The process of business model creation and evaluation has become much easier recently, thanks to the appearance of various appliances like Business Model Canvas. It provides a framework for identifying and organizing the key elements of a business and how they fit together to create value. Key resources are considered to be one of the crucial parts of any business model.
Today, let’s discuss in more detail how key resources are linked to the Business Model Canvas and define how they can influence the development of your business and contribute to its success.
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What are Key Resources?
Key resources are the assets and credits that most businesses rely on when devising, delivering, and conveying value. Based on the aspect of work they influence, these resources can be grouped into different classes, like human resources, financial, physical, etc.
Key resources can also be categorized as tangible or intangible:
- Tangible resources are physical assets such as machinery, equipment, buildings, and inventory;
- The second type is more about something that is not materialistic, such as intellectual property, patents, trademarks, and customer data.
These resources are critical to a business model because they enable a company to perform key activities, create value for customers, and generate revenue. Without them, it would be practically impossible for a company to operate effectively and achieve its goals.
Identifying key resources requires a thorough understanding of a company’s business model, industry, and competitive landscape. In order to do that, a company has to determine its key activities. Only after doing that they can figure out which resources they need to perform these activities effectively.
For example, some of the assets that are essential for producing their goods are various raw materials, production equipment, and professional workers. For a software company, it would be necessary to gain access to the following:
- Specialized software development tools;
- A talented team of software engineers;
- Intellectual property such as patents and trademarks.
By using various Business Model Canvas, you can create a structured scheme identifying and organizing key resources. The canvas is composed of nine elements. Some of the main ones are key activities, customer segments, value propositions, and key partnerships.
In the lower-left quadrant of the canvas, you’ll find key resources side-by-side with key activities and key partners. This quadrant is the representation of all the resources and capabilities needed to create value for customers.
What are the Main Kinds of Key Resources?
Any business requires a number of key resources to operate effectively. So, now we want to present you with a list of some of the most common ones and describe their features.
Physical Resources
Physical key resources are one of the crucial elements of any business model. First of all, they include substantial assets like various appliances, tools, and inventory. Plus, any company needs a building – a place where they organize their production and deliver their services to the customers.
We already mentioned that the usage of this type of resource is vital for manufacturing or transportation industries.
Physical key resources are also essential for companies involved in construction, mining, and agriculture, as most of their working processes require the usage of specialized tools and machinery. Additionally, they are crucial for businesses in the retail industry, where inventory, store layout, and displays act as an attraction for customers.
Physical assets are not limited to production or service delivery activities. Things like working spaces, furniture, utilities, and technological devices make it possible for any company to effectively perform its administrative functions as well. For example, a financial services company requires access to high-speed Internet, computer systems, and a comfortable spot for work to conduct its operations and serve its customers.
Human Resources
No business can become outstanding without human key resources. You can call them a backbone in a way. They refer to the people who work for a company, including employees, contractors, and partners, and play a vital role in driving growth, innovation, and success.
Human resources are critical for companies involved in service industries such as:
- Healthcare;
- Education;
- Consulting.
If a company wants to succeed in these industries and provide services of the highest quality to meet the needs and expectations of their customers, they need to hire workers that are professional, educated, skilled, and qualified.
For example, a healthcare company requires highly skilled personnel that are experts in their field in order to guarantee excellent patient care. Similarly, an education company requires talented teachers and professors to engage their students and make the learning processes effective.
Human assets are also really important for companies that provide their services for technology-based industries, like IT services, design, content creation, etc. These companies require a proficient and talented team of software engineers, designers, and scientists to come up with fresh ideas and be the driving force of innovation in various fields.
Human key resources are not only about technical skills and knowledge. Creativity, leadership, and teamwork are some other essential features that are extremely valuable for any business. These qualities are crucial for driving innovation, collaboration, and productivity and are a necessity for businesses looking to stay ahead of the competition.
For any business owner, one of the top priorities is the effective management of human resources. It involves the following:
- Identifying and attracting top talent;
- Providing opportunities for professional growth and development;
- Creating an environment that will motivate your employees and lead to a boost of creativity, innovation, and productivity.
Intellectual Property
Intellectual property (IP) is a valuable resource for businesses of all sizes and industries. It refers to the legal rights that protect all the unique products created by someone, like literary and artistic works, symbols, names, and designs.
Some of the forms of IP you might be familiar with are patents, trademarks, copyrights, trade secrets, and industrial designs. The main purpose of all these protection forms is to give companies the possibility to ensure their unique ideas and creations are preserved. They prevent others from using them without permission or compensation.
For example, a software development company may hold a patent for a unique software algorithm or a trademark for its brand name. Similarly, a fashion company may hold copyrights for its clothing designs or a trademark for its logo.
