Find Out What a Business Model Is
As mentioned earlier, the Business Model Canvas is a helpful tool for developing a business model.
Oh, wait, what exactly is a business model?
It’s an essential step for any business, whether it is just starting, expanding into a new market, or adapting to disruption and competitive pressure. A business model captures the basic assumptions and approaches about the opportunity in one place.
The Business Model Canvas is a simple, easy-to-use method to articulate and visualize the business model for all to see.
Get Familiar With Some Types of Business Models
Businesses are different, and so are their business models. Let’s look at some of them.
Business model type | How it works | Examples |
Retail | Traditional retailers buy finished goods from manufacturers or distributors and sell them to a defined target audience, either online or via physical stores. | Barnes & Noble, John Lewis, Best Buy |
D2C Retail | D2C stands for direct-to-consumer and is a growing business model. In the D2C approach, companies prioritize developing a direct relationship with their customers instead of selling through third-party retailers. They have their own marketing, CRM, and e-commerce capability to cover the full relationship with their customers. | BarkBox, Glossier, PantryShop |
Manufacturer | Typically manufacturers are responsible for sourcing the raw materials and manufacturing finished products. They do this at scale and have the staff, factories, and processing plants to enable it. They may make custom or mass-market goods and sell their products to distributors or retailers. However, they don’t usually own the relationship with the customer. | Ford Motor Company, Proctor and Gamble, Unilever. |
Multi-sided platforms | Companies like eBay or Airbnb connect buyers and sellers on a platform. | Amazon Marketplace, Facebook, Alibaba, Uber |
Subscription | A service is usually available on a recurring monthly subscription. | Netflix, Spotify, Harry’s Razors |
Freemium | A free service is available but with certain limits that are only removed for customers who upgrade. | Spotify, LinkedIn |
Razors/blades | A core product like a razor is sold cheaply to generate sales of high-margin blades (i.e., printers and printer ink). | Gillette, HP Printers |
Advertising | Sites like Yahoo! create valuable content to generate page views that they can sell to advertisers. | New York Times, Tik Tok |
Take a Look at the Business Model Canvases of Existing Businesses
Let’s look at some existing businesses (some of which you may recognize) and consider their Business Model Canvas.
Our first business is Burlap & Barrel, a direct-to-consumer retailer selling high-quality, ethically-sourced spices online. They describe themselves as a public benefit organization supporting smallholder farmers.
They are a high-margin, low-volume retailer.
We don’t know if they ever used a BMC when starting, but we’ve filled one in with them in mind. Have a look here (or download the pdf version of the BMC for Burlap & Barrel ):
Let’s look at another BMC. Does this look familiar? Could you guess what company this is? What is their business?
✅ You can check the answer here.
Now we’ve looked at other business models, let’s focus on our own brilliant idea, The Founders Reading Guild.
Your Turn! Create a BMC for The Founders Reading Guild
So, before you begin, let’s reexamine the idea behind The Founders Reading Guild.
It’s a bit like a book club for startup founders.
A founder can join the book club to get timely access to learning relevant to their business and career skills and pay a subscription fee to be a member.
The book club curates the best books and supplies each member two to three per month. The books are chosen based on their relevance as the startup grows and moves through different stages, depending on:
how they rated previous books.
their business’s stage.
what industry their business operates in.
what areas of interest they selected.
The books will be drawn from topics related to business operational aspects such as marketing, finance, product design, agile ways of working, etc., as well as leadership and well-being, to give a balanced perspective to the learning.
Another idea is that there might be a monthly meeting that founders could attend (virtually or in person) to discuss their learning with others. This could be an enhanced membership.
✅ So what might our canvas look like for The Founders Reading Guild? You can check my version of the canvas here.
How did you fill in the BMC like that?
It can be overwhelming but don’t worry. We will explore each block on the BMC for The Founders Reading Guild in the following two parts of the course. To help, we’ll use this canvas to illustrate what we’ve explored in each one of the blocks, step-by-step, so you can see how to apply the thinking.
Let’s Recap!
A business model is a vital phase in any business.
It describes the business’s plan for creating value.
There are different business models, so you need to choose the one that works best for you.
The business model is brought to life through the BMC.
We are now at the end of Part 1 of this course! In Part 2, we’ll delve deeper into the BMC, working on two critical aspects central to our business model - our customers and our value proposition.
Take the quiz and see you there!
