I have a business idea now what? Ok. If that’s the question you’re asking, it means you’ve had that aha moment. A business idea has popped into your head, and it won’t leave you alone. It’s calling to you – telling you to take action. It’s an itch you have to scratch. Great!
But what’s the next step?
The next step is to give your business idea some structure, validate it’s worth pursuing, and start bringing it to life – and one of the best ways to do this is by creating a Lean Canvas.
The Lean Canvas, created by Ash Maurya, is a one-page business model, designed to give start-ups a more agile approach to ideation and planning. However, aside from start-ups, the canvas works great for budding small business owners who want to break-down a business idea.
The thinking behind the Lean Canvas is that business planning and ideation is not static. It’s an iterative process – you make assumptions, validate those assumptions, and then refine your idea as you move forward.
Sound interesting?
Let’s take a closer at how you can use it to develop your business idea.
The Lean Canvas
The canvas consists of 9 sections. Each represents a foundational question that every business owner should ask (and answer) before pulling the trigger on an idea.
Image source: Lean Stack - lean canvasIt takes about 20 minutes to an hour to complete the first draft of your canvas. Once finished, you will have deconstructed your idea into its core assumptions, and you will have a framework to validate it and begin making it a reality. However, keep in mind this will just be the first draft.
When you complete this draft, you will need to perform customer, market, and competitive research to ensure your assumptions are correct. When you get new information and insight through this research, go back to your Lean Canvas and update it.
Ok, now that you know what it is. Let’s look at the different sections of the Lean Canvas. As you can see from the above image that sections of the canvas are small; this is intentional. It forces you to be clear in your thinking and concise in your answers.
Problem
Without a problem to solve, you don’t have a business to start. And you should be able to articulate what that problem is clearly. So, in this box of the Canvas Model, clearly describe the main problems (up to three) that your target audience is facing.
Existing alternatives:
Also list existing alternatives. These are the businesses that are currently serving your target audience and providing solutions to them.
Solution
Now that you have identified and clearly described the main problem (or problems) faced by your audience, the next step is to outline your solutions. Be very specific with your descriptions.
Key Metrics
In this section, write down the key metrics you will use to measure business performance – they differ from business to business:
For example, a restaurant might use monthly sales and weekly reservations as key metrics. An online magazine might use the number of daily visitors and monthly subscribers.
Unfair Advantage
An unfair advantage is something you can bring to the table that your competitors will find hard to copy or replicate. Not every business has an unfair advantage, but having one can help give you a competitive edge.
For example, if your opening an Italian restaurant, having an Italian Chef with a Michelin star would be an unfair advantage. Or if you have a massive budget for marketing and branding when your competitors struggle to pay for a $20 Facebook ad.
Revenue Streams
Think of the different ways (streams) your business will generate revenue and write each one down. For example, the revenue streams for a beauty salon might include – nail treatments, hair styling, facials, and waxing.
If your business provides digital products or services, you might generate revenue from sales of each product or service. Or through a monthly subscription that offers customers access to everything.
In addition to outlining the different revenue streams, add price points and structures for each. This will help you better understand how much sales you have to generate each month to break even and make a profit.
Cost Structure
Here, list all the costs of doing business. I like to break this section into two parts – initial launch costs and ongoing operational costs once you’re up and running.
Dividing costs in this way lets you know how much money you will need to get your business off the ground. And also how much you need to make each month to cover operating costs.
Unique Value Proposition
In the center of the Canvas Model, there is a section for your unique value proposition (UVP). This is a short statement (kind of like an elevator pitch) that outlines the benefit your product or service provides, how you solve your audience’s needs, and what makes you different.
To write a UVP that resonates with your audience, you first have to understand their needs and motivations. You also have to know the strengths and weaknesses of your competitors, and what makes your offering better.
Customer Segments
Your audience is probably not monolithic. More than likely, it will consist of different customer segments. Try a identify up to 4, and describe who they are. For example, a beauty salon will have a mix of younger and older customers; each of them will have different needs and wants.
Channels
Write down the channels you will use to market your business. Will you use traditional marketing channels like radio and print. Or digital channels like social media, SEO (search engine optimization), and influencers. Maybe a mix of both.
Of course, it’s important that invest your resources in the channels that your audience use. There is no point putting effort into marketing your business on Snap Chat when 90% of your customers use Facebook.
Lean Canvas Examples
Let’s take a look at some examples of Lean Canvas templates:
The first example is a re-imagining of how Brin and Page from Google might have used a Lean Canvas. The below image is from a post “Lean Canvas Examples of Multi-Billion Startups” published on the Railsware Blog.
The next example “The Tomato Food Truck Lean Canvas,” was originally published on the Xtensio website – you can actually making a canvas using Xtensio (I am not affiliated with them in any way but they have some great tools).
Last we have a Lean Canvas example originally published on Slide Share – Slide 43 of Lean Canvas Process and Examples.
Putting it all together
So far, we have walked through what the Lean Canvas is, how to write one, and we also looked at some examples. However, to tie it all together, here is an excellent video (with another example) of how you create a Lean Canvas.
Over to you
You started this post asking the question: I have a business idea now what? And now that you know what to do, it’s time to take the next step – break down your idea with a Lean Canvas and start bringing it to life.
Remember this: An idea will always be just that – an idea. For it to become a reality, you have to act upon it. Unfortunately, most people don’t take action! Don’t be one of them!
