Deconstructing the Business Canvas Model of Gusto: An Analysis

The given report highlights the deconstruction of the business canvas model of Gusto, an HR agency. The report analyzes the building blocks, interrelationships, critical success factors, and downside risks of the business model. Certain recommendations and business model changes have also been provided.

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Executive summary
The given report highlights the deconstruction of the business canvas model. Business canvas
model forms an essential aspect of the organization and for this purpose, analyzing the canvas
model is considered to be critical. The business canvas model of Gusto- the HR Agency has been
examined in this. The report begins with a brief introduction on the company which is then
followed by the analysis of the building mode. Certain recommendations, key success factors
and the downside risks have also been provided.

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Table of Contents
I. Introduction..............................................................................................................................3
II. Business canvas model.........................................................................................................3
Building blocks............................................................................................................................3
Interrelationships.........................................................................................................................9
Critical success factors..............................................................................................................10
Downside risks...........................................................................................................................10
Business model changes............................................................................................................11
III. Conclusion..........................................................................................................................11
IV. Recommendations:.............................................................................................................12
V. References.................................................................................................................................13
VI. Appendices.........................................................................................................................15
Appendix 1.................................................................................................................................15

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I. Introduction
Any business operating in the dynamic business environment needs to ensure that the
different components of the business function adequately in synchronization with one another in
order to ensure that the company achieves success. For this the deconstruction of the business
canvas model is very crucial. The business chosen for deconstruction is Gusto. The company is
involved in Human resource services and aims to provide personalized services to the different
client companies (Gusto, 2018). The mission of the Gusto Company is to create an environment
where work is able to provide a better lifestyle. When the company is able to make various
business task simple then gusto assists in managing the payroll, benefits as well as other Human
resource company. The company provides service to more than 60000 companies worldwide
and has its offices in San Francisco and Denver. The report will be deconstructing their business
model and analyze risks, success factors and provide recommendations on the same.
II. Business canvas model
The business model can be described as an essential aspect of the business as it
contributes towards the understanding of the different components of the business (Zott, Amit &
Massa, 2011). The business canvas model of nine building blocks has been attached in the
Appendix section.
Building blocks
The building blocks form an essential aspect of the organization and any company who
has a well-defined procedure needs to ensure that the different blocks comprise of sufficient
information with respect to the operations of the firm.

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Customer segments
The customer segments of the Gusto are as follows:
Companies interested in Payroll Management: These organizations may require help in
managing their payroll and hence, for they may outsource the payroll task to another
organizations. Gusto deals in the management of the given companies (Carayannis, Sindakis &
Walter, 2015).
Companies interested in Benefits Management: Very often the different organizations may
not be capable enough to manage the benefits aspect of the different employees and due to this,
they can outsource the task of benefit.
Human resource Decision Makers: They can also act as a suitable customer for the business
Key partners
The key partners of the company are as follows:
Job recruitment agencies: The job recruitment agencies also act as potential partners for the
Gusto HR Agency as they perform together as a team.
Core and Network: The core fucntions and network providers also act as the partners for Gusto.
Payment Gateway: A majority of services requires payment exchange like the payroll and return
for services (DaSilva & Trkman, 2014). Hence, for this purpose, the payment gateway acts as a
crucial partner to carry out all payment functions.
Software Vendors: The software vendors also act as a crucial partner to Gusto as they help in
maintaining their website and other digital marketing activities of the firm.

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Value proposition
The value proposition as offered by Gusto is as follows:
Improve Employee retention: An organization with a good Human resource and Payroll system
will go a long way in making the employees feel quite respected and value (Dudin, Kucuri,
Fedorova, Dzusova & Namitulina, 2015). This thereby has a positive impact on the organization
and helps it to retent the different employees.
Provide employees ownership in business strategy: Through the outsourcing of the different
activities, the company allows the different employees working more than 60000 companies to
have a stake in the business strategy.
Builds congruency in business and product strategy: Outsourcing of the business activities and
management by the Gusto Company will assist the companies in building a congruency between
the product as well as business strategy.
Key activities
The key activities of the company have been given as follows:
Payroll: The Gusto Company manages the payroll activities whereby the 60000 companies who
are the customers of the organization tend to take the services of the firm for their welfare.
Benefits: The Gusto organization also looks after benefits which are provided to the employees
like the gratuity, insurance benefits and other health benefits (Kiel, 2014).
HR Tools: The Gusto company other human resource related tools like performance
management and other facilities to a wide variety of companies as well.

