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A business plan is read one section at a time, so the cost on one page and the revenue on another never sit side by side. The Business Model Canvas puts every part of a business on a single page, where two parts that disagree show up in the same glance.

A plan can argue every section well and still describe a business that cannot pay for itself. Webvan, the online grocer, went public in 1999 and planned to expand to 26 US markets. In 2000 it took in $178.5 million and spent $525.4 million, close to three dollars out for every dollar in, and it shut down in July 2001.

Each half of that business held up alone. People did want groceries brought to the door, and the warehouses and vans did get built. What failed was the relationship between the two halves, and a document read in order never makes anyone look at that.

The canvas exists so that every part of a business can be checked against every other part at once.

The canvas changes the format. Who you serve, what you promise, how you deliver and what it costs all sit on one sheet, so you read the business as a set of relationships between blocks instead of a sequence of chapters.

Pick one answer

A friend hands you a thirty-page plan for a meal-delivery start-up. Every section is well argued. What is the most useful first check?

Put what one order costs to deliver next to what one order brings in

Check the market-size estimate against an outside figure

Re-read the operations section for anything that cannot be built

Ask for a one-paragraph summary of each section

A plan's sections can each be sound while the business fails between them. Setting what one order costs to deliver beside what one order brings in tests the relationship the plan's format keeps apart. Re-reading sections, checking the market size or asking for summaries all stay inside one section at a time.

35:T1a2d,

The canvas has nine blocks in three zones. The customer's side sits on the right, the delivery side on the left, and the value proposition between them, with costs and revenue running along the bottom.

Alexander Osterwalder developed the canvas from his 2004 doctoral research at the University of Lausanne, and he and Yves Pigneur published it in Business Model Generation in 2010. It is free to use and adapt under a Creative Commons licence, as long as copies credit Strategyzer.com, which publishes it, and adapted versions are shared on the same terms.

Block	Where it sits	The question it answers
Customer Segments	Right	Who exactly do we serve?
Value Propositions	Centre	What do we get done for them?
Channels	Right	How do they find, buy and receive it?
Customer Relationships	Right	What kind of relationship do they expect?
Revenue Streams	Bottom right	How and when do they pay?
Key Activities	Left	What must we do well?
Key Resources	Left	What can the model not run without?
Key Partnerships	Left	Who does what we do not do ourselves?
Cost Structure	Bottom left	What does running all of this cost?

A freelance bookkeeper can fill all nine in ten minutes. Her segment is independent restaurants, her value proposition is books closed by the fifth of each month, her revenue is a $400 monthly retainer, and her key resource is her own time.

The right side says why anyone would pay. The left side says whether you can deliver for less than they pay, and the value proposition is the one sentence both sides have to agree on.

Pick one answer

A founder's canvas has a sharp segment, value proposition and revenue stream. Every block on the left says 'to be decided'. What can the canvas not tell her yet?

Whether she can deliver the promise for less than customers pay

Whether anyone wants what she is offering

How customers will hear about her

What price she has chosen

The right side shows that customers want the thing and how they will pay. Only the left side shows what delivering it takes and costs, so with it blank she cannot tell whether the price covers the cost of serving a customer. Demand, channel and price are all already on the page.

36:T179c,

One rule ties the canvas together: what one customer pays has to cover what it costs to serve that customer. Check it on a single customer first, because growth multiplies whatever that number is.

Revenue Streams and Cost Structure share the bottom edge of the page for this reason. Read them together on the unit: one customer, one month, or one order.

MoviePass shows what happens when the unit is negative. In August 2017 it cut its price to $9.95 a month for up to one film a day, and it usually paid cinemas the full ticket price each time a member went. A member who saw two films a month cost more than they paid, so every new active member added to the loss, and the service shut down in September 2019.

If one customer earns you money, more customers cover your fixed costs and then build profit. If one customer loses you money, more customers only make the loss bigger.

Set the price and the cost of serving one customer, then move the number of customers.

