A Lean Canvas Model or a Business Model Canvas? Many entrepreneurs are met with this crusade before they start deconstructing their startup into one of these two templates.
Whereas a Business Model Canvas could be great for your growth or investment stage, it also takes much time to complete (can be up to a couple of months), and it requires many assets and work to conduct it properly. So, Business Model Canvas or Lean Canvas Models?
The answer is simple: If you’re a startup founder, go with the Lean Canvas Model, and here’s why: the BMC (Business Model Canvas) is too extensive, and like many other things in the startup world - think WOW! Statements, for example - explaining what you do needs to be short and straight to the chase. One sentence more than necessary, and the consequence could be your reader’s loss of interest.
So, what is the Lean Canvas Model?
The Lean Canvas Model is Ash Maurya’s adaptation to the original Business Model Canvas, first introduced by Alex Osterwalder. According to him, it’s “a one-page business planning tool that gets read.”
Maurya’s Lean Canvas solution is to break down your startups’ fundamental whys into a one-page template that can be used for any business type and be read in under 20 minutes. It packs everything you need - and possibly more - in a template that’s easy to read, fill, and update.
It also features a sort of Easter Egg category (the Unfair Advantage), that can be tricky to find, but will give you a competitive edge when explaining why your business is so great to potential investors.
The Lean Canvas Model is ideal for startups, and, as a startup founder, it is crucial that you understand its importance and how to build one for your business. Let’s start by looking at a Lean Canvas Model Template and defining how to fill each category.
There are nine categories or blocks in the Lean Canvas Model Framework. Each needs to be filled out following this particular order:
According to Ash Maurya, arranging the information in this fashion allows you to test each category of your business model, starting from the highest to lowest risk. Also, note that by starting with the Problem category, the Lean Canvas Model gives your business model a customer problem-focus approach, which allows you to build more effective solutions for your customers’ pain points.
How To Fill Your Lean Canvas Model?
#1 Customer Segments And Early Adopters
In order to fill your Lean Canvas Model, Maurya proposes to start by defining your customer segments. Approach this block with your customer’s problem in mind (which is the following block to fill). These two are intrinsically connected. So keep that in mind when completing this part of the template.
Start by asking yourself questions about your business like:
- Who is going to use your product or service?
- Who will benefit from it?
- What are their key demographics?
- What is their pain point?
If you have a multi-sided platform, you will need to create separate Lean Canvas Models for each case: supply and demand.
Identifying your early adopters is crucial because, as the word suggests, they will be your first customers. If you don’t know how to pinpoint your potential early adopters, check out this article.
#2 Problem And Existing Alternatives
What are your customers’ top three pain points? Describe their needs as simple as possible so that anyone can understand them. Avoid technical jargon at all costs.
When thinking about your customers’ problems, think about their existing solutions too. Who is already out there doing something similar to what you offer? How are they solving their customers’ needs? The key here is to conduct market research on your competitors so that you may identify your unique value proposition.
#3 Unique Value Proposition and High-Level Concept
Defining your unique value proposition is the core of the Lean Canvas Model, and it’s also possibly the most challenging step to complete.
To write a great value proposition statement in under 200 characters, think about the benefits that your customers will have received from using your products. So, this step involves going back to the first few steps:
- Understanding your customers’ pain points.
- Understanding the problem you are solving.
- Understanding how your product/services solves that problem and the benefits your customers will get out of it.
Your high-level concept is like your elevator pitch. You’ll need to break down what you do into the shortest, most clear sentence possible so that it can be used for VC pitches, press releases, and all sorts of communications. If your sentence is too long, it means you still don’t have a clear grasp of what you do and what you offer.
#4 Solution
Go back to your customers’ problem and think about how you’re going to solve it. Exactly write your solution so that anyone may understand it.
#5 Channels
You have established that your business solves a real customers’ need, and you know exactly how you’re going to solve that need. Now, you need to select the channels you will sell your product and acquire new customers. Up to 3 channels are right; more can be counterproductive.
#6 Revenue Streams
How are you planning to charge for your services? This block aims to clarify that. Choose your revenue streams of preference.
#7 Cost Structure
Once you finish your business idea validation process, you will have a clear picture of your fixed costs. But if you want to jump ahead, you can start by writing down the expenses you know you have and leaving the minutiae for later.
#8 Key Metrics
Having clear metrics will help you analyze what’s working and what needs adjusting. So, define which metrics you will be tracking. A good example can be measuring the number of purchases, abandoned carts, the number of signups, etcetera.
#9 Unfair Advantage
Last but definitely not least is your unfair advantage. This is the most critical step of the process because it’s what will differentiate you from your competitors. Defining into simple and a few words what makes your business unique and better than your competition is tricky and requires some serious thought. However, once you do, that’s when the good stuff starts happening.
Parting Thoughts
If you are an entrepreneur or startup founder, then you need to go down this rabbit hole. A Lean Canvas will clarify your business model and help you in many stages along the journey - from getting those first customers to investor funding.
However, filling out a Lean Canvas is not enough. It’s actually the first step that will set the way for what comes next: implementation. That’s when it gets hard. Putting everything you researched and know about your business into practice will give you the real insight you need.
So, do you have your Lean Canvas Model ready? If not, it’s time to get started!
