Why create a business model?

A business model helps describe how an organization or individual captures, creates, and delivers value for a
customer, ultimately to generate revenues and profits. A business model will help you stand out as a strong
emerging farmer to potential landlords, lenders, and customers. It will also give you a pathway as you start
your farming journey.

This template is a modification of the Business Model Canvas created by Alex Osterwalder and Yves Pigneur.
Organizations worldwide, including IBM, Ericsson, and the Public Works and Government Services of Canada,
have used this concept.

Through this ten-step process, you will identify the components of your business that are critical to its
success. Each piece of the model is found on an individual tab, with additional information and questions to
help you identify the components specific to you.

The key components of the agricultural business model are:

1. Customer segments
2. Value propositions
3. Channels
4. Customer relationships
5. Key resources
6. Key activities
7. Key partnerships
8. Conservation
9. Cost structure
10. Revenue streams

To begin, click on Step 1 using the tabs at the bottom of this file. You can add your text using the shaded cells.
As you complete each step, the information will be entered into the Business Model Canvas tab, which
collects the information in one place. Use the additional notes area to expand on the brief notes, if needed.
Continue completing Steps 2 through 10. You can print and compile all tabs into a presentable business
model for your next meeting.

Adapted by Iowa Learning Farms, Iowa State University, from Osterwalder, Alexander, Yves Pigneur,
Tim Clark, and Alan Smith. Business Model Generation. Hoboken, NJ: Wiley. 2010.
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Step 1. Customer Segments
Defines the different groups of people or organizations an enterprise aims to reach and
serve.
Customers comprise the heart of any business model. Without profitable customers, no
company can survive for long.
In order to better satisfy customers, it helps to group them into distinct segments that
have common needs, behaviors, or other attributes. A business model may define one or
several large or small customer segments.
Customer groups represent separate segments if they have distinct needs, if you reach
them through different channels, if they require a different type of relationship, if your
profits from them are substantially different, or if they are willing to pay for different
aspects of what you offer.
Once you've grouped your customers, you must consciously decide which segments to
serve and which segments to ignore. Then you can carefully design your business model
around a strong understanding of specific customer needs.
Example customer segments for agricultural businesses include:
• Consumers looking for locally grown options for the products you grow
• Immigrant populations whose diets include large amounts of your product
• Landowners who need services or equipment you can provide
• Cost-conscious consumers
Additional Notes:
Questions to Answer:
• For whom are we creating value?
• Who are our most important customers?
Notes
Land enrolled in CRP Program requires mid-contract management to maintain
cost-share eligibility. Within a four-county area, customers could include:
—Absentee landowners who do not have the expertise or ability to provide
maintenance
—Aging/retired landowners who don’t have ability/desire to complete the
maintenance
—Active farmers without equipment and/or time
—Farm management companies overseeing acres enrolled in CRP for landowners
—State/federal agency-owned land
Goal: Establish five landowner clients for CRP maintenance services in year one.
Each year, I will need to recruit new clients, as midcontract management occurs
once for each contract the landowner holds. Depending on number of contracts
and enrollment dates, some clients may continue to need services in the future.
Revisit after year one to see if expansion is possible.
Step 2. Value Propositions Questions to Answer:
Describes the bundle of products and services that create value for a specific • What value do we deliver to the customer?
customer segment. • Which one of our customer’s problems are we helping to solve?
• Which customer needs are we satisfying?
The value proposition is the reason customers turn to your company over another • What bundles of products and services are we offering to each Customer
—it solves a customer problem or satisfies a customer need. Each value Segment?
proposition consists of a selected bundle of products or services that caters to the
requirements of a specific customer segment. It is the set of benefits you offer each
of your customer segments. Notes
Through in-person discussions in local coffee shops, community events, and
Some value propositions may be innovative and represent offers that are new to county NRCS/FSA offices, there are no other people or companies offering this
the customer. Others may be similar to existing market offers, but with added service to landowners in the area.
features and attributes.
What I will deliver:
Examples of value propositions include: —Quality, reliable, and timely CRP maintenance (shallow disking and herbicide
• Custom drilling of cover crops following harvest, which allows customers to applications) to meet program requirements for cost-share payments
focus on getting their crops out of the field, knowing their cover crops are getting —Awareness of program rules, changes, or updates and will notify customer of
seeded as closely behind the combine as possible. any changes to CRP program
• Locally raised grass-fed beef with personalized service, allowing customers to —Clear documentation of maintenance practices for submission to FSA county
customize their orders. office
—Peace of mind that the maintenance is done according to program guidelines to
ensure timely submission of documents required for cost-share payments