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Channels
Channels can be largely described as the medium through which the organization
provides service to the clients. The different channels through which the company, Gusto
provides its services are as follows:
Website: The company has a well detailed website with the help of which the company is
successfully able to reach out to the audiences and able to manage the client details as well as
clientele services (Matusiak, 2016).
The website is: www.gusto.com
Sales force: The sales force of the organization also assists the company in engaging in sales by
presenting their offers to different companies and getting in more companies to enroll with their
offers.
Revenue streams
The revenue streams of the consumers have been given as follows:
Commission: The Company earns from commission which is paid by the different companies to
the organization for carrying out their HR services.
One time service fees: This fees is the one time service fees which is charged by the Gusto
Company to the different companies which are its customers for the purpose of registration with
the organization.

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Subscription fees: The subscription fees is the monthly fees which is paid by the different client
companies to the organization for the maintenance services being provided by them (Maurya,
2017).
Figure 1: Certain snapshots from the website of the company
(Source: Gusto, 2018).

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Cost structure
The cost structure of the firm can be described as the cost incurred by the organization to fund
the operations of the company and in order to carry out all the activities as mentioned in the
business canvas model.
The cost structure of the firm is as follows:
 Fixed
Payroll costs which are incurred
Marketing costs of the firm
Sales cost of the organization
 Variable
The customer acquisition costs which are incurred by the company are variable in nature
The talent acquisition cost as incurred by the firm is variable in nature.
Key resources
The key resources of the company, Gusto is as follows:
Research expert: The research expert of the Gusto Company incurs various research costs
which help the company in making its different operations better in nature.

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HR experts: These Human resource experts of the firm help the client company to deal
with the different People related problems and also go a long way in helping the clients to retent
their employees and keep them motivated.
Software manager: The website is a primary channel through which the company
manages its clients. Hence, the software management is an essential aspect.
Payroll and benefits management( accountants): The human resource aspect of the
organization is largely concerned with the pay roll and the other benefits being provided to the
employees, for which it is crucial for the business to have an accounts team which assists in
carrying out these operations.
Customer relationships
The Gusto Company maintains the relationships with its various customers through a
large number of ways which have been given as follows:
Key account management: The organization provides payroll and other human resource
accounting services to the various clients and hence, it can be described as a useful method of
maintaining the relationships with the customers.
Customized services based on the needs: Different organizations who have different needs with
respect to the size and nature of the organization request Gusto to provide specialized services
based on their need. Hence, by following this, the organization successfully engages in providing
their best services (Mentink, 2014).

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Interrelationships
The different building blocks amongst the business canvas model are highly interrelated
to one another. These blocks tend to form the basis of one’s business and hence, an impact on
one of the components tens to have an effect on the other components as well (Hong & Fauvel,
2013). Their interrelationship can be explained with the help of an example.
For instance, the company Gusto decides to increase its activities and provide additional
human resource services to the different clients. In such a scenario, the cost structure of the firm
might also be impacted severely as the cost of maintaining the additional services might be
incurred.
Hence, the different building blocks are highly dependent on one another and any change
in one of the components may lead to a change in the other components as well.
Critical success factors
The critical success factors of the organization may be described as those factors which
add a competitive advantage to the business model of the organization. The critical success
factors of the company have been given as follows:
Customized client services: The company`s services are not rigid in nature and they do not have
a particular number of packages for the clients (Sinkovics, Sinkovics &Yamin, 2014). Instead,
Gusto believes in offering designated client services to the different companies with varying
needs and demands.
Active channels: The sales force team and the website channel of Gusto are very active in nature.
The company updates its website regularly and this helps the organizations to ensure that they
get premium services.

