Assess the Business Model Canvas

How easy or difficult is it for customers to switch to another company?

Apple’s iPod got people to copy their entire music library into the iTunes software, which made switching to Android based platforms more difficult for customers.

Is every sale a new effort or will it result in quasi-guaranteed follow-up revenues and purchases?

Nespresso turned the transactional industry of selling coffee into one with recurring revenues by selling single-portioned pods that fitted only into their machines.

Are you earning revenues before you are incurring costs?

Personal computers (PCs) used to be produced well ahead of selling them at the risk of inventory depreciation until Dell disrupted the industry, sold directly to consumers, and earned revenue before assembling PCs.

Is your cost structure substantially different and better than those of your competitors?

Skype and WhatsApp disrupted the telecom industry by using the internet as a free infrastructure for calls and messages, while telecoms incurred heavy capital expenditures.

How much does your business model get customers to create value for you for free?

Most of the value in Facebook’s business model comes from content produced for free by more than 1 billion users. Similarly, merchants and shoppers create value for free for credit card companies.

How easily can you grow without facing roadblocks? (Infrastructure, customer support, hiring)

Licensing and franchising are extremely scalable, as are platforms like Facebook or WhatsApp that serve hundreds of millions of users with few employees. Credit card companies are also an interesting example of scalability.

How much is your business model protecting you from your competition?

Powerful business models are often hard to compete with. Ikea has found few imitators. Similarly, platform models like Apple with the App Store provide powerful moats.

Assess your Business Model Canvas