Additional Notes:
Step 3. Channels Questions to Answer:
Describes how a company communicates with and reaches its customer segments to • Through which channels do our customer segments
deliver a value proposition. want to be reached?
• How are we reaching them now?
Communication, distribution, and sales channels comprise your interface with • How are our channels integrated?
customers. Channels are customer touchpoints that play an important role in the • Which ones work best?
customer experience. • Which ones are most cost-efficient?
• How are we integrating them with customer
Channels serve several functions. They raise awareness among customers about routines?
your products and services, deliver and help customers evaluate your value
proposition, allow customers to purchase your products and services, and serve as
your means of providing post-purchase customer support.
Notes
Examples of channels for rural communities include: Visit local coffee shop
• Flyers for local gas stations, cooperatives, grocery stores, community centers, Offer my services to local landowners based on my
and restaurants local knowledge
• Social media Post flyers in local gas station/grocery stores
• Paid advertising in local newspapers or the Farm Bureau Spokesman Look into costs of advertising in local
• Visits to local farmer and landowner gathering spots—coffee shops, newspapers/Farm Bureau Spokesman
cooperatives, and restaurants Word of mouth/referrals

Additional Notes:
Step 4. Customer Relationships Questions to Answer:
Describes the types of relationships a company establishes with specific customer • What type of relationship does each of our customer
segments. segments expect us to establish and maintain with them?
• Which ones have we established?
It's important to clarify the type of relationship you want to establish with each of • How costly are they?
your customer segments. Relationships can range from personal to automated. • How are they integrated with the rest of our business
model?
Three main motivations drive customer relationships—acquiring customers,
retaining customers, and boosting sales.

Typical relationships with specific customer segments might be:

• Scheduling an in-person meeting to review which fields will be seeded with
cover crops, which species will be used, the seed source, date of delivery, and Notes
anticipated harvest date of the field to estimate when the drill needs to be I will interact with my customers through personal
available relationships. These will include:
• Setting up at the local farmers' market to attract new customers with samples of —Face to face
your product (i.e. jerky, wool, soap) and information about placing orders, pick-up —Phone
and delivery options, and payment. —Email
—Hard copy mail

Additional Notes:
Step 5. Key Resources Questions to Answer:
Describes the most important assets required to make a business model work. • What key resources do our value propositions require?
• What key resources do our distribution channels require?
Every business model requires key resources. These resources allow an enterprise to create • What key resources do our customer relationships require?
and offer a value proposition, reach markets, maintain relationships with customer segments, • What key resources do our revenue streams require?
and earn revenues. • Which of these resources do we currently possess?
• Which of these resources do we still need to get?
Different business models require different key resources. A microchip manufacturer requires
capital-intensive production facilities, whereas a microchip designer focuses more on human
resources. Key resources can be physical, financial, intellectual, or human, and owned, leased,
or acquired from partners.

Key resources for rural businesses may include:

• A tractor or a truck and trailer
• Water access Notes
• Fencing Key resources I have access to or can obtain:
• Shelter for livestock —Disk and tractor
• Computer, printer, phone —Sprayer and customer applicator license
• Operating loan for paying expenses until crops, products, or services are sold —Truck for hauling chemical supplies
• Additional labor sources through hired help —Computer, printer
—Phone
—Regular maintenance on equipment (self and third-party services)

Additional Notes:
Currently possessed
—Disk and tractor
—Sprayer
—Truck for hauling chemical supplies
—Computer, printer
—Phone
—Regular maintenance on equipment (self)

Need to acquire
—Customer applicator license
—Regular maintenance on equipment (third-party services)
Step 6. Key Activities Questions to Answer:
Describes the most important things a company must do to make its business • What key activities do our value propositions
model work. require?
• Our distribution channels?
Every business model calls for a number of key activities. These are the most • Our customer relationships?
important actions you must take to operate successfully.

Some examples of key activities include:

• Quality herdsmanship and care, including timing vaccinations, proper animal Notes
nutrition, and identification of market-ready lambs to generate safe, delicious, Midcontract management activities: shallow
locally grown meat for customers disking or herbicide applications during
• Timing billing and collection of payment from clients approved times as listed in the CRP midcontract
• Meeting with clients one-on-one to schedule what activities need to be done, and management technical note.
their deadlines Collection of payment from clients within 60 days
• Keeping landowners up to date on CRP midcontract management activities of billing.
Effective, timely communication with clients
about activities.

Additional Notes:
Step 7. Key Partnerships Questions to Answer:
Describes the network of suppliers and partners that make the business model work. • Who are our key partners?
• Who are our key suppliers?
Companies forge partnerships for many reasons, and partnerships are becoming a • Which key resources are we acquiring from
cornerstone of many business models. Creating alliances helps you to optimize your partners?
business model, reduce risk, and acquire resources. • Which key activities do our partners perform?

