explain the business to a new team or to look at a new revenue source. Keep it to one model, and fill it in with what the business does today, not what you hope it does.

Create your own

Fill in the nine blocks in half an hour, then run the four checks above with your own numbers. Open the business model canvas template, replace the bike repair notes and colour every guess. Before you commit to a segment, look at it more closely with a value proposition canvas.