Compared to writing a business plan, which can take several weeks or months, you can outline multiple business models on a canvas in one afternoon. Because creating these one-page business models takes so little time, I recommend spending a little additional time up front, brainstorming possible variations to your model and then prioritizing where to start.
We live in a short attention span world. If you are starting a new business, you need to be able to explain your business in less than a minute, and catch the attention of web visitors in less than ten seconds. Lean Canvas is the tool to help you accomplish this.
Lean Canvas is similar to the Business Model Canvas, but with some changes that focus on problems and their solutions, making it better suited for entrepreneurs or existing companies that are planning to do something radically new or very different.
Lean Canvas vs. A Business Plan
Business plans take a long time to write, and result in a thick document rarely read by more than a few people. Updating a business plan is an arduous task. For an entrepreneur facing a fast changing environment, the effort required is not practical. What is needed is a one-page document that includes the key information an investor needs, and that can be easily be updated, similar to an executive summary. That document is called a Lean Canvas.
A Lean Canvas uses a one-page template that can be completed in less than 30 minutes. The objective is to distill the essence of your idea or product down to just the essentials—the key information showing why it will be a success. In other words, a Lean Canvas immediately gets to the important points – no fluff.
Because a Lean Canvas is a single page, it is not overwhelming and will be read. The result is that your Lean Canvas gets greater attention and wider distribution than a traditional business plan.
The Lean Canvas Template
A Lean Canvas is a visual chart on an 8-1/2” x 11” sheet of paper, with boxes for describing the value proposition, resources needed, customers, and the financial aspects of the idea.
By including the key information on a single page, the Lean Canvas concisely provides investors with the information they need, and helps entrepreneurs to identify trade-offs, and align their activities to support a successful launch of their new venture.
A typical Lean Canvas template has nine boxes. The boxes are sized to limit the amount of information they can hold, forcing what is written to be concise and to the point. Only the most important information is placed on the Lean Canvas.
Filling in the Lean Canvas usually starts with an opportunity, which is typically a problem in need of a solution. The information in the “activities” box describes how the problem will be solved, with the balance of the Lean Canvas used to evaluate the costs, anticipated revenue, and the potential for success.
When filling in a Lean Canvas take a customer-centered approach. A customer is someone who is willing to pay for your product. Without customers you have nothing. So look at your product from the customer's viewpoint.
Let’s look at the information that goes in each of these boxes.
Filling in the Lean Canvas Template
As you work on your Lean Canvas it is okay to leave boxes blank. Put information on the Lean Canvas as you think of it, in any order. Keep in mind that you can change anything you write. For instance, as you get better insights into your potential customers, and the competition, you'll probably want to make changes to your Lean Canvas.
You may also want to make several Lean Canvases. For example, a different Lean Canvas might be created to address a different market, or variations in the proposed product. Because they are quick to make, multiple Lean Canvases can be used to compare various “business plans” or scenarios.
- Lean Canvas – Opportunity
Begin by defining the problem by describing it in the “Opportunity” box. How do you know it is a problem (including measurable metrics), and who does the problem impact the most?
- Lean Canvas – Activities
Describe your solution (your product) to the problem. What are the resources that will be needed, such as financial, manufacturing, intellectual property, human, and marketing resources?
- Lean Canvas – Key Metrics
These are metrics that will be used to measure success (or failure) of your solution. Examples would be revenue growth, financial sustainability, customer retention, market share, and the level of activity on a web site.
- Lean Canvas – Unique Value Position
Why is your solution different from the existing options customers already have? Why will customers be willing to switch from their existing suppliers to buy from you?
- Lean Canvas – Unfair Advantage
To be successful there should be a unique advantage. This is something only you offer. If you make a product ask yourself, “Can someone in China copy what we are doing and sell it for one-quarter of the price?”
- Lean Canvas – Channels
How will customers learn about your product? Possibilities include placing articles in trade publications, using social media, and exhibiting at trade shows. This box should also identify the channels you want to avoid. For example, you may not want to use Adwords because of its high cost.
- Lean Canvas – Customer Segments
Who is going to buy your product? Who are your potential customers? What is your target market?
- Lean Canvas – Cost Structure
What are the factors that contribute to your costs? This may include marketing costs (customer acquisition), engineering/development costs, sales and distribution costs, licensing costs, and manufacturing costs.
- Lean Canvas – Revenue Stream
How will you make money from the product or service? For example, will it be priced higher than the competition? Will be sold as a subscription? Or will it be given away to drive sales of another product?
Lean Canvas – An Effective Tool
Lean Canvas is a simple, yet sophisticated tool that provides an overview of a proposed new business or product. Unlike a business plan which can take months to write, Lean Canvas produces a useful summary in less than 30 minutes; is easy to update; and it actually gets read. This makes Lean Canvas the tool to use when evaluating a new venture.