How do I start a business is the number one question I get from other people who are considering entrepreneurship—would-be founders with big ideas and big vision who can't seem to get past the beginning. But I believe what they are honestly asking is, what does it take to start and build a business? If you ask yourself these same questions, you need to begin by redefining "start."
Starting isn't the day you incorporate your business.
Starting isn't the domain you purchased in the middle of the night.
Starting isn't your first Instagram post.
Starting isn't even the first customer you receive.
It's all of these things and a hundred other things. To go from idea to implementation, you first need to redefine start. Many of us get stuck in the start phase by the way we think about "start."
Starting isn't a singular thing you do. It's a process and a journey.
Traditional planning processes and tools are built following a linear plan with clear goals and expected results, but starting a business isn't linear. The mindset behind the business model design and tools like the business model canvas considers the inherent messiness and non-linear process of starting. A tool like the business model canvas gives you the clarity, structure, and focus you need for the journey.
What is the business model canvas?
If you have not yet dived into the business model canvas's wonders, let's first agree on a simple working definition for what a business model is. Although pitch decks prominently label their financial models as the 'Business Model,' a business model isn't just about how companies make money.
My favorite definition comes from Gennaro Cuofano, who defines "a business model as a framework for finding a systematic way to unlock long-term value for an organization while delivering value to customers and capturing value through monetization strategies." With this definition, we can understand how the business model canvas gets your idea out of your head and into the real world––much quicker than a business plan.
The Business Model Canvas focuses on the nine essential building blocks of a unique and competitive business model: value propositions, customer relationships, customer segments, key partners, key activities, vital resources, channels, cost structure, and revenue streams.
Feel free to dive deeper into the building blocks of the business model canvas. The business model canvas is not only a starting point for starting your business, and it can help solve some of the biggest reasons why founders get stuck at the start.
Stuck in Start Reason #1: You might have a product but not a business.
There are two ways founders get stuck at start: those who know how to work on their business yet struggle with working in their business. Then you have those who know how to work in their business but not on the business. This results in either a 'product' or a 'brand.' Neither of these is a business. Therefore, the picture is incomplete.
The business model canvas combines the elements of working on your business and in your business. Allowing you to create a holistic vision to see, plan, build, investigate, and test all the critical building blocks that transform an idea into a viable business.
The nine-building blocks of the business model canvas aid you in answering these critical questions.
What do you offer to the customer?
Who is your target customer?
How do you find and serve them?
How is the value proposition created?
Why does the business model generate profit?
Don't rush this phase. Putting time and resources into understanding whether you're solving the right problem for the right person in the right way is fundamental to your start journey.
Here are the questions to keep in mind as you begin to explore a business model around your idea.*
Who
Customer Segments
What customers and customer segments do you mainly serve?
Who are your most valuable customers?
Who are the other essential stakeholders to consider?
Who influences your customers (opinion leaders, stakeholders, users)?
What are the people behind your customers? Will the same people be here for the next ten years? (The people behind customers are often neglected, especially in B2B dealings.)
Customer Relationships:
What kinds of relationships do your customers expect, and how do you maintain them?
Channels
What distribution channels do you use to serve your customers?
Do different departments address the same customer segments differently?
What
Value Proposition
What customer problems do you solve, and what needs do you meet?
What are the products and services do you put in place to accomplish this?
What is the perceived customer value? Usually, this is not the same thing as a product or service's technical specifications.
How do your offerings differ from those of your competitors? What alternatives do customers have?
Does your current business model meet your customers' needs fully?
How
Key Resources
What vital resources are behind your offerings and value proposition (e.g., physical, labor, financial resources, intellectual property)?
What competencies and crucial activities do you need?
Does your value chain make full use of your core competencies?
Key Partners
Who are your most important partners? What is their relation to your business, and what do they bring you?
Who are your most important suppliers and partners, and what do they contribute?
Why
Revenue Stream
Why will the customer pay for your product or service?
What are your primary sources of income?
How is the income generated? What are customers willing to pay for it?
Cost Structure
What are your main costs and the most significant cost drivers?
What are the main financial risks in your current revenue model?
Stuck in Start #2: I have the big picture vision I'm excited about, but I don't know how to plan or prioritize my next steps.
This lack of clarity is often blamed on a funding issue, team issue, resource issue. It's a strategy issue known as an 'Air Sandwich.'
In The New How, Nilofer Merchant describes a widespread Silicon Valley phenomenon known as 'Air Sandwich.' "It's the empty void in an organization between the high-level strategy conjured up in the stratosphere and the realization of that vision down on the ground."
How do you know you've been feeding your entrepreneurial appetite with an air sandwich?
The first indicator is frustration: You have a hard time planning your to-do list, verbalizing what you need help with, and often think, "I don't know what I don't."
The second indicator is inefficiency: You put in a full week of work, but you are not quite sure how any of those activities moved you forward in any meaningful way. (Noted by symptoms such as redesigning and designing your website––guilty.)
The third indicator is consistently missing self-appointed deadlines created by a cycle of the first two problems.
Any of these feel familiar? You need a strategy to defeat that air sandwich. The Business Model Canvas is not a strategy, but it can help you understand what you need to focus, prioritize, and strategize your next steps.
Stuck in Start #3 - I'm in the marketplace, but I can't tell what's working and not working.
Your business model canvas is merely a set of assumptions until you go through the actual process of validating it. Despite researching the Size of the Market (TAM), Size of the Problem (SAM), and all the other great I am––that research is based on someone else's business. A business that may have the same product as you but different configurations of their business models (Think Spotify vs. Apple Music vs. Tidal).
Ash Maurya highlights that you test your riskiest assumptions most significant, swings, hurdles, and gaps first. Often founders create a go-to-market strategy that does not involve any sort of testing of their business model—leaving them unable to understand what is genuinely unlocking the value in the business model.
What value proposition is unlocking the most value for your customers
What channels are unlocking the most benefit?
How do we unlock the value of a channel that doesn't seem to be performing very well?
What key activities are unlocking the most value in your business and need to be prioritized?
What partners are unlocking the most value in your industry?
Is everything you're spending money on (cost structure), creating a higher amount of value?
Are you, as a whole, unlocking more value for and to your customers than your competitors.
Since you have already established that start is a journey- the momentum of that journey relies on the ability to test, evaluate, and pivot. Missing the testing phase will cost you key momentum or cause you to misidentify what is stealing your momentum.
You need a process and a tool that empowers you to manage new information, ideas, and priorities without losing track of big picture goals. This refining is what will drive your company to greatness. Go through the canvas and check which parts you are sure of and those that need to be validated. Any falsely assumed knowledge will catch up with you sooner or later.
By diving in deep and understanding your business model with tools like the business model canvas, you can be agile, resourceful, and thoughtful about the way you start your business.
As you learn and grow with your business model, you will be able to do more than just start. You would be able to innovate, scale, and look at entrepreneurship as the experimental and adventurous journey.
References:
*Abbreviated collection of questions from the St. Gallen Business
Business Model Canvas was created by Alexander Osterwalder and the minds behind Strategyzer.
Business Model Canvas Slide - You can use this google slide version of the business model canvas, which is simple to return to repeatedly.
Use The Experiment Canvas as your testing companion.
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Nagela Dales is the founder and creative pilot of SLCO Agency, rise and thrive.
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