Filling In Your Second Business Model Canvas

Most of the benefits of the Business Model Canvas come from filling it in a second time.
The first time through we’re still learning about the terminology and format of the boxes, but the second time we’re learning about your business.

Think about every other creative field – breakthroughs occur when someone steps away from their work, then comes back with a fresh perspective and a new energy.
Same deal.

There are two specific benefits to filling in your second canvas.
Firstly, it’s a chance to better describe each part of your business, especially now that you’ve had more time to look closely at your customers, operations and numbers.
The more specific we can get, the better.
Secondly, it’s a chance to dream and scheme about new ways of running the business.
These might start out as “what if?” questions, asking if you can target a new audience, change your marketing and delivery, raise your prices, create new products and services, or form new partnerships that let you specialise where you’re strongest.

In this article, we’ll look at some good questions and prompts for each of the nine boxes.
Take note of the ideas that give you a strong reaction – excitement, curiosity or disdain.
Strong reactions are a clue as to what’s important to you and your vision for the business.
It might hit a nerve because you like the concept, or that you hadn’t thought of it before.
It might also hit a nerve because it sounds repulsive, which is a big hint that this particular topic is of great significance to you, and that it needs extra attention.

The Desirability Boxes

Customer Segments

There are no “normal people”, everyone is weird in their own way.
Whenever we describe people in a way that sounds simple or normal, it’s usually a sign that we don’t understand them in enough detail.

What makes your customers weird?

What makes them dissatisfied with the status quo?

How do they make purchase decisions?

How do they assess quality or value for money?

Who are your prototypical customers?

Are there 6-8 people who are a fair representation of your market?

What do they have in common?

Where are they notably different from each other?

Who did they consult or consider when choosing to shop with you?

Who would you love to have as a customer in 12 months time?

Who would be a “big fish” customer that boosted your credibility?

Who are these “big fish” shopping with today?

What would entice them to consider you and overcome the “switching costs”?

What if you went to a different part of the market?
e.g. wholesale instead of retail, B2B instead of B2C, amateur instead of veteran, or even a different country?
Your brain usually generates a believable reason at this point as to why it’s silly to even consider these markets, but why?

What would be the “Yes If…” for each of these?

Would a partnership give you the confidence and resources?

Would it be a new product or service menu?

Could this be a growth opportunity that’s worth an experiment?

Value Propositions

Behind every decision are two reasons – the good one and the real one.
We’re getting closer to understanding both, but now we want more precision and detail over how customers make choices.

What’s most important to them?

When they spoke to you or went to your website, what was the moment that sold them?

Are they looking for “better” or “cheaper”?

Are they spending their own money, or using a work budget?

Who do they need to rationalise/justify their decision to?

How do customers describe what they care about, in their own words?

Do they know what they want?

Do they like saying it out loud?

How many Value Propositions do we actually need?

Can we get away with less?

What offers could we withdraw for future customers that they would not miss?

Can we make some Value Propositions available for a higher price or as part of a larger package?

What’s a new angle that customers might receive well?

What’s a position that none of our competitors are taking?

Is there room to be the cheapest?

The easiest?

The most flexible?

The most reliable?

The most vibrant and fun?

The patriotic or local choice?

Could we partner with an existing trusted brand?

Channels and Customer Relationships

Customers don’t always travel the usual well-worn paths, and they don’t travel in straight lines.

When we look closely at how our recent customers found us, what trends become clear?

Are they making quick decisions or building long relationships?

Who do they look to in order to know who to trust?

How many touch points or interactions do they like to have before making a purchase?

Are there multiple decision makers who get consulted along the way?

Where are our best acquisition channels?

Where are we disproportionately strong or popular?

Can we double down on the strongest channels?

What’s our organic reach like?

How are our paid advertising channels going?

When it comes to rating our marketing, what metrics do we like to use?

Do we know how much it costs to acquire a customer, compared to how much they spend with us?

What if we deliberately improved our Customer Journey?

What if we made it easy for people to find us, understand us and shop with us?

How might we make the process seamless?

Where are there leaks in the funnel, and how might we patch them up?

Could we engage and retain our favourite former customers with a great offer?

What channels have we previously written off as being too hard or not worthwhile?

What channels are working well for our peers and competitors?

Is it worth revisiting the channels we dismissed?

Can we drop our underperforming channels?