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Downside risks
The downside risks can be described as those risks which can take place in an
organization as a result of certain outside factors. The downside risks as face by Gusto, the HR
agency are as follows:
1. Change in legislatives- The labor laws as managed by the government tend to undergo a
change continuously. Hence, the company might have certain level of disruptions faced
in their operations when they are abiding by the new set of laws as prescribed by the
organization (Rayna & Striukova, 2016). Hence, the company needs to ensure all services
are managed as per the law.
2. Failure of client commitment: Very often the client may fail to provide adequate
information to the company which may then lead to false operations and transactions
which may tamper the name of the organization.
Business model changes
After analyzing the deconstruction of the business canvas model of the Gusto Company
which is involved in the human resource and pay roll services, the following changes to the
business model can be recommended:
The key activities of the organization can be increased. In this aspect, the company can
start offering the different clients recruitment opportunities as well. Providing recruitment
opportunities would then assist the firm in making adequate decisions.
The customer relationships aspect can be increased by inculcating in social media
activities.

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III. Conclusion
Therefore, from the given analysis it can be stated that the business model canvas forms
an integral part of an organization and needs to be analyzed well in order to understand the
different requirements of the business and its competitive edge. The deconstruction of the
business canvas model of Gusto reflected that the organization has been performing considerably
well. However, it still has scope to improve.
IV. Recommendations:
The following recommendations may be given for the company:
 Improvement in the customer relations aspect
 Increase in the number of services as provided by the company.

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V. References
Carayannis, E. G., Sindakis, S., & Walter, C. (2015). Business model innovation as lever of
organizational sustainability. The Journal of Technology Transfer, 40(1), 85-104.
DaSilva, C. M., & Trkman, P. (2014). Business model: What it is and what it is not. Long range
planning, 47(6), 379-389. DOI: https://doi.org/10.1016/j.lrp.2013.08.004
Dudin, M., Kucuri, G., Fedorova, I., Dzusova, S., & Namitulina, A. (2015). The innovative
business model canvas in the system of effective budgeting.
Gusto. (2018). Retrieved from https://gusto.com/about/
Hong, Y. C., & Fauvel, C. (2013). Criticisms, variations and experiences with business model
canvas.
Kiel, I. H. (2014). Entrepreneurial marketing. Pearson Education.
Matusiak, B. E. (2016). Local balancing system from the business model canvas perspective.
In E3S Web of Conferences (Vol. 10, p. 00055). EDP Sciences.
Maurya, A. (2017). Why Lean Canvas vs Business Model Canvas? LeanStack. 2017.
Mentink, B. (2014). Circular business model innovation: a process framework and a tool for
business model innovation in a circular economy.
Rayna, T., & Striukova, L. (2016). 360° Business Model Innovation: Toward an Integrated View
of Business Model Innovation: An integrated, value-based view of a business model can
provide insight into potential areas for business model innovation. Research-Technology
Management, 59(3), 21-28.

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Sinkovics, N., Sinkovics, R. R., &Yamin, M. (2014). The role of social value creation in
business model formulation at the bottom of the pyramid–implications for
MNEs?. International Business Review, 23(4), 692-707. DOI:
https://doi.org/10.1016/j.ibusrev.2013.12.004
Zott, C., Amit, R., & Massa, L. (2011, July). The Business Model: Recent Developments and
Future Research. Journal of Management, 37(4), 1019-104. DOI:
10.1177/0149206311406265

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VI. Appendices
Appendix 1: Business Canvas Model of Gusto HR Company
Key Partners
Software vendors
Enterprise social
platforms
Core and network
Payment Gateway
Key Activities
HR Tools
Payrolls
Benefits
Value
Proposition
Improving
employee
retention
Providing the
different
employees
ownership in
the business
strategy
Building
congruency
between
product and
strategy
Customer
Relationships
Key account
management
Customized
services based
on needs
Customer
Segments
Companies
HR Decision
makers
Key Resources
Software teams
Research specialists
Payroll manager
HR Talent
Channels
Website
Sales force
Cost Structure
Fixed cost :Payroll, marketing and sales
Revenue Streams

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Variable :Customer acquisition and talent
acquisition
Commission
Onetime fee services
Subscription fees