At the default settings each customer loses $4, so going from 2,000 to 20,000 customers takes the monthly loss from $11,000 to $83,000. Raise the price above the cost and the same slider starts working for you.

Pick one answer

A subscription box charges $30 a month and costs $34 to fill and ship. An investor says doubling the customer base will get it to profit. What will doubling actually do?

Double the losses that come from the boxes themselves, because each one loses $4

Reach profit, because fixed costs are spread over more boxes

Leave the result unchanged, because the loss per box stays the same

Reach profit once suppliers give volume discounts

Each box loses $4 before any fixed cost, so twice the customers means twice the per-box loss on top of the same overheads. Volume only helps once a single customer pays more than they cost. Fixing price, cost or what the box contains has to come first.

37:T1968,

Your flat-fee plan is growing fast. Check the unit before you decide what to do with the growth.

Make the calls

The lunch plan that sells too well

You deliver lunches to offices. Six weeks ago you launched an unlimited plan at $99 a month, and each lunch costs you $7 to make and deliver.

400 people have signed up. The average member orders 18 lunches a month.

Start

38:T181f,

By now you know where the nine blocks sit and the rule that the right side has to pay for the left.

Do this for real

Lay out your canvas and put numbers on its bottom edge

Draw the nine blocks of your business on one blank page or a printed canvas: the customer side on the right, the delivery side on the left, the value proposition between them, and costs and revenue along the bottom. Leave the upper blocks empty for now. Pick one unit, such as one customer, one month or one order. Write what that unit pays you under Revenue Streams and what serving it costs under Cost Structure, and rework the page until every check in the list below passes.

After you do it, you'll check in on

What does one unit pay you, and what does serving it cost?
Does each new customer add to your profit or to your loss?

I'm in

Tick off as you go

All nine blocks sit on one page, each in its place

You chose one unit: one customer, one month or one order

Revenue Streams shows what that unit pays you, as a number

Cost Structure shows what serving that unit costs, as a number

You can say whether each new customer adds profit or adds to the loss

If the unit loses money, you wrote down whether price, cost or usage changes first

39:T1776,

The five right-side blocks describe who pays you and how. They work as one chain led by the value proposition, so changing the promise changes the channel, the relationship and the way you get paid.

Read them in order. The segment is who you serve, the value proposition is what changes for them, the channel is how they find and get it, the relationship is how they deal with you over time, and the revenue stream is the shape of the money that results.

Music shows the chain moving. Both companies below served people who love music, and one change at the top moved every block under it.

Right-side block	iTunes Store, 2003	Spotify, 2008
Value proposition	Buy the songs you want and keep them	Play any song, own none of them
Channel	The iTunes app, paired with the iPod	A free app and a free tier
Relationship	One purchase at a time	An ongoing membership
Revenue stream	99 cents a song	A monthly subscription, plus ads on the free tier

Once the promise became access instead of ownership, an ongoing relationship followed, a subscription followed from that, and a free tier became a way to find the next paying member. A one-off download had no way to give itself away like that.

When you fill in your right side, write the value proposition first and then check that each block below it follows from it.

Pick one answer

A training firm sells one-day workshops at $900 a seat. It decides its promise is now 'ongoing support as your team grows'. Which block most needs to change to match?

Revenue Streams, from a one-off seat price to a recurring fee

Customer Segments, from teams to individuals

Key Partnerships, to add a venue provider

None, because the promise is wording and the rest can stay as it is

An ongoing promise implies an ongoing relationship, and a one-off seat price does not pay for one. The revenue stream has to move towards a retainer or subscription, or the firm will be delivering support it is not paid for. The segment can stay the same; the other choices do not follow from the change.

3a:T137b,

First drafts usually go wrong on two right-side blocks. Customer Segments is written too broad to act on, and Revenue Streams is copied from how money comes in today instead of chosen.

A segment is specific enough when one channel can reach it. "Small businesses" fits no single channel or promise. "Independent dental practices with two to five chairs" points to where they gather, what they buy and what they would pay for, so every block that follows can be filled in.

