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The Most Painless Way to Develop a Business Model

While your first stab at developing a working business model will seldom turn out right, there's lots to learn in the process.
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Rarely, if ever, does everything go according to plan after you come up with an idea and then try bring it to market. Why, then, do entrepreneurs spend so much time mapping out plans for the inevitably unpredictable? 

According to one business thinker, strategizing around conditions that will certainly change is never a waste of time--that is, if you're doing it right. 

Entrepreneur Alexander Osterwalder co-developed the Business Model Canvas during the early 2000s while earning his PhD at the University of Lausanne in Switzerland. He designed the visual map to help both startups and large companies imagine how possible business decisions will play out. It's since been used by a number of recognizable companies, including GE, P&G and 3M, to test out new business ideas, according to a recent post in First Round Review.

 Here's what the canvas looks like: 


The big idea behind the map--and the arrangement of the blocks--is that it helps users to see which elements of their business model will influence others. 

"It's like a balloon--when you push on one side, it will affect the other side," Osterwalder said during a recent Stanford Entrepreneurship Corner talk, according to First Round

Entrepreneur Steve Blank was also at the event, and he and Osterwalder had some tips for getting started on your own plan. First, make sure you have a big canvas. Very big. You want to be able to move your thoughts around quickly, so use Post-it Notes to change your model as often as needed. 

Second, practice makes perfect. If you're having trouble getting rolling, map out the successful business plans that other companies have used in the past. After a few times, you'll get the hang of it. 

Then when you're ready to run with your own ideas, have a conversation with yourself. "It sounds something like: 'I'm addressing this customer segment, and this is the job I want to get done,'" Blank said. "'Today in the market, nobody does this job, so I am offering them this. They are willing to pay this much, but if I want to charge that, I'll need key resources at these costs.'" 

And lastly, take pictures--at least once a week--as you alter the canvas. There's much to learn from visually capturing your own entrepreneurial process. 

More often than not, you'll likely see where you went wrong. "It's said that no business plan survives its first contact with customers," Osterwalder noted. And that's perfectly fine, as long as you try, try again. 

IMAGE: Getty Images
Last updated: Aug 13, 2014

LAURA MONTINI | Staff Writer

Laura Montini is a reporter at Inc. She previously covered health care technology for Health 2.0 News and has served as an associate editor at The Health Care Blog. She lives in San Francisco.




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