UNIT 3

Business Canvas Model

Business Canvas Model
• A business model canvas (BMC) is a template that summarizes the nine key components of a business model in a single
diagram.

• The Business Model Canvas (BMC) is a strategic management tool that helps businesses visualize, design, and analyze their
business models. Developed by Alexander Osterwalder, it provides a structured, one-page overview of how a business
creates, delivers, and captures value.

• Unlike traditional business plans, which can be long and complex, the BMC presents a simplified and flexible approach that
enables businesses to quickly identify their key components and make strategic adjustments when needed.

• Why Use the Business Model Canvas?

• ✅ Clarity – Provides a clear and concise overview of a business model.

✅ Flexibility – Allows easy modification and adaptation to market changes.
✅ Efficiency – Saves time compared to lengthy business plans.
✅ Collaboration – Helps teams and stakeholders align on business goals.
✅ Problem-Solving – Identifies strengths, weaknesses, and opportunities.
Business Canvas Model
Why This Layout?
🔹 Left Side → Internal Focus (Operations & Resources)

7 4 🔹 Right Side → External Focus (Customers & Revenue)

🔹 Bottom → Financial Aspects (Costs & Revenues)

8 6 1
🔹 Center → Value Proposition (Bridging Both Sides)

2
3

9 5
Business Canvas Model
Key Components of the Business Model Canvas

Key Component Description

1. Customer Segments Who are the target customers? (e.g., mass market, niche market, B2B, B2C)

2. Value Proposition What problem does the business solve? What unique value is delivered?

3. Channels How does the business reach customers? (e.g., online, retail, direct sales)

4. Customer Relationships How does the business interact with customers? (e.g., self-service, personal assistance)

5. Revenue Streams How does the business make money? (e.g., product sales, subscriptions, advertising)

6. Key Resources What assets are needed? (e.g., physical, intellectual, human, financial)

7. Key Activities What crucial activities drive the business? (e.g., manufacturing, software development)

8. Key Partnerships What external companies or suppliers help in operations?

9. Cost Structure What are the major costs? (e.g., fixed costs, variable costs, operational expenses)
Business Canvas Model
Customer Segments (Who are your customers?)

✔ This block identifies the different groups of people or businesses a company aims to
serve.

✔ Customer Segments are the different types of customers that a company manages. A
company that produces different products will need to interact with different types of
customers.

• Mass Market: Large, broad customer base (e.g., Coca-Cola, Apple iPhone users).

• Niche Market: Specialized segment with unique needs (e.g., luxury watches, high-end
software).

• B2B (Business-to-Business): Companies selling to other businesses (e.g., SAP,

Salesforce).

• B2C (Business-to-Consumer): Direct-to-consumer businesses (e.g., Netflix, Amazon).

• Multi-Sided Market: Platforms serving two or more groups (e.g., Uber connects
drivers and passengers).
Business Canvas Model
Value Proposition (Why do customers choose you?)

• The Value Proposition is the core reason why customers choose a particular product or
service over competitors. It defines the unique benefits and value that a business offers to its
customers.

A strong Value Proposition addresses:

✅ Customer Needs – What problems does it solve?

✅ Unique Differentiation – Why choose this product over others?

✅ Benefits – What value does it provide to customers?

• Problem-solving: Addressing a specific pain point (e.g., Tesla solving sustainable transport).

• Innovation: Offering something new (e.g., Apple’s iPhone revolutionizing mobile phones).

• Price: Providing a more affordable option (e.g., Walmart’s low-cost products).

• Convenience: Making life easier (e.g., Amazon Prime’s fast delivery).

• Performance & Quality: High-end products (e.g., Rolex watches, Mercedes-Benz cars).
Business Canvas Model
Channels (How do you reach customers?)

✔ This block defines how a company communicates with and delivers its product or service to customers.

✔ Channels are the different structures and methods that are used to deliver your company’s product and value proposition to its customers.

✔ Channels encompass all of a company’s supply, distribution, and marketing channels.

✔ It is important to consider all channels of a company and make sure they are functioning cohesively.

✔ For example, a company like Amazon needs to consider how its fulfillment centers and shipping services are integrated to send out timely shipments.

It defines how a company communicates with and delivers its product or service to customers.

Online sales: E-commerce websites (e.g., Shopify, Amazon).