The revenue stream is a decision, and it reaches up the page. A bookkeeper who bills $60 an hour has a relationship that restarts with every invoice. If she switches to a $400 monthly retainer, the relationship becomes ongoing, her income becomes predictable, and her cost structure has to fit a fixed fee instead of billed hours.

Choose the revenue stream on purpose, then check that the rest of the page still agrees with it.

Before you leave either block, test it. Ask whether one named channel reaches the segment, and whether the revenue stream is the one you would pick if you were starting today.

Pick one answer

A founder writes 'busy professionals' as her segment. Her channel box says 'LinkedIn ads, events, partnerships and SEO'. What does the long channel list most likely tell you?

The segment is too broad for any one channel to reach

She has a strong marketing plan with good coverage

Her channel budget is too small for four channels

Her revenue stream needs to change first

When a segment is too broad, no single channel reaches it, so the channel box fills up with everything. Narrowing the segment to a group one channel can reach is what lets the channel box shrink. More budget or better tracking leaves the vague segment in place.

3b:T1788,

The four left-side blocks describe the machine that delivers your promise and what running it costs. Two companies can make the same promise and survive or fail on this half alone.

Key Activities

The few things the model must do well to work at all.

Key Resources

What it cannot run without: people, assets, data, a brand.

Key Partnerships

What you hand to others, and who you depend on.

Cost Structure

What it all costs, and whether that shrinks per customer as you grow.

The blocks form a chain. The activities you commit to decide the resources you need, the resources you will not own become partnerships, and all three land in the cost structure that the right side has to pay for.

Blockbuster and Netflix both promised a film at home tonight. At its 2004 peak Blockbuster ran about 9,000 stores, and their rent and staff had to be paid however many people walked in. Netflix rented DVDs by mail on a subscription, using the postal service as its partner, and in 2007 added streaming, where one more viewer of a film it already offers costs little extra. Blockbuster filed for bankruptcy in 2010.

When you fill in your left side, ask of each cost whether it grows with every customer or stays put as you add them.

Pick one answer

Two tutoring businesses charge the same price for the same subjects. One rents a learning centre; the other teaches online from home. Which block is most likely to decide which one survives a slow year?

Cost Structure, because the centre's rent is due however many students enrol

Value Propositions, because in-person teaching is a better promise

Customer Segments, because online students are a different group

Channels, because the centre gets more passing trade

The promise, price and students are the same, so the right sides match. The rented centre is a fixed cost that is due whether enrolment is high or low, while the online tutor's costs fall with demand. The difference lives in the cost structure.

3c:T17a1,

A growth plan changes the left side of your canvas. Read what it does to cost and to your promise before you sign.

Make the calls

Stay solo or hire two

You sell part-time operations help to start-ups at $6,000 a month per client. You serve four clients yourself and spend $1,000 a month on tools, so you keep $23,000 a month.

Your promise to clients is senior attention: they work with you.

Start

3d:T1bc7,

The Lean Canvas is a one-page variant built for ideas nobody has paid for yet. Use it before you have customers, and move to the Business Model Canvas once you are running a business you need to explain and improve.

Ash Maurya adapted the canvas in 2010 for start-ups whose biggest risk is that nobody wants the product. He swapped out four blocks: Key Partnerships, Key Activities, Key Resources and Customer Relationships. In their place are Problem, Solution, Key Metrics and Unfair Advantage.

The swap moves the page from how you deliver to what you have not proven. A founder with a meal-planning app idea and no users learns more from writing the top three problems her buyers have and the one number that shows the app is working than from listing suppliers she does not have yet.

Lean Canvas fits when

You have an idea and no paying customers yet

The biggest unknown is whether the problem is real

You need to pick the one number to watch first

Business Model Canvas fits when

Customers already pay and you are improving the model

Partners, resources and costs are where the risk is

You are comparing your model with a competitor's

Both canvases hold guesses until a customer, a price test or a cost check turns them into facts.

