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Posted On 2024-07-31
Author Shilpa Desai
For micro, small, and medium enterprises (MSMEs) in India, the path to growth is full of challenges. According to the Udyom registration portal, total job creation by the Indian MSME sector, as of July 2024, has crossed 20.5 crores or 205 millions. But the share of MSME GVA in All India GDP has remained stagnant around 29%
What are the challenges faced by Indian MSME businesses? Is it the resource availability/ demand- supply mismatch or something else? Is it a systemic issue or is it related to the individual businesses?
Let us use the tool called BMC model by Strategyzer created by Alex Osterwalder. BMC or Business Model Canvas, helps the entrepreneurs and founders to get clarity on what they offer, who their customers are, and how they make money. Using BMC tools, businesses can find out what they are missing and make better plans to grow.
Keep reading to see how the Business Model Canvas can help MSMEs plan better and find new ways to grow.
The Business Model Canvas (BMC) is a tool that helps businesses outline and visualize their key components. It simplifies the process of understanding and designing business models, making it easier for companies to strategize and innovate.
The Business Model Canvas meaning the tool consists of nine essential building blocks covering different business aspects.
Customer Segments: The groups of people or organizations you aim to reach and serve should be identified as customer segments.
Value Propositions: Your unique product or service and why customers should choose it over competitors’ offerings are what value propositions define.
Channels: How you plan on delivering your value propositions to your customer segments is determined by channels in the business model canvas.
Customer Relationships: This block establishes the type of relationship between you and your client base, depending on which segment they belong to, ranging from personal assistance to automated services.
Revenue Streams: This block identifies how money comes into an organization from each customer segment it serves.
Key Resources: List the most important assets required to make your business model work, including physical, intellectual, human, and financial resources.
Key Activities: Define the crucial actions your business must perform to operate successfully.
Key Partnerships: Identify the network of suppliers and partners that help your business succeed.
Cost Structure: BMC tool outlines the major business model canvas cost structure involved in operating your business. This could include production costs, marketing expenses, and more.
Using the Business Model Canvas, MSMEs in India can better understand their operations and identify growth opportunities.
Indian MSMEs face challenges in scaling up due to financial and operational barriers. The BMC can be a powerful framework to address these issues and drive sustainable growth.
Business Model Canvas (BMC) is a great tool for mapping out & understanding business strategy, especially for MSMEs in India. Let’s see how each part of the BMC model can help MSMEs specifically:
Customer Segments: The different groups of customers one wants to serve. For example, Meesho, the Soft-Bank backed ecommerce startup targets small business owners who want to sell products online through social media channels.
Value Propositions—What makes my product/service unique? LendenClub offers LendenClub an opportunity to connect with verified borrowers instantly using secure platforms, making borrowing easy and fast like never before.
Channels: Determine how you deliver your value propositions to customers. The term channels in business model canvas refers to these delivery methods.
Customer Relationships: Decide the type of relationship you want with your customers. Many MSMEs in India use social media for personalized customer engagement, maintaining a direct and interactive relationship with their customers.
Revenue Streams: Identify how your business will make money. Flipkart, which supports many small sellers, makes money through commissions on sales, advertising fees, and premium services offered to its sellers.
Key Resources: List the main resources your business needs. Key resources for tech-based MSMEs like LendenClub include their technology platform, financial data, and a network of lenders and borrowers.
Key Activities: Define the main activities needed for your business to work. Meesho focuses on building and maintaining its app, marketing to new sellers, and providing customer support.
Key Partnerships: Identify the partners and suppliers you need. Many MSMEs in India form partnerships with larger corporations for better market access.
Several small manufacturers partner with Flipkart to reach a wider audience.
Cost Structure: Outline the main costs involved in running your business. For MSMEs adopting digital solutions, costs include technology development, digital marketing, and operational expenses.
Using the BMC model example, MSMEs can pinpoint gaps in their strategy and implementation on an operational level and focus on growth.
Using the BMC model, MSMEs can uncover hidden opportunities, streamline operations, and create new revenue streams.
Let’s find out how you can unlock growth with the Business Model Canvas.
The Business Model Canvas is great for spotting gaps and weaknesses in your current business model. Here’s how it works:
Customer Segments: Are you targeting the right customers? You may be missing out on a group.
Value Propositions: Is your product or service solving a problem for your customers? If not, what can you improve?
Channels: Are you reaching your customers effectively? Think about different ways to connect with them.
Examining these areas helps the BMC model identify where you're failing and where you can improve.
Once you’ve identified the opportunities, it’s time to develop and test new growth strategies. Here are a few ideas:
Exploring new Revenue Streams through product diversification.
Entering new markets with existing products.
Enhancing customer engagement through loyalty programs.
Collaborating with other businesses for joint ventures.
Improving your marketing strategies to reach a broader audience.
Using the Business Model Canvas, you can brainstorm and experiment with these strategies to see what works best for your business.
The BMC isn’t just about finding new opportunities. It also helps you optimise your current operations. Here’s how:
Key Activities: Focus on what’s crucial for your business. Eliminate unnecessary tasks that waste time and resources.
Cost Structure: Look at where your money is going. Look for ways to cut expenses without sacrificing quality.
Key Resources: Ensure you have the right resources to support your key activities.
Creating your own Business Model Canvas is easy. Follow these steps to get started. Here’s a BMC example to guide you:
| Element | Description |
| Target Audience | Who is your target audience? |
| Unique Selling Points | What sets your product or service apart? |
| Marketing Methods | How will you promote your product or service? |
| Customer Support | How will you help your customers when they need assistance? |
| Income Sources | Where will your money come from? |
| Essential Assets | What important things do you need to run your business? |
A Virtual CFO can make the Business Model Canvas (BMC) work better for your business. They understand money and can find ways to save costs and increase income. For example, by looking at your financial data, a Virtual CFO can spot where you can save money. They can also suggest new ways to make money by seeing trends you might miss. This makes the BMC example even more useful because it includes smart financial insights, helping you build a stronger business.
Want to grow your business? Start building your own Business Model Canvas now. It’s a great way to plan and improve your business. Contact our Virtual CFO services at CFO Bridge
Let's talk! Book your free consultation today
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