Moniek Tiel Groenestege - Business Model Inc.

1. Created
For you.
9-Steps: How to use financials
with the Business Model Canvas

2. If you want to use the BMC to help you figure out where the money is in your idea or
business, well, you’re going to need to first model that idea or business using the BMC.
But, beware. This is NOT about filling out the nine boxes. This is about intentionally
designing a business model that tells a story in a comprehensive way. The BMC is a tool
that is meant to show how a business works back to front, in a systematic way.
Step 1: Design your business model using the BMC
Business model canvasBMI
Who are your most important partners?
Which key resources do you acquire from partners?
Which key activities do your partners perform?
What are the activities you perform every day
to create & deliver your value proposition?
What is the value you delivery to your customer?
Which of your customer’s problems are you helping to solve?
What is the customer need that your value proposition addresses?
What is your promise to your customers?
What are the products and services you create for your customers?
What relationship does each customer segment
expect you to establish and maintain?
For whom are you creating value?
What are the customer segments that
either pay, receive or decide on your
value proposition?
•Key partners
•Key activities
•Value propositions
•Customer relationships
•Customer segments
What are the resources you need to create &
deliver your value proposition?
What are the important costs you make
to create & delivery your value proposition?
How do customers reward you for the value you provide to them?
What are the different revenue models?
How does your value proposition reach
your customer? Where can your customer
buy or use your products or services?
•Channels
•Revenue streams
•Cost structure
•Key resources
© Business Models Inc www.businessmodelgeneration.com
Activities
Cost1
Value prop B
Value prop A
Partners
Cost2
Resources
Relations
Channels
Customer A
Customer B
Cost3
Revenue A Revenue B

3. Any good, well run (sustainable) business, whether it’s for profit or not for profit, will have
three things going for it: at least one customer segment, a clear value proposition, and
at least one revenue stream. Don’t see one of these on your own BMC? Keep designing.
When you connect these three elements you get what we like to call, The Golden
Triangle. Yes, everything else is also important. But, The Golden Triangle is absolutely
fundamental. Think of this as the beginning of your business’s story: you create some
value for some customer whom in return gives you money for the value you delivered
to them. Have more than one customer segment? Fine, model that too. Just make sure
that for every customer segment there is a clear value proposition as well as a
matching revenue stream. We like to make a clear delineation using different colours
for each triad in the triangle.
Step 2: Link the golden triangle
Business model canvasBMI
Who are your most important partners?
Which key resources do you acquire from partners?
Which key activities do your partners perform?
What are the activities you perform every day
to create & deliver your value proposition?
What is the value you delivery to your customer?
Which of your customer’s problems are you helping to solve?
What is the customer need that your value proposition addresses?
What is your promise to your customers?
What are the products and services you create for your customers?
What relationship does each customer segment
expect you to establish and maintain?
For whom are you creating value?
What are the customer segments that
either pay, receive or decide on your
value proposition?
•Key partners
•Key activities
•Value propositions
•Customer relationships
•Customer segments
What are the resources you need to create &
deliver your value proposition?
What are the important costs you make
to create & delivery your value proposition?
How do customers reward you for the value you provide to them?
What are the different revenue models?
How does your value proposition reach
your customer? Where can your customer
buy or use your products or services?
•Channels
•Revenue streams
•Cost structure
•Key resources
© Business Models Inc www.businessmodelgeneration.com
Activities
Cost1
Value prop B
Value prop A
Partners
Cost2
Resources
Relations
Channels
Customer A
Customer B
Cost3
Revenue A Revenue B