Retail stores: Physical outlets (e.g., Apple Stores, Walmart).

Mobile apps: Service through mobile applications (e.g., Uber, Airbnb).

Direct sales: Sales representatives contacting customers (e.g., B2B software sales).

Wholesale/Distributors: Selling through third-party vendors.

Business Canvas Model
Customer Relationships (How do you interact with customers?)
This focuses on how a company builds and maintains relationships with its customers.
The Customer Relationships block in the Business Model Canvas (BMC) describes how a business interacts with its customers to build
engagement, loyalty, and satisfaction.
It outlines the strategies used to acquire, retain, and grow the customer base.
Key Aspects of Customer Relationships
Customer Acquisition – How do you attract new customers?
Customer Retention – How do you keep customers loyal?
Customer Expansion – How do you encourage repeat purchases and referrals?

How to Choose the Right Customer Relationship Strategy?

✔Understand Customer Needs – Do they prefer personal assistance or self-service?
✔Align with Business Model – A high-end product may require dedicated assistance, while a digital service might focus on automation.
✔Enhance Customer Experience – Make interactions smooth, engaging, and valuable.
✔Encourage Loyalty & Referrals – Reward customers and build long-term relationships.
Business Canvas Model
• Revenue Streams (How does the business make money?) Describes how a company generates income from its
customers. Or How will you generate income from customers? How much will you charge?
✔ The Revenue Streams block in the Business Model Canvas (BMC) defines how a business generates income from its customers. It outlines
the different ways a company monetizes its products, services, or platform to sustain operations and drive profitability.

Revenue Model Description Example Key Aspects of Revenue Streams

Product Sales Selling physical or digital goods Apple (iPhones, MacBooks) ✔ What are customers willing to pay for?
Subscription Model Recurring payments for ongoing access Netflix (monthly streaming subscription) ✔ How do they prefer to pay (one-time, recurring,
Basic service for free, premium features commission-based)?
Freemium Model Spotify (free vs. Premium plan)
for a fee

Advertising Revenue Earning money by displaying ads

Google (Google Ads), Facebook ✔ How does pricing align with customer value?
(Instagram Ads)

Uber (takes a cut from drivers), Airbnb

Commission/Brokerage Fees Earning a percentage on transactions
(booking fee)

Charging for the use of intellectual

Licensing Fees Microsoft (Windows OS licenses)
property
AWS (Amazon Web Services,
Pay-Per-Use Charging customers based on usage
pay-as-you-go pricing)
Hertz (car rentals), WeWork (office
Leasing/Renting Temporary use of assets for a fee
spaces)

Wikipedia (donations), Kickstarter

Donations & Crowdfunding Revenue from voluntary contributions
(crowdfunding campaigns)
Business Canvas Model
Key Resources (What do you need to operate?) How to Identify Key Resources for Your Business?

The Key Resources block in the Business Model Canvas (BMC) outlines the essential assets a company ✔ Which resources are crucial to delivering your Value
needs to operate, deliver value, and sustain its business model. These resources enable the business to Proposition?
create and offer a Value Proposition, reach Customer Segments, maintain Customer Relationships, and ✔Do you need physical, financial, or intellectual assets?
generate Revenue Streams.
✔What resources give you a competitive advantage?
• These are the essential assets required for the business to function. ✔How can you acquire or strengthen these resources?
Resource Type Description Example Eg: Amazon required the Warehouses, logistics network,
Tangible assets like facilities, equipment, Manufacturing plants, retail stores, AI-powered recommendation system
Physical Resources
inventory, and technology delivery trucks
Intangible assets such as patents,
Intellectual Property Coca-Cola's secret formula, Google's
copyrights, trademarks, and proprietary
(IP) search algorithm, Nike's branding
technology
The workforce needed to run the
Skilled engineers at Tesla, designers at
Human Resources business, including employees,
Apple
specialists, and leadership
Capital, funding, revenue streams, and Venture capital, bank loans, retained
Financial Resources
access to investors or credit lines earnings
Technological Digital infrastructure, software, or Cloud servers (AWS, Google Cloud),
Resources technical capabilities AI algorithms, mobile apps
Raw materials or environment-related Oil for energy companies, agricultural
Natural Resources
assets that businesses rely on land for food production
Business Canvas Model
Key Activities (What does the business do?) How to Identify Key Activities for Your Business?
✔Which activities are essential to delivering your Value
The Key Activities block in the Business Model Canvas (BMC) describes the most
Proposition?
important actions a business must take to operate successfully, deliver its Value Proposition,
✔What processes differentiate your business from competitors?
reach customers, and generate revenue. These activities ensure the business functions
✔How do these activities connect with your Key Resources and
efficiently and remains competitive.
Revenue Streams?
Activity Type Description
Example: Key Activities in a Food Delivery Business
Production Creating and delivering a product or service

