How to Clarify Your Business Model as a Social Entrepreneur
Using the Impact Business Model Canvas to give you a clear strategic foundation and shared understanding throughout your team.
Business models can be HARD.
Like you’re juggling 8–10 different projects in your brain.
I remember feeling like my brain was an octopus with each tentacle juggling a different piece of the business model.
It’s even more complicated when you have a team, all with different perspectives on what your business does and what’s important.
It‘s difficult to get a shared understanding on strategic decisions when there’s not a shared understanding on how the business model works as a system.
There’s great news though — life doesn’t have to be like this.
What You get From Filling out Your Business Model Canvas
Enter… The Impact Business Model Canvas!
Maybe you’ve heard of the O.G. Business Model Canvas by Strategyzer. It’s great — but this one will be more relevant to you as a social entrepreneur (non-profits, that includes you!). The canvas I made was inspired by the “Sustainable Business Model Canvas”.
I’ll break down each part of the Impact Business Model Canvas with a summary, questions to ask, how to fill it out yourself, and an example using Million Dollar Teacher Project (MDTP), a non-profit improving learning outcomes by enriching the student and teacher experience.
Notice the order of the different squares of the canvas — this matters. It’s designed so each section flows into the next.
When to Map out Your Business Model
- In times of intensive change in the market or in your business (think a global pandemic, when you see a new opportunity, or when you’re making a strategic pivot)
- During strategic planning.
- When you’re looking for funding and are talking to investors.
- When your team seems disconnected from each other and find it difficult to see how they fit into the bigger picture.
- When you have high momentum and want to build on it by creating a synergistic product/service.
How to Actually Fill It Out
You can download the Impact Business Model Canvas by just grabbing this image:
I filled it out using mural.co, an amazing visual collaboration tool that I use with all my clients. It makes getting to a shared understanding with a remote team very easy.
If you’re in person, you can just as easily use a whiteboard/paper and sticky notes!
Okay. Let’s get started!
The Impact Business Model Canvas
Value Propositions
Your business model usually starts with the value proposition. A value proposition is defined as
“a declarative statement that explains why a customer should purchase your product or service. The statement summarizes how you will deliver your brand promise and how your offering will deliver value to customers. It clearly explains what differentiates you, or makes your offering “unique,” and why you are the best choice on the market.”
Definition Via Clearvoice
A Value Proposition usually has two elements — an offering (the actual service or product), and a benefit (the statement why it’s valuable to your customers).
Questions to Ask: What value do we deliver for each customer or supporter? What problems are we solving, and for who? What makes our offering unique?
How to Fill It Out:
Take 2 minutes and have your team individually brainstorm all of the value propositions you offer using the Questions to Ask as prompts.
Then take 5 minutes to compile all the ideas, delete duplicates and refine the wording.
Going Above and Beyond (10 mins)
- sort the items into “Offering” and “Value” columns as I did, then connect offerings with the different value propositions in the offering.
- color code the value propositions based on the customer segment they’re for.
- Rank the value props/offerings for each based on importance to your customer.
If all that that’s confusing and overwhelming, just get a solid list of value propositions to move forward with.
Example:
See how there are two value propositions for the first offering?
That’s because, sometimes, different customer segments care about different aspects of an offering.
Getting your messaging right starts with figuring out which value propositions matter most to specific types of customers or supporters.
Customer/Donor Segments
Your customer segments are the different types of people who use your value proposition. Each segment will be connected to a value proposition (usually I establish this connection through color coding).
Since many social enterprises (non-profits) can accept donations, you might also have a donor segment that donates time/money for an impact outcome, but not a particular product.
Questions to Ask: For whom are we creating value? Who are our most important customers or supporters? Who pays money for our value propositions? Who pays money for the impact we’re creating?
How to Fill It Out:
Take 2 minutes and have your team individually brainstorm all of the customer segments you serve using the Questions to Ask. Then take 5 minutes to compile all the ideas, delete duplicates and refine the wording.
Going Above and Beyond (5 mins)
- You can rank the customer/donor segments based on engagement or revenue
- If you haven’t already, you can color code your customer segments to match them with the value propositions/offerings that speak to that segment.