4. Business model canvasBMI
Who are your most important partners?
Which key resources do you acquire from partners?
Which key activities do your partners perform?
What are the activities you perform every day
to create & deliver your value proposition?
What is the value you delivery to your customer?
Which of your customer’s problems are you helping to solve?
What is the customer need that your value proposition addresses?
What is your promise to your customers?
What are the products and services you create for your customers?
What relationship does each customer segment
expect you to establish and maintain?
For whom are you creating value?
What are the customer segments that
either pay, receive or decide on your
value proposition?
•Key partners
•Key activities
•Value propositions
•Customer relationships
•Customer segments
What are the resources you need to create &
deliver your value proposition?
What are the important costs you make
to create & delivery your value proposition?
How do customers reward you for the value you provide to them?
What are the different revenue models?
How does your value proposition reach
your customer? Where can your customer
buy or use your products or services?
•Channels
•Revenue streams
•Cost structure
•Key resources
© Business Models Inc www.businessmodelgeneration.com
Activities
Cost1
Value prop B
Value prop A
Partners
Cost2
Resources
Relations
Channels
Customer A
Customer B
Cost3
Revenue A Revenue B
When designing your business model, your customer segments should represent
clearly definable, defensible markets. For instance, if you believe ALL electronics
consumers are on the market looking for your value proposition, you’d better have a
good way to defend that. By the way, there is NO product available in the world that
targets every single consumer on earth – though, not for lack of effort by Facebook,
Google, and Apple. More likely, there are clearly definable customer segments that you
serve. When you design for these you’ll be able to find plenty of market research giving
you the addressable market size for these customer segments. Add those numbers to
the business model (via a sticky note). Once you’ve done that, add another sticky note
that shows what percentage of the total addressable market (TAM) you believe you’ll
be able to capture. This is your market share.
Step 3: Identify the market size & market share
1 M
2%
20
K
2M
1%
20
K

5. Once you have an idea about how many customers makeup the market share for your
value proposition(s), you’ll need to come up with an estimate for how often they
purchase from you (daily, monthly, yearly, etc.), the quantity that they purchase from
you for each transaction, as well as the price they pay. Do this for each revenue
stream. Once you have this down, within each golden triangle, multiply the number of
customers in that customer segment that will by from you by the quantity they’ll
purchase by the price. This is the total revenue for any product/service (i.e. value
proposition) for the period you chose (daily, monthly, yearly, etc.).
Step 4: Estimate the #s and $s of your business’s
transactions
Business model canvasBMI
Who are your most important partners?
Which key resources do you acquire from partners?
Which key activities do your partners perform?
What are the activities you perform every day
to create & deliver your value proposition?
What is the value you delivery to your customer?
Which of your customer’s problems are you helping to solve?
What is the customer need that your value proposition addresses?
What is your promise to your customers?
What are the products and services you create for your customers?
What relationship does each customer segment
expect you to establish and maintain?
For whom are you creating value?
What are the customer segments that
either pay, receive or decide on your
value proposition?
•Key partners
•Key activities
•Value propositions
•Customer relationships
•Customer segments
What are the resources you need to create &
deliver your value proposition?
What are the important costs you make
to create & delivery your value proposition?
How do customers reward you for the value you provide to them?
What are the different revenue models?
How does your value proposition reach
your customer? Where can your customer
buy or use your products or services?
•Channels
•Revenue streams
•Cost structure
•Key resources
© Business Models Inc www.businessmodelgeneration.com
Activities
Cost1
Value prop B
Value prop A
Partners
Cost2
Resources
Relations
Channels
Customer A
Customer B
Cost3
Revenue A Revenue B
#1
2
$2
5
6M
#1
$1
00
2M
1 M
2%
20
K
2M
1%
20
K

6. Unless your business is already running it will probably require some investment to get
it off the ground. Using the elements you applied to your cost structure, add some
sticky notes for the investment (in cash) that you’ll need to start your venture. These are
ONE-TIME costs and not running costs. So, be sure to note that.
Step 5: Estimate investment needed
Business model canvasBMI
Who are your most important partners?
Which key resources do you acquire from partners?
Which key activities do your partners perform?
What are the activities you perform every day
to create & deliver your value proposition?
What is the value you delivery to your customer?
Which of your customer’s problems are you helping to solve?
What is the customer need that your value proposition addresses?
What is your promise to your customers?
What are the products and services you create for your customers?
What relationship does each customer segment
expect you to establish and maintain?
For whom are you creating value?
What are the customer segments that
either pay, receive or decide on your
value proposition?
•Key partners
•Key activities
•Value propositions
•Customer relationships
•Customer segments
What are the resources you need to create &
deliver your value proposition?
What are the important costs you make
to create & delivery your value proposition?
How do customers reward you for the value you provide to them?
What are the different revenue models?
How does your value proposition reach
your customer? Where can your customer
buy or use your products or services?
•Channels
•Revenue streams
•Cost structure
•Key resources
© Business Models Inc www.businessmodelgeneration.com
Activities
Cost1
Value prop B
Value prop A
Partners
Cost2
Resources
Relations
Channels
Customer A
Customer B
Cost3
Revenue A Revenue B
#1
2
$2
5
6M
#1
$1
00
2M
1 M
2%
20
K
2M
1%
20
K
1,
5
M
5
0
K
5
0
K