Offering solutions through consulting, advisory, or

Problem-Solving
innovation

Maintaining and improving an online platform or

Platform/Network Management
service ecosystem

Marketing & Sales Promoting products and acquiring customers

Customer Service Providing post-sale support and assistance

Research & Development

Innovating and improving products/services
(R&D)
Business Canvas Model
Key Partnerships – Highlights external collaborations and alliances.
The Key Partnerships block in the Business Model Canvas (BMC) describes the external relationships and collaborations that
help a business operate effectively. These partnerships reduce risks, optimize resources, and create strategic advantages.
How to Identify Key Partnerships for Your Business?
Type of ✔Which external companies or organizations are essential to your
Description Example
Partnership
Non-competitive companies operations?
Starbucks partnering with
Strategic Alliances working together for mutual ✔ How can partnerships reduce costs or improve efficiency?
Barnes & Noble bookstores.
benefits.
✔Are there strategic alliances that can boost your competitive advantage?
Sony and Ericsson forming
Two or more businesses creating
Joint Ventures Sony Ericsson for mobile Example: Titan is short for Tata
a new entity together.
phones.
Industries Tamil Nadu. It's the
Long-term relationships with name of a company that was
Supplier Apple sourcing chips from
suppliers to ensure quality and
Partnerships TSMC for iPhones. started as a joint venture
efficiency.
between the Tata Group and the
Technology Collaborations with tech Shopify integrating with PayPal
Partnerships providers to enhance operations. for payments. Tamil Nadu Industrial

Marketing Companies teaming up to Nike collaborating with athletes

Development Corporation
Partnerships expand reach and visibility. for brand endorsements. (TIDCO
Business Canvas Model
Cost Structure (What are the main expenses?)
✔ The Cost Structure in the Business Model Canvas (BMC) defines the main expenses involved in operating a business. It helps in understanding how costs are
incurred and optimizing them for better profitability. How to Optimize Cost Structure?
✔ Defines the major costs involved in running the business.
✔ Identify high-cost areas and find alternatives
•Fixed costs: Rent, salaries, utilities (e.g., office rent for a software company).
✔Automate processes to reduce operational costs
•Variable costs: Production costs, commission-based expenses (e.g., materials for manufacturing).
✔Negotiate better deals with suppliers
•Economies of scale: Cost reduction due to large-scale production (e.g., Walmart’s bulk purchasing). ✔Outsource non-core functions
•Operational costs: Marketing, logistics, R&D (e.g., Tesla’s spending on battery research). ✔ Leverage technology to improve efficiency

Category Description Example

Expenses that remain constant
Fixed Costs Office rent, salaries, insurance.
regardless of production or sales.

Costs that change based on production Raw materials, packaging, delivery

Variable Costs
levels or sales volume. charges.

Day-to-day expenses required to keep Utilities, software subscriptions,

Operational Costs
the business running. maintenance.
Expenses for advertising and promoting Social media ads, influencer
Marketing Costs
the business. marketing, branding.
Payments made to employees for their
Employee Salaries Wages, bonuses, incentives.
work.

