An entrepreneur grinds every day facing new challenges and taking advantage of the opportunities. One of the biggest challenges he/she faces is having an idea out on papers. You cannot just say I have an idea as an entrepreneur you are answerable to a bunch of people mainly your employees and investors. You need a plan. However, mapping out your idea may take weeks and months. How can you map out your idea quickly and effectively? This is where Lean Canvas comes into the picture.
What are the Lean Canvas?
The Lean Canvas is a simplified one-page business plan. Ash Maurya created this method and it is an adaptation of the Business Canvas Model by Alexander Osterwalder. The Lean Canvas helps you to map out all the essential points of a business idea. It provides a structure to your ideas, making it more concrete. The Lean Canvas model was created for entrepreneurs to help them map out their ideas simply and clearly. It is a time-efficient model as it is the go-to one-page format for brainstorming business ideas.
Understanding the components of Lean Canvas
Lean Canvas has nine blocks that highlight the needs and requirements of a start-up. The blocks create a logical understanding of how an idea would look on paper. Read on to know exactly what the nine blocks are all about:
Problem
What are you bringing to the table? What problems of your customers are you planning to solve? In this block, write the customer issues you plan to address with your idea. Know the top three problems your customer is facing and make a note of it.
Customer Segments
You cannot solve your customers’ problems without knowing who your customers are in the first place. In the customer segment section, write down your target customers. The type of customers you are targeting will help you to think what problems they are probably facing.
Unique Value Proposition
What sets you apart from the rest of the competition? Your USP is your unique value proposition that you are offering to your customers. In this segment, you will write about what unique value your business has to offer. Especially, when they are competitors attempting to solve the same problem as you are. What makes your brand or product stand out? Write about that in this section.
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Everything begins with an idea.
- Earl Nightengale
Solution
After you have found your customer’s problems, look for what solutions do you have to offer. How do you plan to tackle the problems your customers are facing? You may not hit it at your first shot, but at least you have started brainstorming for solutions. One of the best ways to find the solution is by conducting research amongst your targeted customers. Give them surveys and questionnaires to know what they feel and then use those learnings while finding the solution.
Channels
Channels are the medium through which you are going to reach your customer segment. Here you need to brainstorm through what channels can you reach your targeted customers the most. Like if your customer segment is millennial, social media like Instagram, Twitter, and Facebook would be the way to go. Find out the channels used by your customer segment and reach them through it.
Revenue Streams
How is your business plan going to make money? This section addresses where the revenues will come from the plan. Talk about how you are going to price your product/service. Though you may feel as your business is just getting started you should lower the cost or even offer services for free like most start-ups. However, avoid only focusing on getting validated by your customers. Conduct research and work on a price point that will generate revenue and the customer’s will be willing to pay for as well.
Cost Structure
To get your product/service out there in the market, a number of costs are incurred. If you have a website, you need to consider how much building it will cost to get customers on your landing page. At every step of the business, there is a cost involved. To have a rough break-even point, estimated costs and potential revenue streams need to be calculated.
Key Metrics
The only way to know that you are on the right track is to evaluate your business using its key metrics from time-to-time. Every business has different key metrics to keep track of. If you run an e-commerce website, probably the traffic you are attracting would be one of the metrics you would monitor.
Unfair Advantage
As an entrepreneur, while filling the lean canvas, it might be challenging to come with an unfair advantage. What sets you apart from the rest of the competition? Having an unfair advantage helps in attracting investors attention. Your unfair advantage can be anything like your well-equipped team, a loyal customer base, fixed set of clients, insider information, or a cost-effective plan compared to the competitors. Your unfair advantage should be such that it cannot be bought with money or easily copied by a competitor.
How to create a Lean Canvas?
The whole purpose behind creating a Lean Canvas is to get your ideas on paper for you and others to see. It is an alternative to the traditional business plans that are time-consuming and may not offer insights that are often needed. When you are creating your Lean Canvas, you can do it alone or along with your business partner. Basically, take 20 minutes and jot down everything that is in your head in those nine boxes. Some people like to have their Lean Canvas on paper while others prefer to have a PDF version of it. To each its own here, whatever sails your boat.
There are also several tools available online to create your Lean Canvas with the utmost ease. Some entrepreneurs prefer taking a print of their Lean Canvas or writing it on paper and placing it in a place where they can see it every day.
What are the features and benefits of creating a lean canvas?
Lean Canvas being a quick way to formulate business ideas from a business model to a marketing campaign, it has several benefits. It acts as a visual guide and helps to communicate your idea more effectively.
Focused on the entrepreneur
The Lean Canvas model was crafted for entrepreneurs. It is a simple business model which proves to be of great value to any start-up business. It is focused completely on what an entrepreneur is thinking and revolves around him. It helps him/her gain a clear perspective of his/her idea before involving other people.
Saves time
A business idea can take days sometimes even weeks to get on paper. The time one business is preparing an idea, another business may be launched implementing it. Time is more valuable than anything in a business. The Lean Canvas model is time-efficient to bring your idea on papers. It will not take you more than 30 minutes to fill the blocks in your Lean Canvas. Making it one of the most time-efficient brainstorming models.
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The difficulty lies not so much in developing new ideas as in escaping old ones.
- John Maynard Keynes
Helps in mapping an entrepreneur’s mind
The Lean Canvas has been designed to promote clarity in an entrepreneur’s mind. It helps him/her in mapping out everything regarding the business idea that is in his/her mind. Also, the model is so simplified that it can be adopted for different niches, making it handier and more useful.
Has a solution-based approach
The first block of the Lean Canvas is a problem and eventually, the solution is followed. It has a simple approach where it compels a person to think about what problem is their business addressing? How are they going to solve it? The approach is problem-solving and solution-based at the same time. It helps a business to understand the ‘why’ behind their model.
Aids in finding a company’s USP
An entrepreneur thinks hard when he/she is filling the unfair advantage section of the Lean Canvas. Here he/she is compelled to think about the unique value proposition of his/her business model. Along with thinking about what will make him/her stand out, an entrepreneur is also forced to think of how his/her USP cannot be easily copied by any entrepreneur. Finding an edge over the competition that cannot be adopted easily is a game changer to any business.
Easy to understand
The Lean Canvas has nine sections that compel an entrepreneur to think intensely. Also, the boxes have a limited spacing allowing him/her to focus only on the key points of any section. It ensures that the entrepreneur is jotting down things to the point. The Lean Canvas is a crisp and clear model which is quite easy to understand. It helps an entrepreneur gain his own perspective on his idea before showing it to anyone else.
The Lean Canvas is one of several business models available. It’s a quick way to get those ideas out of your head and on to papers. Read our article on the ‘Business Model Canvas’ by Alexander Osterwalder to know about the business model that inspired the Lean Canvas.