7. When you modelled your revenue financials, you did so using some defined period
(daily, monthly, yearly, etc.). Now it’s time to use that same period to estimate the costs
of running your business. To do this, just as you added some numbers for estimated
investments needed, add another number representing the estimated costs (in cash)
for each element in the cost structure. A helpful way to understand if you’re on the right
track is to link each key activity, key resource, and key partnership back to some
element in the cost structure box. In other words, what’s it going to cost you to do the
things you need to do to make your value proposition true every day/month/year/etc.
After you’ve done this, it’s often also helpful to add up all of the costs, including
investments, for the first period to understand what your total cost outlay will be.
Step 6: Estimate running costs
Business model canvasBMI
Who are your most important partners?
Which key resources do you acquire from partners?
Which key activities do your partners perform?
What are the activities you perform every day
to create & deliver your value proposition?
What is the value you delivery to your customer?
Which of your customer’s problems are you helping to solve?
What is the customer need that your value proposition addresses?
What is your promise to your customers?
What are the products and services you create for your customers?
What relationship does each customer segment
expect you to establish and maintain?
For whom are you creating value?
What are the customer segments that
either pay, receive or decide on your
value proposition?
•Key partners
•Key activities
•Value propositions
•Customer relationships
•Customer segments
What are the resources you need to create &
deliver your value proposition?
What are the important costs you make
to create & delivery your value proposition?
How do customers reward you for the value you provide to them?
What are the different revenue models?
How does your value proposition reach
your customer? Where can your customer
buy or use your products or services?
•Channels
•Revenue streams
•Cost structure
•Key resources
© Business Models Inc www.businessmodelgeneration.com
Activities
Cost1
Value prop B
Value prop A
Partners
Cost2
Resources
Relations
Channels
Customer A
Customer B
Cost3
Revenue A Revenue B
#1
2
$2
5
6M
#1
$1
00
2M
1 M
2%
20
K
2M
1%
20
K
1,
5
M
1
M
5
0
K
2
M
5
0
K
4
M

8. Business model canvasBMI
Who are your most important partners?
Which key resources do you acquire from partners?
Which key activities do your partners perform?
What are the activities you perform every day
to create & deliver your value proposition?
What is the value you delivery to your customer?
Which of your customer’s problems are you helping to solve?
What is the customer need that your value proposition addresses?
What is your promise to your customers?
What are the products and services you create for your customers?
What relationship does each customer segment
expect you to establish and maintain?
For whom are you creating value?
What are the customer segments that
either pay, receive or decide on your
value proposition?
•Key partners
•Key activities
•Value propositions
•Customer relationships
•Customer segments
What are the resources you need to create &
deliver your value proposition?
What are the important costs you make
to create & delivery your value proposition?
How do customers reward you for the value you provide to them?
What are the different revenue models?
How does your value proposition reach
your customer? Where can your customer
buy or use your products or services?
•Channels
•Revenue streams
•Cost structure
•Key resources
© Business Models Inc www.businessmodelgeneration.com
Whereas many people at this point might think they have a well-designed business
model with included financials, you’re not like many people…are you? As a designer you
understand that your business model, especially the estimates you added are simply
assumptions at the moment. So, at this point, you’ll need to really try to uncover which
are the most critical assumptions to making your business model fly. An easy way to
do this is to try to break each of your numbers down into smaller pieces. For instance, if
you’re building a hardware widget, what’s makes up its bill of materials (BOM)? Which
customer segments are you really reaching for but don’t exactly know if the numbers
are right? Break those down into smaller groups outside of the BMC to determine how
you might go about validating your value proposition with them.
Step 7: Define your critical financial assumption
GUESS GUESS
GUESS
GUESS
GUESS
GUESS GUESS
GUESS