Investments in software, hardware, and Website hosting, cybersecurity,

Technology Costs
digital infrastructure. cloud services.
Unit iv
Types of companies in entrepreneurship
Entrepreneurs can register different types of companies under the Companies Act, 2013 (‘Act’) in India to conduct their
business and provide a legal structure for the business. The different types of companies are as follows:
Private Limited Company (Pvt. Ltd.)
Public Limited Company (Ltd.)
One Person Company (OPC)
Limited Liability Partnership (LLP)
Section 8 Company (Non-Profit Organization - NPO)
Sole Proprietorship
Partnership Firm
Producer Company
Types of companies in entrepreneurship
✔ A company is a structured and legally recognized business entity.
✔ It is formed and registered under the Companies Act, 2013 in India.
✔ A company is a separate legal entity from its owners, with its own rights, responsibilities, and legal standing.
✔ Entrepreneurs and organizations prefer companies over sole proprietorships or partnerships due to:
Limited liability (protection of personal assets)
Perpetual succession (company continues even if ownership changes)
Structured management (clear roles of shareholders and directors)
✔ Companies contribute significantly to the economy by:
Generating employment
Increasing GDP growth
Encouraging innovation
Attracting domestic and foreign investments
✔ Companies operate in a regulated environment that ensures:
Transparency
Accountability
Good corporate governance
Types of companies in entrepreneurship
Entrepreneurs can register different types of companies under the Companies Act, 2013 (‘Act’) in India to conduct their
business and provide a legal structure for the business
Partnership
Key Features of a Partnership Firm
A partnership is a business structure that allows individuals to
Minimum 2 Partners Required: A partnership firm must have at least 2 partners and
collaborate and share the risks and rewards of a business. The type of
a maximum of 50 partners (as per Companies Act, 2013).
partnership chosen will determine the level of liability and management
Shared Responsibility & Profit: Partners share profits and losses based on the terms
involvement for each partner.
of the Partnership Agreement.
A Partnership Firm is a type of business structure where two or more No Separate Legal Entity: The firm does not have a separate legal identity from its
individuals come together to manage and operate a business. The partners, unlike LLPs and companies.

profits, losses, and responsibilities are shared according to the Unlimited Liability: Partners are personally liable for the firm’s debts. Their personal

Partnership Agreement. assets can be used to pay off business liabilities.

Advantages of a Partnership Firm Mutual Agency: Each partner acts as an agent of the firm and can bind other partners

✔ Easy to Start & Low Cost: Requires minimal paperwork compared to a through their decisions.

private limited company. Easy to Form & Operate: A partnership does not require complex registration

✔ Less Compliance: No strict audits or corporate governance like (though registration is recommended for legal benefits).

companies. Dissolution Flexibility: The firm can be dissolved easily if all partners agree.
Disadvantages:
✔ Better Decision Making: Partners bring diverse expertise for better
•Unlimited Liability (in GP): In a general partnership, partners are personally liable for
business decisions.
the business's debts.
✔ Profit Sharing Flexibility: Profits can be shared in any agreed ratio, not
•Potential for Disagreements: Disagreements among partners can lead to conflicts and
necessarily equally. disrupt the business.
✔ Tax Benefits: Partnership firms are taxed at 30% flat rate, which may be •Lack of Continuity: A partnership may dissolve if a partner dies or withdraws (unless
lower than corporate taxes. otherwise specified in the partnership agreement).
Private Limited Company (Pvt. Ltd.)
A Private Limited Company (Pvt. Ltd.) is a type of business Key Features of a Private Limited Company
entity that is legally recognized and registered under the 1.Limited Liability – Shareholders are only liable up to the amount they
Companies Act, 2013. It is a preferred business structure due to have invested in shares.
its limited liability, separate legal entity status, and ease of 2.Separate Legal Entity – The company can own assets, incur debts, and
fundraising. enter contracts in its own name.
Eg: Microsoft Corporation (India) Private Limited, Google etc 3.Number of Members – Minimum of 2 and maximum of 200
Advantages of a Private Limited Company shareholders.
✅ Limited Risk Exposure – Owners’ personal assets are 4.Minimum Directors Required – At least 2 directors, with a maximum
protected. of 15.
✅ Better Credibility – Preferred by investors, banks, and 5.No Public Trading of Shares – Shares cannot be freely transferred like
suppliers. in a public company.
✅ Easier to Raise Capital – Can attract investments from 6.Perpetual Succession – The company continues to exist despite
venture capitalists and financial institutions. changes in ownership or the death of a shareholder.
✅ Structured Management – Owners and management can be 7.Legal and Compliance Requirements – Annual financial reporting, tax
separate entities. filings, and audits are mandatory.
✅ Perpetual Existence – The company is not affected by the
death or departure of shareholders.
Private Limited Company (Pvt. Ltd.)
A Public Limited Company (PLC) is a type of business entity that is legally recognized under the Companies Act, 2013 in India. It is
characterized by the ability to raise capital from the public by offering shares through stock exchanges like NSE and BSE. This makes it an
ideal choice for businesses looking for large-scale expansion, growth, and investment opportunities.
A public limited company enjoys the benefits of limited liability, separate legal entity status, and perpetual succession. However, it is also
subject to strict regulatory compliance under the Securities and Exchange Board of India (SEBI) and the Ministry of Corporate Affairs
(MCA).
Examples:
Reliance Industries Ltd., Tata Consultancy Services Ltd.,
Advantages of a Public Limited Company
Access to Large Capital – Can raise funds from the public and institutional
Key Features of a Public Limited Company
Public Ownership: The defining feature is that its shares are offered to the investors.

