B-Plan in 20 mins using Lean Canvas
7 Section Roadmap for your startup
Let me guess, you have an Idea, you have found your team members, but you’re stuck on what to do next? Well, congratulations you have completed 20% of your work, but 80% still remains a mystery!
Ever heard about Lean canvas? No, no, it has nothing to do with your painting skills(pun intended). Putting it in simple words, it is a tool or a template using which you can disentangle your idea of a start-up and get a better insight in you business model.
The lean canvas, originally developed by Ash Maurya, is an adaptation of Alex Osterwalder’s Business Model Canvas optimized for lean Start-ups.
Yes, that’s a lean canvas. Pretty lean, isn’t it?
The lean canvas’s key fundamental is the elimination of unwanted efforts, including time, process, presentation, etc. A well-researched business plan is unquestionably necessary, but it is required only at a particular stage.
As Steve blank quotes,
“Business plan: a document investors make you write, that they don’t read.”
If you are a startup, you need to be efficient and fast in every way. Be it understanding the idea that is twisting your mind or explaining it to a potential investor.
It uses a canvas containing seven blocks adapted to a startup’s requirements, everything on a single page. It helps you brainstorm a possible business idea, a new product, or a service. Gliding you through every question that may arise.
Now, let us get into understanding one by one each elements of a lean canvas. The features are in order as to be followed, and elements that are numbered similarly in the picture are interrelated.
- PROBLEM
The customer audience that you are planning to target will undoubtedly have a set of problems. Identify and list the top 3 issues that your targeted audience might have.
The Key Takeaway here is that think of the problem from the Customer’s perspective rather than a Business Idea. It’ll help you while formulating the solution.
2. CUSTOMER SEGMENTS
You need to identify who your customer segment might be. They can be based on various factors like age, race, religion, gender, family size, ethnicity, income, education level, social class, lifestyle and personality characteristics, etc. Generally, problem and customer segments are interrelated.
3) UNIQUE VALUE PROPOSITION
UVP is at the center, and it is a clear statement of what benefits you are offering to your customer segments that your competitors aren’t. It is also a proposition as to why your customer should buy your product or service.
4) SOLUTION
Finding a solution to your problem is a real brainer. It is the key to success in business, especially for a startup. But to find a solution, you need to interact with your customer segments. So, get out in the market and meet your customers as learning is a never-ending process.
5) CHANNELS
A channel is a medium through which you will reach your customers. Remember a channel is two ways and should be of such type that your potential customers should learn about you and your products, and you should also learn about your customers. Channels can be E-mail, social media, CPC ads, blogs, articles, trade shows, radio & TV, webinars, etc.
6) REVENUE STREAMS
A revenue stream is a source from which your company is going to generate its revenue. It can be recurring revenue, transaction-based revenue, project revenue, or service revenue. Say, for example, a revenue stream for an OTT platform is the subscription fees its users will pay at regular intervals.
7) COST STRUCTURE
The cost structure refers to the numerous types of expenses your startup is going to incur. Daily operations cost, marketing cost, land cost, etc. which are typically fixed or variable. You can use this cost structure and revenue streams to decide on the value of your product.
8) KEY METRICS
Key metrics are used in any business to measure performance. It is also known as a performance indicator. It evaluates the success of an organization or of a particular activity (such as projects, programs, products, and other initiatives) in which it engages. They do not have a monetary value, but they do contribute to the company’s profitability.
9) UNFAIR ADVANTAGE
Unfair advantage is something that you possess, which your competition cannot copy or buy. It is hard to come up with, but it is imperative when you go looking for investors or partners. It can be anything from passion, intellect, experience to patients, network, etc.
You have got an idea about what a lean canvas is. Now let us move forward by understanding it with an example.
The lean canvas shown above is of amazon when it started as an online bookstore back in 1994.
Jeff Bezos would have primarily noted down the problems faced by his customer segment in the problems section. Which here is a lack of online book stores and the lack of recommendations and reviews in the existing offline bookstores.
After recognizing problems, Bezos would have moved to step 2, which is identifying the customer segment. Of course, they were book readers and the people who were searching for a specific book or the people who wanted to sell their writings.
Later, Bezos would move on to identifying his UVP, that is what unique his business was going to provide to his customer segment. In this case, it was buying the book that you want to read from your home’s comfort through your PC. Later, a solution had to be found, which was building an online book store with millions of book titles.
After discovering a solution, a channel had to be recognized to communicate with his customer segment — following which a revenue stream and cost structure is identified. Of course, the revenue stream here is direct selling of the books. And the cost structure, which in simple terms, are the expenses that will incur. Daily operations cost, marketing cost, land cost, etc. which are typically fixed or variable.
Key metrics are identified later in the process, which plays a vital role in any organization. Here for Bezos, it would have been website traffic, COCs, and ROIs. They indicate how efficient a business is and where is the scope for improvement.
The last part is of unfair advantage. It is a part where Bezos would have identified his business’s uniqueness, which his competitors cannot copy or buy. For Amazon, there was very little or no competition back in 1994, but the real deal was the lower cost of operation. The benefit of which he was able to pass on to customers as huge discounts. Plus, millions of books that were available to his customer segment at one single point.
As an entrepreneur, you need to be fast, reliable, accurate, and lucid when envisioning your business model. That is where lean canvas comes to your aid. It provides you with a definite structure and cognizance concerning your model while providing a path for your thoughts to flow in the right direction.
Conventional and complex business models can be formulated later in your business when you are expanding, looking for partners, or an investor.
Concluding, I hope you liked this information on the lean canvas.
And thanking Ash Maurya for making our lives easier.