Pick one answer

A bakery has sold to 300 regular customers for three years and wants to add wholesale deliveries to cafés. Which canvas suits the decision better?

The Business Model Canvas, because the risk sits in partners, resources and costs

The Lean Canvas, because wholesale is a new idea for the bakery

The Lean Canvas, because it is quicker to fill in

Neither, because a canvas only works before launch

The bakery's problem and demand are already proven. The open questions are about delivery partners, van and staff costs, and whether wholesale prices cover them, which are the left-side blocks the Lean Canvas drops. The Business Model Canvas keeps them on the page.

3e:T189c,

By now your page has the nine blocks in place and numbers on the bottom edge for one unit.

Do this for real

Fill in the right side and the left side of your canvas

Fill the right side from the value proposition: the segment, then the channel, the relationship and the revenue stream, each one following from the promise. Choose the revenue stream on purpose instead of copying how money comes in today. Then fill the left side as a chain: the key activities, the resources they need, the partners for what you will not own, and the costs. Mark each cost as growing with every customer or staying put, and rework any block until every check in the list below passes.

After you do it, you'll check in on

Which one channel reaches your segment?
Which of your costs grows with every customer, and which stays put?

I'm in

Tick off as you go

Your segment is narrow enough that one named channel reaches it

The value proposition says what changes for the customer, without naming the product

Channel, relationship and revenue stream each follow from the value proposition

Your revenue stream is the one you would pick if you were starting today

The left side runs from activities to resources to partners to costs

Each cost is marked as growing with every customer or staying put

3f:T15be,

Most canvases start from one choice, usually the customer segment, and the other eight blocks have to live with it. To compare two businesses, find the choice each one made first and check whether the rest of its page agrees with it.

In 2006 Nintendo and Sony launched consoles for the same shelf. Nintendo aimed the Wii at casual players, people who did not think of themselves as gamers, and promised motion control and fun. That promise did not need cutting-edge hardware, so the Wii could be built cheaply and sold at a profit from launch.

Sony aimed the PlayStation 3 at committed gamers and promised maximum power. Power meant a custom Cell processor and a Blu-ray drive, and those parts cost more than the console sold for.

$241 to $307Estimated loss on each PlayStation 3 at its 2006 launch prices

Every Sony block followed from its first choice, and the chain ended on a bottom edge that lost money on each unit. Sony was betting that parts would get cheaper before the losses ran too long. The Wii went on to sell 101.6 million units, ahead of the PS3 by most industry estimates.

Run the same comparison on your own competitor. Name the block each of you chose first, follow it down the page, and read both bottom edges on one unit.

Pick one answer

Two accounting firms serve the same town. One chose 'fast-growing tech start-ups' as its segment; the other chose 'local trades businesses'. Where should you look first to predict which page holds together?

Follow each firm's segment down its page and compare the bottom edges on one client

Compare the two firms' offices and headcount

Pick the firm with the larger potential market

Compare the two value propositions on their own

The segment each firm chose first decides what it has to promise, what skills it must hire and what it can charge. Following each chain down to the bottom edge shows whether the price that segment pays covers what serving it costs. Office size or headcount only matter as part of that chain.

40:T1ec3,

A canvas can have nine true blocks and still describe a business that fails. The flaw usually sits between two blocks that each hold up alone and cannot both be true for the same customer.

Webvan's blocks all checked out one at a time. The customers were real, the warehouses and vans were built, and orders came in. Set Cost Structure beside Revenue Streams, though, and the company was spending close to three dollars for every dollar of sales.

Two hands hold jigsaw pieces whose knobs face each other, so they cannot lock together. One piece is labelled What it costs, the other What they pay.

The pair is not always on the bottom edge. Color, a photo-sharing app, raised $41 million before it launched in March 2011, with a strong team and working technology. Its promise was to share your photos with whoever happened to be near you, and it never found a group of people who wanted that. The app was wound down in 2012, after its engineers left for Apple.

Read these three pairs first on any canvas.

Tick off as you go

Cost Structure against Revenue Streams: does one customer, served once, pay more than they cost?

