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Now we finally come to the last part of the business model canvas.
We've talked about value props, customer segments, channels, customer relationships,
revenue streams, partners, resources, and activities, and now we get to cost structure.
It's kind of ironic we're getting to the last part of the business model canvas
that could actually put us out of business.
Because remember costs need to be less than the revenue stream.
At least if not on day 1, over time,
or else you haven't built a profitable and sustainable business.
Let's take a look at cost.
If you really think about it, there are two general types of cost.
One called fixed cost, that is how much does my building costs?
How much are my employee costs going to show up every month,
month to month, that don't move.
The other things are, what are my most important costs?
Are there resources from the resoures part of the business model canvas?
Are there activities that are most expensive?
Did I have to do something with my suppliers?
I really want to understand what's the cost structure to operate the business.
What are my fixed costs? What are my variable costs?
What are my most expensive resources? What are my most expensive activities?
I want to add them all up and make sure that the interaction between cost and revenue
has costs less than my revenue.
Again on day 1 you could say no we're not going to make money for the next year, 2, or 3,
and as long as your investors agree and you eventually make money and can prove
to yourself and them you can make money,
it's okay to have costs being a little more expensive.
But you and your investors need to be in sync about costs versus revenue from day 1.
This is something you don't want to surprise investors about.