general public. This is typically done through an initial public offering (IPO) High Credibility – More trust from investors, customers, and banks.

and subsequent trading on a stock exchange. Liquidity for Shareholders – Shareholders can sell their shares anytime in

Minimum & Maximum Members – Requires at least 7 shareholders and 3 the stock market.

directors. No maximum limit on shareholders. Expansion & Growth – More funds allow for business expansion, mergers,

Greater Regulatory Oversight: Public limited companies are subject to and acquisitions.

stricter regulations and reporting requirements to protect investors. This Limited Risk Exposure – Shareholders' personal assets are protected.

includes regular financial disclosures and adherence to stock exchange rule

Difference between Pvt. Ltd. and public ltd
Feature Private Limited Company (Pvt. Ltd.) Public Limited Company (Ltd.)

Ownership Owned by private individuals or a group Owned by public shareholders

Minimum Members 2 shareholders 7 shareholders
Maximum Members 200 shareholders No maximum limit
Minimum Directors 2 directors 3 directors
Share Transferability Shares cannot be freely transferred Shares can be freely traded on stock exchanges
Stock Exchange Listing Not listed on stock exchanges Listed on stock exchanges (NSE, BSE, etc.)

Capital Raising Limited to private investments Can raise large capital from the public via IPO

Regulatory Compliance Less strict compliance Strict SEBI & MCA regulations
Financial Disclosure Financial statements are private Financial reports must be publicly disclosed

Risk of Takeover Low, as shares are not publicly traded High, since shares can be bought in bulk by investors

Perpetual Succession Yes, company continues to exist Yes, company continues to exist
Operational Flexibility More flexible decision-making Requires board approval for major decisions
Proprietary Firm (Sole Proprietorship)
A Proprietary Firm, also known as a Sole Proprietorship, is the simplest and Advantages:
most common form of business structure. Simplicity: Easy to set up and manage.
It is owned and managed by a single individual who has full control over Easy to Start & Operate – No complex registration
the business operations, profits, and liabilities. Low Cost: Minimal legal and administrative costs.
Examples: Complete Control: The owner has full authority.
Small retail stores (e.g., a local bakery, a corner shop). Low Cost of Formation – Requires only basic licenses and tax
Freelance service providers (e.g., writers, graphic designers, consultants). registrations.
Minimum Compliance – No mandatory audits or corporate
Home-based businesses (e.g., online sellers, craft makers).
governance rules
Disadvantages:
Key Features of a Proprietary Firm
Unlimited Liability: The owner's personal assets are at risk.
✅ Single Ownership: The business is owned and controlled by one person.
Limited Capital: Raising capital can be challenging, as the owner relies on
✅ Unlimited Liability: The owner is personally liable for all debts and losses.
personal funds or loans.
✅ Minimal Compliance: No need for formal registration under the Companies
Lack of Continuity: The business ceases to exist if the owner dies or
Act, 2013 (except for tax and licensing requirements).
becomes incapacitated.
✅ Quick & Easy Setup: Requires minimal paperwork and investment to start.
Limited Expertise: The owner is responsible for all aspects of the business,
✅ No Separate Legal Entity: The business and the owner are considered the
which may require a wide range of skills.
same entity in legal terms.
Limited Liability Partnership (LLP)
A Limited Liability Partnership (LLP) is a hybrid business structure that Key Characteristics:
combines the benefits of a Partnership and a Private Limited Company. It Limited Liability: Partners' personal assets are protected from the business's debts
provides the flexibility of a partnership while ensuring limited liability for and liabilities. This means their liability is limited to their investment in the LLP.
its partners, similar to a company. •Separate Legal Entity: An LLP is a legal entity separate from its partners,
Introduced under the Limited Liability Partnership Act, 2008, LLPs have meaning it can enter into contracts, own property, and sue or be sued in its own
become a popular business structure, especially for professional services name.
firms, startups, and small businesses due to their low compliance costs •Flexibility: LLPs offer flexibility in terms of internal organization and
and tax benefits. management. Partners can agree on how profits and losses are shared and how the

Examples: business is managed.

