Lean Model Canvas: Actually F***ing Use It
When thinking about business finances in creating a startup, it’s important to start with a lean model canvas. A lean model canvas (LMC) is essentially a one page business plan. It consists of nine sections and asks you to answer critical business questions, which can help clarify what your business does, and who it helps.
A LMC let’s you understand your business’ cash flow. Understanding customer segments lets you know who to keep in mind when designing your product and understand how much they would be willing to pay. Understanding cost structure lets you know how much money you need to spend to stay afloat, and how long you will be able to stay afloat. These metrics are important because they can set how fast you need to work to create a profit.
The LMC will also help clarify where your business is creating value, and where it is capturing value. Creating value falls under your unique value proposition and unfair advantage. What do you have which other people will pay for, and other companies cannot create? How can you create something with value for others? Capturing value deals with your channels and revenue streams. How can you access and communicate your target demographic? How do they pay you, and who pays you?
Finally, your LMC should be a living document, and this was my greatest mistake when working on Growthfolio. The act of creating a LMC is not a one and done process. As your venture changes over time, the LMC needs to be revisited, updated, and reevaluated. Each time, use your LMC as a tool to clarify your thoughts and current business position.
Personally, one of the mistakes I made was not referencing my LMC and losing a clear vision. It’s easy to get caught up in the details of work and miss out on what the overall goal is, which can eventually lead to stagnation and a lack of directed progress.
Take this article for example, about one month ago I wrote this, “Growthfolio helps recent college graduates save money by learning about easy ways to get started in investing money today” and I haven’t looked at it again since today. The result? A lack of focus in publications. There’s definitely been inconsistency in my writing. I’ve gone from writing about taxes and investing pitfalls, to explaining how to use LMC for start-up finance. Definitely time to start following my own advice.