The Feasibility Boxes

Key Resources

Good businesses own great assets – that’s what enables them to grow, innovate and become bigger than the founders.
Without assets, you’re essentially building yourself a job, which means no holidays and a tricky exit strategy.

What are the best assets your business owns today?

Are the assets currently stuck in your team’s brains?

Are they physical assets like machines and equipment?

Are they intangible assets like your reputation, brand and network?

What assets would be valuable to acquire or build this year?

Is it content and intellectual property?

Is it time-saving tools and systems?

Is it larger modes of production that lower your cost-per-unit?

What assets could you rent or sell to a customer or key partner?

What if we strengthen a strength?

Where do we have a competitive advantage in our Key Resources?

What purchases or projects feel intimidating today but are we unlikely to regret in the future?

Where should we bite the bullet and take part of the business to the next level?

Key Activities

The founder’s job is to design and build good systems, them recruit good people to run and improve those systems.
These systems include running your sales channels, acquiring and serving customers, hiring and firing, keeping on top of projects and deadlines, designing and testing new products and services, etc.

Can we describe our systems and processes today?

Which ones are we proud of?

Which ones have taken shape by accident and improvisation?

Which ones need an overhaul?

Which ones need some fine tuning?

What are we particularly good at?

Which activities are harder for our competitors?

What activities do we find gratifying or rewarding?

Which activities are lucrative?

Which activities fulfil our mission?

Which activities drain our soul?

Could our strengths be the basis for a new line of products or services?

What systems will enable our business to be sold for a high price, if that’s of interest to us in the future?

Key Partners

Strong businesses know where to specialise – dominating some fields and working with other specialists where they’re not naturally gifted.
Insourcing and outsourcing might not sound like exciting topics, but it can open up new revenue streams and allow you to focus on what you do best.

Can we offer to insource the activities that we don’t mind but others hate?

Can we outsource our least favourite/least lucrative activities to someone else?

Who are our friends? Who sends customers our way? Can we thank/retain them?

Can we find more people who can become referrers or fans of our business?

Whose blessing or approval do we need?

Who permits us to operate?

Can we take steps now to preserve and improve the trust in that relationship?

What relationships can we start building today that will be valuable in 18 months time?

Can we play the long game and approach people long before we have an “ask”?

The Viability Boxes

Cost Structure

We rarely see anyone fill in actual costs in their first canvas, so this might be a good time for more clarity and real numbers.
We want to understand how much it costs to produce each product and service, calculate our breakeven point, and see if there are any opportunities to save money today or in the future.

What are your costs of good sold?

What goes into making each product or delivering one service?

Is it physical components or paying for time?

Do these naturally happen one at a time, or in batches?

If it’s in batches, what are our batch costs?

What’s our gross margin – the price minus the cost of goods sold?

What are our overheads?

What expenses do we have irrespective of how busy we are?

If we know our overheads and our gross margin, how much do we have to sell each week/month/year in order to break even?

How far above that breakeven point do we tend to sit?

Do we have the option of spending more money now in order to reduce our unit costs in the long term?

Do we have the option of making a smaller gross margin in order to lower our breakeven point?

Where do we tend to feel a pinch with our costs?

Revenue Streams

We want to understand how money flows into the business – for what, from whom, how much and how often.
You might have four different revenue streams, but they might not be equally lucrative over the course of a year.

What products and services are you selling?

Are customers paying for something once, or is there an ongoing component?

Are there natural extensions or follow-up purchases?

How have you set your prices?

Are you cheap, mid-priced or premium? Compared to what?

How many customers are out there?

What’s the total addressable market?

How many people can you realistically serve at once?

How many people can you serve over the course of a month?

Are there seasonal highs and lows?

What’s your cashflow like?

Do you have to spend money before you make money?

Is there the ability to earn money before you spend it?

What’s the gap between buying inventory/committing money versus being paid by your customers?

What new revenue streams would you consider?

Could you offer bundles or package deals?

Would you consider changing or raising your prices?

Could you entice customers to come back more frequently, or buy follow-on products and services?

Filling It In

Now that you have a good grasp on each box and the terminology, you can dedicate all of your brain power to describing the business rather than trying to understand the canvas.
Don’t be surprised if you find the process much smoother and helpful than the first time.
The key to a good second canvas is to keep track of which dot points are based on solid facts, which dot points are based on educated guesses, and which dot points are total fabrications.
This helps us identify the crucial assumptions that need validation.
You can take these to your coach or advisors, and work with them to design cheap and clever tests for checking your guesses.