Business tools: the lean canvas

Welcome back guys and girls. Today’s article is a follow-up on the previous article (you can find it below).

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This time, we’ll be talking all about the lean canvas. Let’s get into it…

Many of us are familiar with the term ‘’business plan’’. A lean canvas shares many similarities with a business plan with just a few differences. While a business plan is a detailed plan of your business’s future, the lean canvas is much simpler and succinct. Both tools, however, serve the same purpose of creating a road map of your business. A business plan is usually 30 to 50 pages long whereas a lean canvas is literally one page. This does not water down the value of the canvas, if anything, it makes it that much more powerful a tool. Lean canvases are more popular to entrepreneurs and investors due to their concise nature. They are used during pitching sessions, investor meetings and many business competitions. The lean canvas has 9 parts: problem, solution, unique value proposition, unfair advantage, customer segment, key metrics, channels, cost structure and revenue streams. Let’s have a look at each segment.

Customer Segment: a customer is someone that finds the problem you’re solving so big that they would pay for it. A customer is not necessarily a user of your services/products. In other words, the person using your product may not necessarily be the one who pays for it. For instance, Facebook’s customers are marketing companies while its users are the youth. So, be careful to state your customers and not users in this segment. If you’ll have to struggle to convince them to pay for your product, they are likely to be your users not customers.

Problem: simply state the problem in this part. Hold on, there’s a catch. Before you state the problem, really think about it. The secret is to analyze the surface problem until you get to the root problem. This is achieved by asking ‘’why’’ until you can’t ask ‘’why’’ anymore because you already have all the answers to your previous why’s. Think of it as a tree; your surface problem is the top part of the tree and your root problem is its roots. All these parts of the problem should be stated here. For example, ‘’There are few clinical workers because X… Y…Z,’’ X being the surface problem and Z being the root. In this is a sub-segment called the ‘’Current Situation.’’ Here, simply state what your customers are doing to deal with the problem you’re trying to solve.

Unique Value proposition: a value proposition is the value you promise to deliver to your customers should they choose to buy your products/services. It is normally very brief, the length of one short sentence. Make it convincing and catchy, but be careful not to lie or make it unrealistic. It is important to remember that the unique value proposition is meant for your customers, not investors. An example of a great value proposition would be ‘’Hot fresh pizza delivered to your doorstep or it’s free.’’

Solution: here, state the top 3 features/qualities of your product/service that will directly address the challenges you stated in the problem segment.

Channels: this is where you state the ways you’ll use to reach your customers. Make sure you have done your research to determine the most effective marketing strategies that will work for you.

Revenue streams: this is probably the most exciting part of the lean canvas. Simply mention your main sources of revenue from your business. For example, app licensing, profit per tool kit, subscription fees etc…

Cost structure: this segment is somewhat a budget. Simply state the operations that will need funding in order to actualize your business. There is no need to state the exact cost of each operation here.

Key metrics: these are the key numbers that tell you how your business is doing. Key metrics should be easy to measure. Here are a few examples of key metrics: number of subscribers, monthly revenue, number of tool kits sold etc.

Unfair advantage: an unfair advantage refers to something about your business that cannot be copied easily, something that makes your business unique. An example of an unfair advantage would be: secret recipe, dream team, copyright etc.

And there you have it, folks. I highly recommend watching Ash Maurya’s tutorial of the lean canvas if you wish to learn more. Until next time, see ya!

#businestools #leancanvas