New practice? Ditch the plan, consider the canvas.
There was a day (many days, actually) when new businesses didn’t dare open doors without well-baked business plans. But in the 2000s, something happened on the way to the business forum. Companies became less traditional (Yes, I’m looking at you, Silicon Valley). Startups especially didn’t want to be saddled with locked-in business plans; they wanted flexibility and agility, and not just on day one but throughout the journey.
Thus was born the business model canvas (BMC), an alternative to written business plans first put forth by Swiss business theorist Alexander Osterwalder around 2004.
As you begin your journey as a mental health provider, it’s fair to ask: Should I write a traditional business plan, or would a business model canvas (BMC) serve me better?
While a traditional business plan might help you summarize and document your locked-in plans, strategies, and goals, a BMC is an open-ended startup function that can help you test, refine, and polish ideas that you hope will drive your business. A BMC encourages you to ask more questions, gather innovative thinking, and pressure-test hypothesis to expose weak spots or pivot points. A BMC is fluid, flexible, and omnipresent throughout your business’ lifecycle. It’s constantly evolving by design to help you reach a point of validation and gain more confidence in your path forward.
What it looks like
A traditional business plan is typically a written document, often pages long. A BMC, on the other hand, is a simple, single-page document that is distinguished by a series of squares and rectangles that represent elements of your business. You might think of the canvas as containing the building blocks of your new company.
Generally, there are nine key elements (boxes) in a BMC. Consider the following elements as suggested starting points. You may find that some elements simply don’t apply to your startup—though, “Customer Segments” and “Value Propositions” should be thought of as essentials. In fact, it’s not a bad idea to start with those two elements.
- Customer Segments
Document the demographics (age, gender, ethnicity, education, income, location, and pain points) of the customers you hope to attract to your business. Try to avoid being too general. Focus on your specialty and what types of patients would benefit from your services.
- Value Propositions
Value propositions put language to business attributes that serve customer needs. As with customer segments, get specific and be clear about what you have to offer and how those attributes make life better for your customer. If you have a unique or more developed skill or tool that sets you apart from competitors, lead with that.
You can see the relationship between Value Propositions and Customer Segments. At a minimum, you need to work through these two elements of a BMC to understand how to induce customers into selecting you over your competition.
Now that you know who your customers are and what you want to say to them, document how you will talk to them. Review the customer segments. What channels do they use that you can leverage? Document those channels here.
- Customer Relationships
Beyond sessions, what does your relationship with your client look like? Will you establish a regular drumbeat of communication, and how will you go about that? What channels will you use for outreach? What channels will you provide to your patients so that they can reach you?
- Revenue Streams
This may seem obvious: you bill your patients, they pay you. If that’s it, then this will be a simple section. Consider, though, whether there are any other money-making avenues into which you can venture, now or in the future. Any partners in the mix such as schools or businesses that need therapy help? Put it here.
- Key Partners
You can also list your key revenue partners here. But this section is less about making money and more about the people, businesses, or other entities on which your business will rely. Think about the main suppliers or strategic alliances you might need to form now or down the road. Include a few brief words about the nature of the relationships with each and how the relationship will work for everybody’s benefit.
- Key Activities
What activities are necessary before you open the doors? Aside from providing care, of course, what ongoing activities are important once you launch to keep your business moving? For many small mental health startups, marketing often becomes the lead activity outside of patient sessions. Administration is another busy one. Elevating key activities forces you to think about how you need to budget time for each or how much additional support you might need.
- Key Resources
List the people or services you may need to tap regularly or occasionally to support what you do. Will you need help with marketing? Will you meet with a mentor or supervisor? What about business banking? Loans? Admin functions? Understand what your resource support system looks like and what or who will be part of that.
- Cost Structure
List the resources through which you will spend money to make money. Again, marketing may top this list. But be specific. For example, what will a simple website cost you every month? You will likely also need a practice management platform or may want to lease practice space. The cost of business—put it here.
A picture takes shape
Every item you list in your element boxes should be succinct. Think each point through until you can get the idea down to a single bullet or sentence. It’s an exercise in focus and refinement. What emerges, though, is the big picture—on one canvas—right before your eyes.
As you launch and road test your new model, you’ll quickly spot its strengths and weaknesses and how it might need to evolve. Without the constraints of a traditional business plan, you can leverage the flexibility of your canvas to immediately respond to business or client headwinds, new opportunities, or a changing market.
In today’s fast-moving business environment, a business model canvas may give you the agility you need to stay competitive and grow at a pace that works for you.
Ben Putland is the chief operating officer at MediSprout.