Content of this unit
Circular Business Model (CBM)
Circular economy offers a variety of economic, environmental and social opportunities. To implement circular economy micro and small companies often require new business models. Closing material loops often affects multiple, if not all aspects of their current business models. Important changes include different products or services, different (relationships with) customers, different production processes and different revenue models, sometimes including other types of values than financial profit. Managing these changes requires entrepreneurs to engage in a process of circular business model (CBM) innovation, which starts with the design of CBM concepts.

If you plan your own circular business, you need to understand: the logic by which your circular enterprise will create and deliver shared or multiple value to its customers; what does this new way of thinking mean for the business community; how can your profitable business model be combined with social and environmental responsibility.

In its essence, a circular business model is the rationale of how an organization creates, delivers and captures multiple/shared value with and within closed material loops. It describes how value creation and retention is organised.

A CBM answers questions such as:
·        how can we organise materials such as tyres, tiles, paper, concrete, plastics, glass etc in such a way that the value these materials represent is preserved and maintained as long as possible?
·        how offering services, leasing components and taking back materials are profitable activities

In this frame a comprehensive definition of circular business model is:

CBM is a business model that strives for 1) employing fewer materials and resources for producing products and/or services; 2) extending the life of current products and/or services through refurbishment and remanufacturing; and 3) closing the loop of products’ life by recycling. In short, CBM seeks to reduce, retain, and recycle.

As mentioned in the previous section the Business Model Canvas has been a very popular tool for a variety of businesses (including small and micro businesses) and entrepreneurs and we can use it to apply circularity with some modification.

Below you find an adaptation specifically for the Circular Economy with the following elements:

• Function: What is the main function of the offer? What essential need are met by the offer?
• Key Activities: What are our key activities creating value? What expertise do we have? What expertise can we acquire?
• Partners: Who are our key partners and suppliers for the creation of vlue? What activities and expertise do they provide?
• Natural resources: Which natural resources are necessary? Is a circularity of resources possible? Are they biodegradable?
• Technical resources: Which technical resources are necessary? Which components, machines or other composite materials are used?
• Energy resources: Which energy resources are required? Are they fossil fuels or renewables? Is an independent energy supply possible?
• Value proposition: What problems do they resolve? What value are we offering look like? How does it work? What are its key characteristics?
• Users & Contents: For whom are we creating value? Who is at the heart of our customer base? In which relevant contexts can we resolve the problem? What are the situations linked to our value proposition?
• Upcycling: What happens at the end of the life cycle of the product and of each of its components? Can they be reused, repaired or recycled? How can we one reach zero-waste? Could one involve the user or partners to reach this goal?
• Distribution: On what occasions do we think about our value proposition? How can we make our offer better known? How does the sale process work? What kind of customer relations process is in place? How can we develop it? How is the product/service delivered or offered?
• Revenue: What are the existing or potential sources of revenue?
• Cost: What are the necessary costs and investments?
• Impacts (positive or negative): What are the positive economic, social and environmental impacts for your organization, society, planet? What are the negative impacts of your activities? What waste is generated, and what are the consequences on health and on nature?