The business model canvas (BMC) is a one-page visual tool that describes how an organization creates, delivers and captures value. It splits a business into nine building blocks that fit on a single sheet.
Alexander Osterwalder and Yves Pigneur set out the canvas in their 2010 book Business Model Generation. This guide explains each block with a guiding question and fills in an illustrative example. It also shows how to run a workshop and compares the canvas with the Lean Canvas.
Key takeaways
The business model canvas describes a whole business on one page using nine connected blocks.
The right-hand side covers customers and value, and the left-hand side covers how you deliver it.
Fill the canvas with short statements and sticky notes, then test each guess against real customers.
The Lean Canvas, adapted by Ash Maurya, swaps some blocks to suit early-stage startups.
A canvas is a set of hypotheses, so treat the first draft as a starting point for testing.
What is the business model canvas?
The business model canvas is a template with nine boxes that together show how a business makes money. It replaces long business plans with a picture a team can read in minutes.
Osterwalder developed the underlying idea in his doctoral research. The 2010 book Business Model Generation, written with Yves Pigneur, made the format widely used. Teams in startups and established companies both use it.
The canvas is not a forecast. It records what you currently believe about your customers, your offer and your costs, so you can examine those beliefs.
What are the nine building blocks?
The nine building blocks are customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partners and cost structure. The sections below give a guiding question for each.
To make this concrete, each block includes an illustrative example for a neighborhood bike repair service. The details are invented for teaching.
Customer-facing blocks: segments, value, channels and relationships
Customer segments ask who you create value for. Our bike repair example serves commuters who ride daily and cannot afford a week without their bike.
Value propositions ask what problem you solve or need you meet. Here it is same-day repairs at a fixed, published price.
Channels ask how you reach customers and deliver the value. The shop uses a window sign, a local map listing and a text message booking line.
Customer relationships ask what kind of relationship each segment expects. Commuters want quick, personal service, so the owner texts them when the bike is ready.
Money blocks: revenue streams and cost structure
Revenue streams ask what customers pay for and how. The shop earns from repair labor, parts and an optional yearly service plan.
Cost structure asks what the main costs are. Here they are rent, tools, parts stock and the owner's time. Costs flow from your key resources and activities, so check the three blocks agree.
Say a basic repair takes 30 minutes and the shop charges a fixed fee. Comparing that fee with labor and parts shows quickly whether the model can work. These numbers are illustrative.
Delivery blocks: resources, activities and partners
Key resources ask what assets you need to deliver the value. The shop needs a workshop, repair tools, a parts stock and a skilled mechanic.
Key activities ask what you must do well. Here that means diagnosing faults quickly, ordering parts and keeping to the schedule.
Key partners ask who else you depend on. The shop relies on a parts wholesaler and might partner with a nearby cafe that hosts a drop-off point.
How do you run a business model canvas workshop?
Run a canvas workshop by putting a large printed canvas on a wall. Give everyone sticky notes and fill in the blocks in a set order. Keep the session short and the notes brief.
A simple format works well:
1. Agree on the business or product the canvas covers. One canvas per customer segment keeps it clear.
2. Start with customer segments, then value propositions. Everything else depends on these two.
3. Move through channels, relationships and revenue streams.
4. Add resources, activities, partners and costs.
5. Mark the notes you are least sure about, then choose two or three to test.
Invite people from different roles, such as sales, operations and finance. Different views expose gaps a single author would miss.
What does a business model canvas look like for a subscription software tool?
A subscription software canvas centers on recurring revenue and low delivery cost. The example below is illustrative: an invoicing tool for freelance designers.
Customer segments: freelance designers who bill several clients each month. Value proposition: send a professional invoice in two minutes and see who has not paid.
Channels: a website, search listings and referrals from design communities. Customer relationships: self-service help pages, with email support for paying users.
Revenue streams: a monthly subscription, with a free tier that limits the number of invoices. Key resources: the software itself, the development team and cloud hosting.
Key activities: building and maintaining the product, fixing bugs and answering support questions. Key partners: a payment processor and a hosting provider.
Cost structure: developer salaries, hosting, payment fees and marketing. Notice how the model depends on keeping customers month after month. If many cancel quickly, the revenue streams box will not cover the costs box.
What does a business model canvas look like for a local cafe?
A cafe canvas centers on location, repeat visits and daily running costs. Again, the details are illustrative: a small cafe near a railway station.
Customer segments: commuters who want a fast coffee, and nearby office workers who want lunch. Value proposition: good coffee served in under two minutes, plus a simple lunch menu.
Channels: the shop front, a pick-up counter and a pre-order message line. Customer relationships: staff who learn regular customers' orders, and a stamp card.
Revenue streams: drinks, food and a small retail shelf of beans. Key resources: the premises, the espresso machine and trained staff.
Key activities: preparing drinks, baking or buying food and keeping the shop clean. Key partners: a local bakery, a coffee roaster and a milk supplier.
Cost structure: rent, wages, ingredients and equipment upkeep. A cafe has high fixed costs, so the canvas shows why footfall matters more than any single menu item.
What are common business model canvas mistakes?
A common mistake is filling every block with vague phrases such as 'everyone' or 'quality service'. Specific statements can be tested, and vague ones cannot.
A second mistake is mixing several customer segments on one canvas. Each segment often needs a different value proposition, channel and price, so draw a separate canvas for each.
A third is skipping the connections between blocks. If your value proposition promises same-day service, your key resources and costs must support that promise.
A fourth is treating the canvas as a one-off exercise. Business models change as you learn, so review the canvas whenever a major assumption is proved or disproved.
What is the difference between the business model canvas and the Lean Canvas?
The Lean Canvas keeps the one-page format but replaces four blocks to focus on problems and risk. Ash Maurya adapted it from Osterwalder's Business Model Generation canvas for early-stage startups.
It swaps key partners, key activities, key resources and customer relationships for problem, solution, key metrics and unfair advantage. It also renames value propositions as the unique value proposition.
Use the business model canvas when you describe an existing or well-understood business. Use the Lean Canvas when you are testing an unproven idea. Our Lean Canvas template guide walks through it, and the lean canvas tools category lists related software.
Neither is better in every case. A team can start with one and move to the other as it learns.
How do you test what you put on the canvas?
Test the canvas by turning your riskiest notes into questions and checking them with real customers. Interviews, landing pages and small paid trials are common methods.
For an unproven product, the cheapest test is often a minimum viable product. The lean startup method describes the build, measure and learn loop behind this approach.
Update the canvas after each test. A canvas that never changes probably is not being tested.
Frequently asked questions
What is the Osterwalder business model canvas?
What are the nine building blocks of the BMC?
Is there a business model canvas template I can use?
How many business model canvases do I need?
What is a good business model canvas example?
Choosing Lean Canvas Tools?
Read the buying guide: what to look for, mistakes to avoid and questions to ask vendors.