How to use the Lean Canvas Model
When someone has a great business idea, one of the most important tasks they can do is to get it down on paper. That said, it can often be difficult to relay thoughts into an easily digestible format that anyone can understand. To make the business idea a success however, it’s imperative to be able to communicate with others; getting the initial idea across in a coherent manner is the first challenge. Old style business plans would take weeks and perhaps even months to create, and although they would be fairly comprehensive, they wouldn’t be easy to comprehend at a glance. What’s more, traditional business plans are seldom updated and rarely read in their entirety by others. Although the finer details are still required a full business plan isn’t the best use of time until the idea has received feedback and been developed further. This is where the Lean Canvas Model comes into play.
What is the Lean Canvas Model?
The Lean Canvas Model is a popular business model used by successful startups worldwide. The model is an adaptation of the Business Model Canvas developed by Alexander Osterwalder. The original Business Model Canvas illustrated a range of planning and marketing strategies for business success in a competitive environment but was then adapted by Ash Maurya to focus on the way the timeline affects a business’s revenue stream. The resulting model is target specific, entrepreneur-focused and actionable for both small and large business ideas. The Lean Canvas Model is a one-page business plan template that helps users to deconstruct their ideas into key assumptions. It focuses on the user answering nine key questions and can be completed in under 20 minutes. The key to Lean methodology is eliminating waste - with this model, users are able to get ideas on paper quickly and effectively.
How to use the Lean Canvas Model
As with the Business Model Canvas, the Lean Canvas Model uses a nine-block concept that has been adapted to suit the needs of a Lean Startup. The one-page design is perfect to enable business ideas to be brainstormed. The blocks are worked through in a logical order starting with the problem the customer is facing through to the unfair advantage of that model against its competitors. The following are the steps, and in turn the blocks, that need to be completed to compile a Lean Canvas Model:
What are the problems that your business idea solves?
A business idea will only have value if it is solving a real problem. Ideally, you need to list at least the top three problems that your idea will solve. The top three will be the strongest frustrations your customers face or conversely their biggest aspirations. Try to be concise in how you describe the problems and use simple language to explain what they are trying to achieve and the obstacle standing in their way. It’s worth also touching on whether it’s already possible to solve these problems as this will outline your current competitors for your idea. If the existing solutions are failing them, then you have the chance to gain a competitive edge and differentiate your value proposition.
Who experiences the problems?
Once you’ve outlined the problems your business idea can solve, it’s time to focus on who it’s solving them for. Customers should always be centric to business ideas and gaining a full understanding of them will help you develop your concept fully. Ask yourself whether they work in specific industries, have particular demographics or specific job roles. Try to ascertain which is your biggest customer segment; this will likely be the group which feels the problem the most and will turn into your first customers.
What will your solution do?
This is where you state your unique value proposition. In simple terms, this is a single sentence that describes your business to your customers. The sentence needs to explain the unique way in which your idea will provide value. This is not an easy task, often writing less is harder than writing more. You’ll need to focus on the key problem, the primary customer segment and the principal benefit along with the unique way in which you’ll deliver it.
How will your idea solve the problem?
Once you’ve outlined what your product or service will do, you need to explain how. This is a non-technical description of the business idea. Again, it’s essential to use concise sentences to describe the customer experience. It can be worth forming a sentence as a reply to each of the problems you outlined in the first block.
How are you going to bring it to market?
Now that you know who your potential customers are, the problem they’re facing, and how you’re going to solve it, you need to work out how you’re going to tell them about it. Your route to market will more than likely consist of two or three primary marketing channels. At this stage, it may be difficult to hone in on the best three, so you can choose to list all of the possible channels and then validate how successful they could be at a later date.
How will your business make money?
It’s great that you’ve found a product or service that solves a real-life problem, but for your business to be a success, it will need to make money. You will need to define whether you are creating a free service funded by advertising, a product with a one-off fee or a service with an ongoing subscription. You don’t necessarily need to add figures at this stage, but you need to define the different ways you’ll charge your customers or earn money from your product or service.
What will it cost to run your business?
You probably won't have exact costs at this stage, but you should be able to list all of the operational tasks needed to take the business to market. This will include an estimate of costs to build landing pages, interview customer segments and carry out market research. The expenses that you include here can be tallied against your potential revenue streams to find an approximate break-even point.
How will you measure success?
No matter what business you're planning to launch, regardless of industry or size, it will need a measurement for success. This measurement is defined by key metrics that are used to monitor performance. You can think of success as a funnel starting with the acquisition of customers, moving to activation, retention, revenue and referral. The AARRR framework is an excellent structure to work to, allowing you to define which customers’ actions you need to track to monitor your business’ performance.
What will be your unfair advantage against your competitors?
This is perhaps the hardest block of the Lean Canvas Model. You need to define what makes your business special. This isn’t the competitive advantage that you hope to have once the business has launched. It is more the unique aspect that makes you different from anyone else, something that isn’t easily replicated or bought. It may be that you have many years of experience in the industry, existing credibility with your potential customers or a broad network of contacts. Be as specific as you can and try your best to define what you have that no-one else can buy.
Tips for Compiling a Winning Canvas
The Lean Canvas Model has been designed to be simple and straightforward, but that doesn’t mean it isn’t challenging. As we’ve touched on, writing succinct sentences that easily sum up our business ideas isn’t an easy task. The following are a few top tips to follow to help you along the way:
Use simple language - you need to write in a way that anyone can understand, even if they have no idea about your business. Avoid technical words and jargon.
Be specific - although you need to keep sentences short, they need to explain the problem. Get straight to the point and make sure every point you make is meaningful.
Make it flow - the canvas model should read almost like a story. Your business idea will help your customers to solve a problem by providing a solution. Your customers will find out about you through specific channels and will be convinced to join because of your value proposition and your unfair advantage. The money you make will cover your costs, and you will track it all using defined metrics.
Think customer first - if you have lots of customer segments with very different problems to solve then consider writing a separate canvas for each of them.
With the Lean Canvas Model, you can put together the first draft of a business plan in just a few short minutes. The simple one-page result will mean that anyone can easily understand your business idea without any prior knowledge of the industry. Do bear in mind that your first draft might not be your winning ticket though. Lean is all about a continual cycle of build, measure and learn all while wasting less time and resources.