Example:
Customer Relationships
This section defines the type of interaction your company has with its customers. You can check out the different types of customer relationships here.
You can have more than one type of relationship per segment — usually each value proposition requires a certain type of customer relationship.
Questions to Ask: What type of relationship does each of our customer segments expect us to establish and maintain with them? What type of relationships have we established with our current customers/supporters? How are they integrated into the business model?
How to Fill it Out: Take 2–5 minutes to discuss and write down the type of customer relationships you have with each customer segment.
Going Above and Beyond:
- Rank each relationship based on how well you fulfill the relationship
- For each relationship, brainstorm tactics you can use to make a better experience for the customer.
- Brainstorm new types of relationships that you could build with existing segments to reach your goals.
Example:
Channels
The channels element determines how you market, sell, and interact with customers at different stages of their journey. You can create your own channels or you can use partner channels to expand your reach.
Questions to Ask: How do we reach our different customer segments? What channels do they want to be reached on? Which are the most cost efficient? How are the channels we’re using integrated with customer/supporter routines?
How to Fill It Out: For each customer segment, take 2–5 minutes to brainstorm all the channels you use to interact with them. Take note of channels that serve multiple customer segments — doubling down on these can save you resources
Going Above and Beyond:
- Rank your channels by revenue or usage
- Rank your channels by cost to maintain
- Split your channels by “owned” and “partner owned” to see if you’re reliant on partners for channels that bring the most revenue.
- Take 5 minutes to brainstorm channels that you aren’t using but could be, and prioritize channels to act on.
Example:
Revenue Streams
We’ve gotten to the 💰!
{Gif of money flying}
Revenue streams are how you get paid. There are many ways to create revenue — you can check out the full list here.
Questions to Ask: What value do customers and supporters pay for? What are they currently paying for, and how much? What are the different revenue streams, and how much do they account for overall revenue?
How To Fill Out: Take 2–5 minutes for each customer segment and brainstorm the revenue streams you get from them.
Going Above and Beyond
- Rank the revenue streams by proportion of overall income. Write the percentage of overall revenue next to the revenue stream.
- Match the ranked revenue streams with channels and value propositions to see which channels + value props are driving most revenue.
- Ask “what if” questions about the different types of revenue streams, e.g.: “What if this was subscription-based?”, or “What if this was usage based”
and discuss with your team how that would change the rest of the business model.
Example:
Eco-Social Benefits (Impact Streams)
These benefits summarize the positive impact your business model has on society. Incorporating these into your foundational business model is what makes you a social enterprise!
Questions to Ask: What larger ecological or social benefits are created by your business model? What measurements are you using to track and communicate these benefits?
How To Fill Out: Take 5 minutes and individually brainstorm the ecological and social benefits you’re creating for society.
Then, take 5–10 minutes to remove duplicates, refine wording, and label each benefit with a metric or two to track the benefits.
Going Above and Beyond
- Connect each benefit to a value proposition.
- Connect each benefit to the customer segments that care about it the most.
- Look for eco-social benefits that could be transformed into value propositions, what the offering would be, and to whom.
Example:
Beneficiary Segments
These are the specific people who’re reaping your eco-social benefits. It helps to know who you’re helping because you can put it into more understandable context when you explain it to people.
Questions To Ask: Who is benefiting from your value and impact? How is their life being improved?
How To Fill It Out:
Take 2–5 minutes and have your team individually brainstorm all of the types of people who’s life gets better because of your business and eco-social benefits. Then take 5 minutes to compile all the ideas, delete duplicates and refine the wording.
Example:
Key Resources
These are the physical, intellectual, human, or financial assets that enable a business to keep functioning.
Questions to Ask: What key resources do our value propositions, channels, customer relationships, revenue streams, and eco-social benefits require to fulfill? What assets or resources do we need to get the job done?
How to Fill It Out: Take 5 minutes and go through all of the major assets you have in each category: physical, intellectual, human, or financial assets. It might help to brainstorm category by category to get a full picture.
Going Above and Beyond:
- Connect each major asset to the revenue streams/eco-social benefits that it enables most.