We can distinguish among four different types of partnerships:

• Strategic alliances between non-competitors—Iowa State University Extension and
Outreach campus and field specialists, and National Resources Conservation Service and
Soil and Water Conservation District staff Notes
• Strategic partnerships between competitors (competition), as with feeder livestock Strategic alliances:
sources Farm Service Agency staff
• Joint ventures to develop new businesses—with a local locker for direct marketing, for NRCS/SWCD staff
example, or with a cover crop seed company SWCD Commissioners
• Buyer-supplier relationships to assure reliable supplies—with a feeder livestock source,
or with a cooperative supplying chemicals, feed, seed, etc. Buyer-supplier relationship:
Local cooperatives
Equipment mechanic

Additional Notes:
Strategic alliances—provide information regarding approved CRP maintenance processes and deadlines for completion, also serve as a
resource when questions about CRP arise
Local cooperative—will sell chemicals needed for spraying services

Equipment mechanic—providing service and repairs that are beyond operator's skill set
Step 8. Conservation Questions to Answer:
Defines how operations or enterprises will work to promote conservation, as well as • How does our model promote conservation or
improve water quality and soil health in their communities and watersheds. sustainable agriculture?
• In what ways is this helping to improve soil
Offering conservation-minded services to clients creates an opportunity to stand out in quality? Water quality? Wildlife habitat?
the crowd. When you're knowledgeable about water quality and soil health practices, • What are my short- and longer-term
you can easily and clearly communicate the benefits of these practice to clients, and conservation goals?
build a strong working relationship.

Conservation practices may include: Notes

• No tillage or strip tillage Properly maintained CRP will provide erosion
• Cover crops protection, soil health benefits; improve water
• Prairie strips quality with healthy, perennial cover; takes into
• Grassed waterway account nesting and wildlife habitat needs to
• Forage promote their survival.
• Rotational grazing
• Edge of field practices like bioreactors, saturated buffers, and wetlands

Visit www.iowalearningfarms.org to learn about these and other practices.

Additional Notes:
Short-term conservation goal:
Increase local pheasant and quail populations through proper timing of CRP maintenance that does not disrupt their nesting needs.

Longer-term conservation goal:

Encourage more wildlife habitat plantings in my community, beyond the CRP-contracted areas, through providing a quality maintenance
service for farmers and landowners so they don't have to invest in new equipment or devote their time to keeping the areas in good health.
Step 9. Cost Structure Questions to Answer:
Describes all costs incurred to operate a business model. • What are the most important costs inherent in our
business model?
This building block contains the most important costs incurred under your • Which key resources are most expensive?
business model. Creating and delivering value, maintaining customer • Which key activities are most expensive?
relationships, and generating revenue all incur costs. Some business models are • How will unexpected expenses be managed?
more cost-driven than others—so-called “no frills” airlines, for instance, have built
business models entirely around low cost structures.

You can calculate your costs relatively easily once you have defined your key
resources, key activities, and key partnerships.

Depending on your business model, costs to consider might include:

• Capital purchases: tractor, sprayer, manure spreader, barn, land, etc.
• Chemicals
• Seed
• Fuel
• Supplemental feed Notes
• Labor Costs related to the business:
• Insurance Equipment purchase and maintenance
Chemicals
Fuel
Labor

Additional Notes:
Initial billing/quotes will be based on real costs and values provided in Ag Decision Maker maintained by Iowa State University
In the case of unexpected costs (for example significant mechanical damage to mower/sprayer), it will be important to make sure the
business has enough cash reserves and/or operating note availability to meet payment deadlines. Insurance options for the business will
be explored and established within the first two months of operating.
Step 10. Revenue Streams Questions to Answer:
Represents the cash a company generates from each customer segment; revenue minus costs • What value are our customers really willing to pay for?
equals earnings. • For what do they currently pay?
• How are they currently paying?
If customers are the heart of a business model, revenue streams are its arteries. Ask yourself: • How would they prefer to pay?
What value is each customer segment truly willing to pay for? • How much does each revenue stream contribute to overall revenues?

Successfully answering that question allows you to generate one or more revenue streams from
each customer segment. Each revenue stream may have different pricing mechanisms, such as
fixed list prices, bargaining, auctioning, market- or volume-dependent pricing, or yield
management.
Notes
A business model can involve two different types of revenue streams:
• Transaction revenues from one-time customer payments. For example, an invoice is prepared Transaction revenues—payment received after billing when maintenance is
after cover crops have been seeded, using true costs and estimates from Iowa State University's performed and photo proof if not local client
Ag Decision Maker. The customer has 45 days to submit payment for the service before interest
is charged. Payable by check or cash
• Recurring revenues from ongoing payments to either deliver a value proposition to a
customer or provide post-purchase customer support. For example, monthly invoices are
prepared and submitted for snow removal and mowing on a landowner's property. The
customer has 30 days to submit payment for the service before interest is charged.