1. Consulting & Auditing Firm – Deloitte India LLP •Partnership Agreement: The rights and duties of partners are typically defined in

2. IT & Software Startup – Infosys Consulting LLP a partnership agreement.

3. E-commerce Startup – Fashion Retail LLP (Example: TrendyWear LLP) •Perpetual Succession: An LLP can continue to exist even if partners change,

4. Digital Marketing Agency – Social Buzz LLP retire, or die.

•Regulatory Framework: LLPs are governed by specific legislation, such as the

Advantages: Limited Liability Partnership Act.

✔ Protection of personal assets.

✔ Flexibility in management and operations.
✔ Easier to form and operate than a corporation.
✔ Increased credibility compared to a traditional partnership.
Partnership vs. LLP vs. Private Limited Company
Private Limited
Feature Partnership Firm LLP
Company

Not separate from

Legal Entity Separate legal entity Separate legal entity
partners

Liability Unlimited Limited Limited

Minimum Members 2 2 2

Maximum Members 50 No limit 200

Registration Not mandatory Mandatory Mandatory

Compliance Low Medium High

Perpetual Existence No Yes Yes

Fundraising Difficult Moderate Easier

Ideal For Small businesses Professionals, startups Large businesses, startups

Legal compliances in entrepreneurship
Entrepreneurs must comply with various legal and regulatory requirements to operate a business legally and avoid penalties.
These compliances vary based on business structure, industry, and location
Taxation Compliance:
Business Structure and Registration:
PAN and TAN: Obtaining a Permanent Account Number (PAN) and Tax
Choosing the Right Structure: Deciding whether to operate as a
Deduction and Collection Account Number (TAN) is vital for tax purposes.
sole proprietorship, partnership, LLP, or private/public limited
GST Registration: If your business's turnover exceeds the prescribed threshold,
company is crucial. Each structure has different legal and tax
you'll need to register for the Goods and Services Tax (GST).
implications.
Income Tax Returns: Filing regular income tax returns and maintaining accurate
Business Registration: Registering your business with the
financial records is essential.
appropriate authorities is essential. This often involves obtaining a
business license and any industry-specific permits. Labor Laws Compliance:
Employee Contracts: Having clear and legally sound employment contracts.
Intellectual Property Rights (IPR) Protection: Employee Provident Fund (EPF) and Employees' State Insurance (ESI):
Trademarks: Protecting your brand name and logo through Complying with social security regulations.
trademark registration. Minimum Wage and Working Hours: Adhering to labor laws regarding
Patents: Securing patents for innovative products or processes. wages and working conditions.
Copyrights: Protecting original works of authorship, such as Workplace Safety: Ensuring a safe working environment.
software, written content, and artistic creations.
Legal compliances in entrepreneurship
Contracts and Agreements: Why Legal Compliance Matters:
Customer Contracts: Having well-drafted contracts with customers to protect Avoids Penalties: Non-compliance can result in fines and legal action.
your business interests. Builds Trust: Compliance enhances your business's credibility with
Vendor Agreements: Establishing clear agreements with suppliers and customers, investors, and partners.
vendors. Ensures Smooth Operations: Compliance helps prevent disruptions
Partnership Agreements: if your business is a partnership, having a clear to your business operations.
partnership agreement is very important. Protects Your Business: Legal compliance helps protect your business
from legal risks.

Data Privacy and Cybersecurity: Key Recommendations:

Data Protection Laws: Complying with data privacy regulations, especially Seek Legal Counsel: Consult with legal professionals to ensure you
when handling customer data. understand and comply with all relevant laws.
Cybersecurity Measures: Implementing measures to protect your business Stay Updated: Laws and regulations can change, so stay informed
from cyber threats. about any updates that may affect your business.
Maintain Accurate Records: Keep thorough records of all financial
transactions and legal documents.