Customer Segments against Channels: does the channel you wrote down reach the people in the segment box?

Value Propositions against Key Resources and Key Partnerships: can what you have, or what a partner controls, deliver what you promised?

When a canvas feels wrong, the instinct is to hunt for the weakest block. A weak block is easy to see and fix, while two strong blocks that contradict each other stay hidden until you set them side by side.

Pick one answer

A dog-walking firm's canvas lists 'busy professionals in the city centre' as its segment and 'leaflets in suburban vet clinics' as its channel. Both blocks are well researched. What is wrong?

The channel does not reach the segment, so the two blocks contradict each other

Nothing, because both blocks are well researched

The segment is too narrow to be worth serving

The value proposition needs more detail before the rest can be judged

Each block is sound on its own, and together they contradict each other: suburban vet clinics do not reach city-centre professionals. That is the segment-to-channel pair. Polishing either block alone, or adding detail to the value proposition, leaves the contradiction in place.

41:Tfa2,

Each line is part of a real or typical canvas. Name the two blocks that contradict each other and say why.

Respond to each line

Find the lying pair

Each line describes part of one business's canvas.

6 lines · about 7 minThe canvas says

The hard lines come at you one at a time. Answer the way you would in the room, and see straight away which answers would land.

Start drillOnly you see what you write here

42:T279b,

You can draw your own canvas in one sitting if you fill the blocks in a set order. Then read it for the pair that contradicts, which is the reason to draw it at all.

Work on one blank page or a printed canvas, one short line per block. Two numbers matter more than any wording: what one customer pays you and what it costs to serve them once. Guess them honestly instead of leaving them blank.

The Business Model Canvas

Free printable canvas from Strategyzer to fill in and redraw.

www.strategyzer.com

Fill the blocks in this order.

Name one customer segment

One sentence specific enough that a single channel reaches it.

Write the value proposition

What changes for that customer, in their words, without naming your product.

Fill the rest of the right side

Channels, relationship and revenue stream, each one following from the promise.

Fill the left side

Key activities, then the resources they need, then the partners for what you will not own, then the costs.

Put numbers on the bottom edge

What one customer pays and what serving them once costs, side by side.

Read the three pairs

Costs against revenue, segment against channel, promise against resources and partners. Circle any pair that cannot both be true.

A freelance designer who does this finds her revenue line says $1,500 a website and her cost line says about 40 hours of her own time. At that rate she earns under $40 an hour before software and tax, which tells her to change the price or the scope before she looks for more clients.

Pick one answer

You finish your canvas and every block looks reasonable, but you left the two bottom-edge numbers blank because you were unsure. What should you do next?

Estimate both numbers roughly and compare them on one customer

Leave them blank until you have a full year of data

Add more detail to the blocks that already look reasonable

Move on, since a canvas with nine reasonable blocks is complete

The bottom edge is the one test that decides whether the rest of the page can work, and a rough guess can be checked and corrected. A blank hides exactly the contradiction the canvas exists to show. Adding detail elsewhere or moving on to a pitch leaves the most important question open.

43:T9dd,

Your canvas holds your own business and numbers now. Read it for the pair that contradicts.

Do this for real

Read the three pairs on your canvas

Take the canvas you filled in on both sides in module 2, with its numbers on the bottom edge. Read the three pairs: costs against revenue, segment against channel, and promise against resources and partners. Circle any pair that cannot both be true.

After you do it, you'll check in on

What does one customer pay you, and what does serving them once cost?
Which pair did you circle, if any?
What is the one change you will make because of it?

I'm in

44:Td82,

By now your canvas holds your own business, with numbers on the bottom edge and the three pairs read.

Tick off as you go

The whole business fits on one page, one short line per block

The bottom edge shows what one customer pays beside what serving them once costs

One customer, served once, pays more than they cost, or that pair is circled

The channel you wrote down reaches the people in the segment box

What you have, or what a partner controls, can deliver what you promised

Every pair that cannot both be true is circled, with one change written beside it

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