9. Once you’ve identified all of the critical financial assumptions, now it’s time to go out
into the world and test them. This very likely means that you need to speak with other
people that have access to actual costs associated with your business model. Just as
importantly, you’ll need to design some ways to test customers’ willingness to pay what
you modelled in the first place. Whatever you do, take this step seriously. The difference
between flying and flopping is often in the numbers. Getting them as right as you can
is essential.
Step 8: Test Your Critical Financial Assumptions
VALIDATE

10. Business model canvasBMI
Who are your most important partners?
Which key resources do you acquire from partners?
Which key activities do your partners perform?
What are the activities you perform every day
to create & deliver your value proposition?
What is the value you delivery to your customer?
Which of your customer’s problems are you helping to solve?
What is the customer need that your value proposition addresses?
What is your promise to your customers?
What are the products and services you create for your customers?
What relationship does each customer segment
expect you to establish and maintain?
For whom are you creating value?
What are the customer segments that
either pay, receive or decide on your
value proposition?
•Key partners
•Key activities
•Value propositions
•Customer relationships
•Customer segments
What are the resources you need to create &
deliver your value proposition?
What are the important costs you make
to create & delivery your value proposition?
How do customers reward you for the value you provide to them?
What are the different revenue models?
How does your value proposition reach
your customer? Where can your customer
buy or use your products or services?
•Channels
•Revenue streams
•Cost structure
•Key resources
© Business Models Inc www.businessmodelgeneration.com
Activities
Value prop B
Value prop A
Partners
Resources
Relations
Channels
Customer A
Customer B
Revenue A Revenue B
Business model canvasBMI
Who are your most important partners?
Which key resources do you acquire from partners?
Which key activities do your partners perform?
What are the activities you perform every day
to create & deliver your value proposition?
What is the value you delivery to your customer?
Which of your customer’s problems are you helping to solve?
What is the customer need that your value proposition addresses?
What is your promise to your customers?
What are the products and services you create for your customers?
What relationship does each customer segment
expect you to establish and maintain?
For whom are you creating value?
What are the customer segments that
either pay, receive or decide on your
value proposition?
•Key partners
•Key activities
•Value propositions
•Customer relationships
•Customer segments
What are the resources you need to create &
deliver your value proposition?
What are the important costs you make
to create & delivery your value proposition?
How do customers reward you for the value you provide to them?
What are the different revenue models?
How does your value proposition reach
your customer? Where can your customer
buy or use your products or services?
•Channels
•Revenue streams
•Cost structure
•Key resources
© Business Models Inc www.businessmodelgeneration.com
Activities
Value prop B
Value prop A
Partners
Resources
Relations
Channels
Customer A
Customer B
Revenue A Revenue B
Business model canvasBMI
Who are your most important partners?
Which key resources do you acquire from partners?
Which key activities do your partners perform?
What are the activities you perform every day
to create & deliver your value proposition?
What is the value you delivery to your customer?
Which of your customer’s problems are you helping to solve?
What is the customer need that your value proposition addresses?
What is your promise to your customers?
What are the products and services you create for your customers?
What relationship does each customer segment
expect you to establish and maintain?
For whom are you creating value?
What are the customer segments that
either pay, receive or decide on your
value proposition?
•Key partners
•Key activities
•Value propositions
•Customer relationships
•Customer segments
What are the resources you need to create &
deliver your value proposition?
What are the important costs you make
to create & delivery your value proposition?
How do customers reward you for the value you provide to them?
What are the different revenue models?
How does your value proposition reach
your customer? Where can your customer
buy or use your products or services?
•Channels
•Revenue streams
•Cost structure
•Key resources
© Business Models Inc www.businessmodelgeneration.com
Activities
Value prop B
Value prop A
Partners
Resources
Relations
Channels
Customer A
Customer B
Revenue A Revenue B
Finally, you’ve reached the end of your financial modelling exercise! Or have you?
Well…unless your business is ONLY setup to run for one year (or one period), you’ll want
to do some forecasting to help you (and others) understand where it will go in the
future. To do this, design business models for the upcoming years. We like to call this
the Z Axis (i.e. time)
Step 9: Translate your business model (financials) to
the upcoming years
+1 period
+2 period
period