A lean canvas is used to create a 1 page business model which is used to replace elaborate business plans in lean startups.
Business plans can be very important , however, In the early days of a start up business, business plans are not so useful, they take very long to write and and are difficult to apply at an early stage in business. The lean canvas was developed by Ash Maurya, it is an adaptation of the business model canvas created by Alex Osterwalder.
Here are 5 reasons to set up a business with a lean canvas.
- It helps you easily translate the business ideas in your head into business solutions that’s relatable.
- With a lean canvas, you become more efficient with maximizing the limited resources available to you especially in the early days of business thus eliminating waste of resources – time, capital, energy, man power…..
- The lean canvas simplifies the process of structuring a startup business.
- It keeps entrepreneurs focused on getting the right products infront of the right audience to earn income.
- It concentrates on general factors that cause that cause starts to fail; such as risks and uncertainty.
A business model can be developed in less than 1 hour using a lean canvas, it originally has 9 segments which can also be tweaked to suit the requirement of any lean startup.
Photo credit : www.celebritypix.us
Above is an original template for the Lean canvas , It has 9 segments
- Problem – Before filling this segment, consider problems people within your customer segment have that need solving. Prioritize and list the top 3 problems that this segment has . This will make it easier to create a solution that fits your target audience (customer segment).
- Customer Segment – Identify your target audience so you are able to look closely into the problems they might have which your business intends to tackle.
- Unique Value Proposition – This has to do with the main reason people in your target audience will want to buy from you as well as the value you intend to deliver ( or deliver) to them. Learn about creating useful unique value proposition
- Solution – You will not get a solution that immediately fits your audience on first attempt and that’s the whole idea of starting small; Continuous research of the customer segment is crucial to finding a solution that fits their problem. Interview people within your target audience , take the feedback you get from them and work that into the business . Research your target audience and Create solutions with value.
- Channels – This is how you intend to reach your target audience (customer segment). It is an opportunity to learn learn about your target audience and what they like (especially in the early days of business). Think of channels where people in your target audience are ; the ones that allow you reach them and learn from (and about) – social media, e-mails, websites….
- Revenue Streams – This is how the business intends to make money; Businesses can have multiple streams of income. This is an important aspect of business as the survival of the business is largely dependent on this.
- Cost Structure – This can be used to roughly estimate when the business might break even . Make a list of operational costs required to bring the business to market. This varies depending on the business you are in; it can include cost of reaching target audience,, setting up a store (online/offline), monthly running costs, burn rate….
- Key Metrics – This involves the relevant metrics required to measure and monitor the performance of a business. It is vital to assign the right key metrics to represent how well a business is performing at every point in time.
- Unfair Advantage – This is an advantage you have over your competitors that can’t be acquired or easily replicated. An unfair advantage can give a business an edge in the market place especially when scouting for investors or partners. You might not initially have an unfair advantage in business but its best you work at securing one.
A lean canvas is very easy to work with especially for early businesses. After tweaking and improving on a lean canvas model, it can be used to develop a working business model in the growth phase of the business.
If you have a business idea for a lean start up and need to bring the idea to life, feel free to start with a lean canvas and work your way up.