Additional Notes:
The Business Model Canvas
Customer Segments
• For whom are we creating value?
• Who are our most important customers?
Step 1.
Land enrolled in CRP Program requires
mid-contract management to maintain
cost-share eligibility. Within a four-
county area, customers could include:
—Absentee landowners who do not have
the expertise or ability to provide
maintenance
—Aging/retired landowners who don’t
have ability/desire to complete the
maintenance
—Active farmers without equipment
and/or time
—Farm management companies
overseeing acres enrolled in CRP for
landowners
—State/federal agency-owned land
Goal: Establish five landowner clients for —Peace of mind that the maintenance is
CRP maintenance services in year one. done according to program guidelines to
Each year, I will need to recruit new
clients, as midcontract management
occurs once for each contract the
landowner holds. Depending on number
of contracts and enrollment dates, some
clients may continue to need services in
the future. Revisit after year one to see if
expansion is possible.
Cost Structure
• What are the most important costs inherent in our business model?
• Which key resources are most expensive?
• Which key activities are most expensive?
• How will unexpected expenses be managed?
Step 9.
Costs related to the business:
Equipment purchase and maintenance
Chemicals
Fuel
Labor
Original template: https://www.strategyzer.com/
Value Propositions
• What value do we deliver to the customer?
• Which one of our customer’s problems are
we helping to solve?
• Which customer needs are we satisfying?
• What bundles of products and services are
we offering to each customer segment?
Step 2.
Through in-person discussions in local
coffee shops, community events, and
county NRCS/FSA offices, there are no
other people or companies offering this
service to landowners in the area.
What I will deliver:
—Quality, reliable, and timely CRP
maintenance (shallow disking and
herbicide applications) to meet program
requirements for cost-share payments
—Awareness of program rules, changes,
or updates and will notify customer of
any changes to CRP program
—Clear documentation of maintenance
practices for submission to FSA county
office
ensure timely submission of documents
required for cost-share payments
Designed For: Example: Conservation Reserve Program (CRP) Maintenance Services
Designed By: Iowa Learning Farms Emerging Farmers
Channels Key Resources Key Partnerships
• Through which channels do our customer • What key resources do our value • Who are our key partners?
segments want to be reached? propositions require? • Who are our key suppliers?
• How are we reaching them now? • Our distribution channels ? • Which key resources are we acquiring from
• How are our channels integrated? • Our customer relationships? partners?
• Which ones work best? • Our revenue streams? • Which key activities do our partners
• Which ones are most cost-efficient? • Which of these resources do we currently perform?
• How are we integrating them with customer possess?
routines? • Which of these resources do we still need to
get?
Step 3. Step 5. Step 7.
Visit local coffee shop Key resources I have access to or can Strategic alliances:
Offer my services to local landowners obtain: Farm Service Agency staff
based on my local knowledge —Disk and tractor NRCS/SWCD staff
Post flyers in local gas station/grocery —Sprayer and customer applicator SWCD Commissioners
stores license
Look into costs of advertising in local —Truck for hauling chemical supplies Buyer-supplier relationship:
newspapers/Farm Bureau Spokesman —Computer, printer Local cooperatives
Word of mouth/referrals —Phone Equipment mechanic
—Regular maintenance on equipment
(self and third-party services)
Customer Relationships Key Activities Conservation
• What type of relationship does each of our • What key activities do our value • How does our model promote conservation
customer segments expect us to establish and propositions require? or sustainable agriculture?
maintain with them? • Our distribution channels? • In what ways is this helping to improve soil
• Which ones have we established? • Our customer relationships? quality? Water quality? Wildlife habitat?
• How costly are they? • Our revenue streams? • What are my short- and longer- term
• How are they integrated with the rest of our conservation goals?
business model?
Step 4. Step 6. Step 8.
I will interact with my customers through Midcontract management activities: Properly maintained CRP will provide
personal relationships. These will include: shallow disking or herbicide applications erosion protection, soil health benefits;
—Face to face during approved times as listed in the improve water quality with healthy,
—Phone CRP midcontract management technical perennial cover; takes into account
—Email note. nesting and wildlife habitat needs to
—Hard copy mail Collection of payment from clients within promote their survival.
60 days of billing.
Effective, timely communication with
clients about activities.
Revenue Streams
• What value are our customers really willing to pay for?
• For what do they currently pay?
• How are they currently paying?
• How would they prefer to pay?
• How much does each revenue stream contribute to overall revenues?
Step 10.
Transaction revenues—payment received after billing when maintenance is performed and photo proof
if not local client
Payable by check or cash