‘A Business Model is the elegant expression of how all parts of a business work together for success.’ Paul Steele, Benefit Capital Co-Founder
Suggested Reading Time: 5 minutes including video
At Benefit Capital we use the “deceptively simple” Business Model Canvas, developed by Strategyzer, as the framework for our business modelling work. A business model canvas is made up of nine interconnected boxes that together create a well-designed business.
There are a few key aspects of a business model that we feel need to be understood to engage effectively with business modelling.
- Ultimately a business model needs to be clear on who its Customers are; these are the people who you offer a Value Proposition to that drives them to make a decision which generates Revenue for your business.
2. When you think of a business model it is helpful to make sure you think of your business with three lenses: Desirability, Feasibility, and Viability*. Do customers want it (desirability), can we build and implement it (feasibility), and can we earn more money with it than we spend (viability). When you get all three of these areas working together your business becomes a powerful agent for change and has the ability to scale. Our collaborator, Isaac Jeffries, captured our approach to this in his blog if you’d like to read more.
*Concept borrowed from IDEO “…what is desirable from a human point of view with what is technologically feasible and economically viable.” Tim Brown https://designthinking.ideo.com/
3. There are then two key aspects to bringing this all together. One happens “on the stage” in front of the customer, and one happens “behind the curtain” not seen by a customer, but essential for the delivery on stage. This aspect is important because it allows you to stop and reflect on what is essential to be done in house and what, while it may be essential to the overall business model, can be outsourced to a partner. Ultimately this allows you to focus on your core business and not be distracted by trying to do everything yourselves.
Through understanding your business model, you ultimately gain insight into your customers: who they are, what distinguishes them, how they interact with you, why they like you, how they pay. You see what goes on behind the curtain: what are your most critical processes and operations? Which team members are currently irreplaceable?
We see more clearly how the dollars flow: When and how we generate revenue? What are our main cost drivers? What’s our breakeven point? Can we sell enough to keep afloat?
An integrated business model rarely happens accidently – you need to design and deliberately create a business that delivers social and financial returns simultaneously. It’s not easy but it is the best and most effective way to build a business that wants to equally prioritise doing good and making money.
There are a lot of people out there claiming to use the business model canvas but there are not a lot of people who have truly mastered this incredibly powerful tool. Business modelling, not only capturing your “as is” (current) business model but helping you design your “future state” model is one of our specialties. We’d love to help you think through the many scenarios and models that might be right for where you want to go. We can guide you on how you might land at a model that increases the chance of both social or environmental outcomes as well as being a financially sustainable model. Working with us can give you confidence that you will be able to continue delivering year after year without the fear of being at the mercy or whim of a funder. Let’s chat!