- For any business that wants to remain competitive and relevant in the market and ensure the safety of their unique products and possessions, IP is a must;
- It gives businesses an opportunity to demonstrate their unique color, manner, and style and find customers that’ll resonate with it. It makes it possible to establish your differences;
- Moreover, IP can also serve as a valuable asset that businesses can monetize through licensing agreements, joint ventures, or other business arrangements. This can provide a valuable source of revenue for businesses and help them generate new income streams.
If businesses want to significantly increase the value of their intellectual assets, effective management of IP is not an option but a necessity. It involves identifying and protecting valuable IP assets, monitoring and enforcing IP rights, and developing strategies for leveraging IP for business growth and success.
Financial Resources
Financial key resources are the lifeblood of any business. They refer to the financial assets that a company possesses, including cash, investments, credit lines, and other financial instruments.
No business can develop and reach success in this competitive and fast-moving world without a strong financial base. What are their main features?
- They provide the necessary capital for the expansion. Businesses can invest in the development of their employees and the creation of new products and services. It allows them to succeed in various marketplaces;
- Moreover, financial resources are also crucial for businesses looking to manage their cash flow and maintain financial stability. They enable companies to pay their bills on time, manage their debt obligations, and respond to unexpected financial challenges.
Business owners should pay more attention to the management of financial resources, as it’ll help maximize their financial performance and success. This involves developing and implementing effective financial strategies, managing cash flow, and monitoring key financial metrics such as revenue, profit margins, and return on investment.
Financial key resources are also critical for businesses looking to attract investors and secure funding for growth and expansion. Investors and lenders typically look for companies with strong financial fundamentals and a track record of financial success. Therefore, businesses must demonstrate a clear understanding of their financial position and the resources needed to achieve their growth objectives.
Network Resources
Our last but definitely not least point is network key resources. Today, the market is really globalized, and all industries are connected in some way with each other. So, creating a strong functioning network is essential if you want your business to succeed. These resources are based on the connections and relationships that a business has with its suppliers, customers, partners, and other stakeholders in the industry.
There’s a variety of benefits effective network resources can provide any business. Some of the main points are:
- Increased access to new markets;
- Opportunities for collaboration and innovation;
- Access to new technologies and resources.
For example, a business that has a strong network of suppliers and distributors can quickly and easily source materials and products, reduce costs, and deliver high-quality products and services to customers. Similarly, a business that has a strong network of partners and collaborators can tap into new sources of expertise, ideas, and innovation and develop new products and services that meet the evolving needs of customers.
Moreover, network resources can also provide businesses with a valuable source of information and insights into industry trends, customer preferences, and competitive dynamics.
Defining Your Key Resources
Defining key resources for a business involves identifying the critical assets and capabilities that the business needs to operate, compete, and succeed. Here are some steps to help define your key resources:
- Identify your business model. First, identify your business model and the key activities that are needed to make it work. That way you’ll be able to figure out which resources you’ll need in order to reach all your objectives;
- Identify critical resources. Next, identify the critical resources that are necessary for the successful performance of your business. This might include physical assets like various tools and space for work, financial resources like capital and financing, human resources like expertise employees, and intellectual resources like patents and trademarks;
- Prioritize resources. Assess your resources and outline the ones that are the most important for the development of your business. This will help you designate your resources more effectively and efficiently;
- Assess strengths and weaknesses. Define the weak and strong points you currently have. By doing that, you can outline where you need to invest more resources or adjust your strategy;
- Plan for contingencies. Unexpected situations and various emergencies are practically unavoidable, so it’s essential to create a backup plan. An alternative strategy and action plan will decrease the risk of failing.
Using Key Resources in Business Model Canvas
No Business Model Canvas (BMC) can function properly without key resources. This strategic tool allows companies to create, develop, and effectively operate their business models. In the BMC, key resources are the assets and capabilities that give businesses an opportunity to comfortably organize their work in all aspects and increase their productivity.
You can create your models yourself or you can use other companies for an advertisement:
- Start by determining the key resources that are essential for your business to function;
- Group them according to their type and importance;
- Ensure that they are aligned with your value proposition.
This will help you create and deliver value to your customers effectively.
To avoid any mishaps and emergencies, or at least to make their impact not as strong, think about some other strategies you might use in case the original one doesn’t work out.
Summing Up
Defining your key resources is an important first step in developing a successful business strategy. There are a few steps you need to take in order to achieve that:
- Identify your business objectives, short-term and long-term goals, and key performance indicators;
- Conduct a comprehensive audit of your business resources. This should include an inventory of your physical, human, and intellectual resources;
- Determine which ones are crucial for the success of your business;
- Prioritize them based on their importance and value to your business;
- Finally, develop a resource management plan that outlines how you’ll manage and optimize your key resources.
In order to make this process simpler and more organized, you can operate some of the newest tools, like Business Model Canvas.