Business Model Canvas Cost Structure

A credible financial plan is another critical requirement for successful startups, and understanding your cost structure is a key part of your financial plan. The hypotheses in all the other segments of the canvas affect your cost structure. In the cost structure section of the canvas, you'll want to document the nature of all of those costs - including your hypotheses about your variable costs, fixed costs, economies of scale, economies of scope. And of course, you're recording those hypotheses so you can go test them!
This video is part of a playlist series on capturing your startup business model hypotheses using the business model canvas template. The playlist covers all 9 sections of the business model canvas:
Customer segments
Value proposition
Customer relationship
Channels
Revenue sources
Partners
Key activities
Key resources
Cost structure
The book Business Model Generation provides additional background on the business model canvas and is something I recommend for all entrepreneurs (order your copy on Amazon at amzn.to/2Qg3luL).
This StartupSOS channel provides practical, how-to advice for new entrepreneurs who plan to build a growth startup with investor funding.

[@fg906-t6b]

This whole series has reduced my fear of having to create a SB plan. The Canvas is exactly what I need to understand how aspects of business fit together and how to determine my requirements . Thank you.

[@Startupsos]

That's great to hear - good luck with your plan!

[@tomshady9760]

Thanks for the well thought out explanation. I'm doing business innovation in school and this is very helpful.

[@Startupsos]

Glad it was helpful!

[@adakadiri1594]

This series has really been helpful to me. The teachings are so easy to understand. thank you

[@ChockySihombing]

thank you for the short and clear explanation :)

[@Startupsos]

Thanks!

[@Amaridi93]

A nod to that dope color coordination ;)

[@nitishdev9029]

Hi Steve I have one issue. Can you show us some example of cost structure of vegetable seller company thanks in advance you are great.

[@emmanuelmakafu7336]

Thank you, this has been helpful as I prepare for a presentation.

[@Startupsos]

Glad it was helpful!

[@kdescapes1146]

Thank you so much for this, it's so easy to understand, and well-explained. ♥️ Subscribed!!!

[@dholland8347]

Great series on Business Model Canvas - explained simply, thank you

[@Startupsos]

Glad it was helpful!

[@ryanrust9142]

Hi, I did a model convas and I would like you to look at it and critique it. Can you do it?

[@venaebreonnatv]

Very helpful, thank you so much Steve!

[@Nepsanagaer]

This was very helpful thank you

[@Justtosee713]

thank you so informative

[@matthiasschmitz649]

Can you tell some Determinants that influence the cost structure ?

[@yohanneslucky5538]

Thank you for educating me.

[@caranaysophia8963]

Thank you sir! You are saving me from failing my college degree hahahaha

[@albertocantu1408]

I think other example of economies of scope related to horizontal integration would be adding other product line within the same facility generating efficiencies formed by viariety

[@Startupsos]

Agreed. And additional product lines might also leverage the same distribution channel for even more efficiencies.

[@elsiekalamibogen3874]

Clear explanation, satisfied.

[@Startupsos]

Thanks!

[@soundgenic]

Thanks a lot, Steve for your insight.

[@Startupsos]

My pleasure!

[@just-ge3834]

Informative Video. Thank U.

[@mariamnaggar10]

thank you for explaining

[@turalhuseynov7830]

I am now creating a canvas model. I am confused in determining cost structure and revenue streams. In your video, I couldn’t get the difference between scale and scope :(

[@Startupsos]

Scale: very often, the per-unit cost of making a product is cheaper if you build 1,000 of them versus 10 of them. Economies of scale can come, for example, from getting discounts because you purchase your raw materials in larger quantities. Scope: there can be economies from owning multiple parts of the value chain. For example, perhaps you own an operation that mines a key raw material for your product, and you also own the facility that uses the raw material to manufacture the final product. The result is that you have more control over the availability and the cost of the raw material which can give you a cost advantage in manufacturing the final product. That's not a scale (or volume) economy, it's a scope economy. I hope those examples help...

[@Lady_MexiMix]

what about a non for profit organization? would they follow the same cost model?

[@Startupsos]

Every organization's cost model is different - but yes, a non-profit certainly has a cost model with direct and indirect expenses, and just like for-profit organization, a non-profit has to have revenue sources that at least cover their cost structure. Depending on what it is that the non-profit does, a typical non-profit has many of the same types of cost as a for-profit: staffing for administration, marketing and service delivery, office expenses, etc. Check out the 990 form for a non-profit (they are publicly available) and you'll see a breakdown of both revenue and expenses for the organization.

[@carolinegranados5682]

thank you so much!!

[@neomashune9126]

Thank you

[@ReubenJames1000]

Very good video, thanks!

[@Startupsos]

Glad you liked it!

[@CFA_L1]

❤❤❤

[@Startupsos]

Thanks!

[@ranaabdelahi7996]

Too General and Complicated