- With your team, do a “forced ranking” of the assets based on importance to the overall business model.
Example:
Key Activities
Key activities describe how you deliver value and keep everything moving by using your key resources. The three main types of activities are production, problem solving, and platform/network management.
Questions to Ask: Using our key resources, what actions do we take to deliver value? What activities do our value propositions, channels, customer relationships, and revenue streams require?
How to Fill it Out: Take 2-5 minutes and brainstorm the main activities that are necessary to create your value propositions. Then take 5 minutes to remove duplicates and refine wording.
Going Above and Beyond:
- Match your key activities with your key resources and the corresponding value props/benefits.
- Rank them based on the resources and value props they’re associated with.
- For each key activity, brainstorm all of the activities that are within it. You can also think about what smaller activities you could do to better perform the key activity.
Example:
Key Partnerships
Your key partnerships are the agreements you have with other companies that make it possible to acquire key resources, perform key activities, deliver a value prop, or create eco-social benefit. Mostly, partnerships are used for scaling production, reaching new audiences, and reducing risk. Read more about the different types of partnerships here.
Questions to Ask: Who are our key partners? Who do we need to join forces with to perform key activities, acquire key resources, and create impact? Who are the key organizations that contribute to our success, and how?
How To Fill Out: Take 5 minutes with your team to collectively brainstorm all of the partnerships that keep your business going. Then take another 2–5 minutes to connect the partnership with the main activities/resources/impact it supports. You might have a partnership with a customer segment — that’s ok!
Going Above and Beyond:
- Ask your team “What partnerships could we explore To solve {insert your major business problem}?” For 5 minutes, individually brainstorm (or research) on the different partnerships that could solve the problem. Gather all the ideas and discuss as a team how they’d affect the rest of the business model. How would this partnership empower key activities and key resources? How would it change your cost structure? How might it create new channels or change existing ones?
Example:
Cost structure
Time to pay up! This section describes all of the costs that your business model incurs. Fees to partners, production costs, labor costs, whatever major items you have to spend money on — they’re a part of the costs structure. You can have a few different types of costs, which you can read about here.
Questions to Ask: What are the most important costs inherent in the business model? Which Key Resources and activities are most expensive?
How To Fill Out: Take 5 minutes and individually brainstorm all of the costs you incur with your team. There will likely be a lot of smaller costs at this stage. Take 5–10 minutes to remove duplicates, and create categories or summaries of costs based on which resources and activities the costs enable.
Going Above and Beyond:
- Rank your cost categories from most expensive to least expensive. See how they match up with the resources/activities/channels they enable and finally, the revenue streams and eco-social benefits that come out on the other side. Do the highest costs lead to the highest revenues? What eco-social ROI are you getting?
Example:
Eco-Social Costs
We’re at the end of the business model road! This is the final part of your business model and probably the most unpleasant to consider. But stay strong! Your focus on this will create a better world for everyone.
Questions to Ask: What negative eco-social effects does our business have? What negative effects could it have in the future if we grow? How might it negatively impact communities? How about the environment?
How To Fill Out: 5 minutes to brainstorm current and potential eco-social costs of the current business model. This will probably stem a lot of discussion and debate, so take 10–15 minutes to discuss the implications with your team and decide on what’s relevant.
Going Above and Beyond:
- For each major eco-social cost, ask your team “How might we mitigate or erase this moving forward?” take 5 minutes to think of tactics, then prioritize them.
- To go even further, ask “How might we incorporate this cost into our business model? Could we create a new business model that addresses this eco-social cost?”. It might seem far-fetched to create a business out of a negative eco-social affect of your current business model, but think of this — a food producer could benefit from considering what revenue streams or value they could create from food waste! Get imaginative. That’s how innovation happens.
Example:
And there we have it folks! A clarified impact business model!
After going through this exercise, it’s my hope that you understand how your business model works as a living system of operations, how each element connects, and which parts you need to work on.
The examples I used were pretty simplified, so dig as deep as you need to find areas of improvement and facilitate mutual understanding within your team, and to investors.
Remember to download the canvas here.
Any questions? Email me at adam@emote.design. Happy to chat.
