2.7. Lean Canvas

Have you ever been in a situation when an incredible, wonderful, one-of-a-kind idea comes into your head while in bed and you are so tired or lazy to get up and write it down, and in the morning you feel wretched or completely heartbroken because you have forgot what you were thinking of? There are so many things happening throughout the day that we actually can’t trust our minds to remember everything. Ideas and inspiration come and go; therefore, it is advisable to record everything that might be important to you. The same rule is applied to business ideas. Before immediately starting to develop products or services, try putting everything on paper to see the situation from a different angle.

What is Lean Canvas?

Compared to long and tedious business model plans, Lean Canvas is a simplified version adapted especially for startups that requires to break down your ideas into the most important elements of your business. It’s a 1-page template that consists of 9 blocks to be filled in.

9 Blocks — 9 Key Elements

Problem. This block concerns customers’ problems that your product or services are to solve. Is there a problem? What problem does your product solve? It should be noted that if there’s no problem — there’s no project. If there’s no problem — there’s no product or service to offer.

Solution. All the problems listed in the previously mentioned block should have corresponding solution. What is the solution to the problem? Is it a website? Is it an app? Is it something else? You should know what kind of a solution you are to provide to the customer.

Value Proposition. It is also called the unique selling proposition. What is your mafia offer? Why should a customer buy from you? What is your unique best selling point? You have to describe the exceptionality of your product so that the customers feel convinced that they really need and want it. On the other hand, if you don’t have the mafia offer or the best selling point, don’t get upset, because now at least you know that you must work on this matter to find it.

Hidden Advantage. What advantage do you have that your competitors don’t? Sometimes it could be a patent. Sometimes you may have some unique technologies that are hard for the competitors to copy. Think about something that no one has and is not able to copy or buy. The following will provide you some extra points that will help you win among other business persons.

Customer Segments. The question is who are the ideal customers for your product? Some startups, especially the ones who offer food delivery, wrongly believe that their customer segment is people of all ages, genders, financial backgrounds, etc. But in real life their customers are people who earn more than average, who live in the center, who work daily and don’t have time to prepare food as they are constantly busy, etc. Accordingly, not everyone needs your product and it’s necessary to narrow down the customer segment and make it more specific. If your segment is specific, then it’s very easy to advertise for that and it’s very easy to focus on it and get result. When you focus on everybody — you are in big trouble!

Channels. What channels do you use to attract clients? Sometime before, let's say 20 years ago, you could go to an investor and say: "Hi. We need money for advertisement", and the investor would give you a $200 just on advertise. Now, times have changed and even the most exceptional and unique product on the market can fail if the clients are not going to be aware of it. Accordingly, use all possible and impossible means to reach out to your potential customers that you have described in the customer segment block.

Key Metrics. What indicators determine the growth of your business? What are your indicators? What is your key performance indicator? Is it possible to build unit economics in your niche? What are your key metrics? What is your North Star Metric? Which metrics determine your growth? How do you measure that you grow? Regardless of the direction of your startup, you need to ponder upon the questions provided and identify metrics (usually 1 or 2) that will help track and measure your progress.

Cost Structure. What does your business spend money on in order to grow? How much does your growth cost? What do you need to spend money on to get growth? As you know, for startups growth is the main and only focus, as no growth — no money. It is necessary to include all costs involved.

Revenue Streams. What brings revenue in your business? How will you earn? Usually, startups believe that they will use all possible sources of income, but as a matter of fact 1 main business model can provide you with 80 or 90% of money. Accordingly, you need to find that source and focus on it.

So, Do We Need Lean Canvas?

Yes. No doubt in that. Lean Canvas allows businesses to prepare a simplified plan for the future, get the overall picture of the situation, and acquire a better understanding of their weak and strong sides. It is an undeniably useful tool to plan one’s steps ahead and verify the product idea before spending a lot of money, time and efforts. Moreover, even after completing all structural units of the canvas, you can continue working with it by updating necessary information after you receive some feedback from your customers. Don't forget that when you fill the canvas for the first time, it is only your opinions or ideas, but once your company begins to grow, you fill it in with facts or proofs.

To Sum Everything Up...

It is important to get ideas out of one’s head, first of all, because they become real. It sounds and looks different when it’s in your head, while putting everything on paper allows to see the overall picture. Taking some ideas and writing them down can actually make one see if there are some flaws or loose ends in your business model or even inspire the appearance of more ideas.