- On June 2, 2020
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A mentors once said, “people will pay you more as long as you offer a solution that makes them lazier”. No one wants to get bored reading a 30-page business plan when the entire business strategy can fit into a page.
Hence, I recommend that you create a simple dynamic business plan using a lean canvas—a one-page business plan template you can create in just a few minutes and update as frequently as you desire. This will help you greatly in dealing with high risks and challenges. An early proponent of this new model is Ash Maurya in his book Scaling lean.
Rather than “just start with something” outreach usually predominant in the new wave of entrepreneur, the primary aim of the Lean Canvas model is to avoid developing products nobody wants to use — sometimes a well-fleshed-out idea could come up very empty or scanty when put down on paper.
A lean canvas can significantly improve your business—it’s fast, simple, shareable, very easy to understand and update.
Don’t get confused about the numbering—it only shows the ideal order of the nine blocks to build an awesome business plan. However, you can move the blocks around however it suits you.
I will briefly discuss this.
Tobi, a friend and colleague once said to me, “our greatest problem as businessmen is that often, we create the product before we find the market”. I couldn’t but agree! First, you need to know who you wish to sell your product or service to. It is from this pool that you’ll find those who will be willing to pay.
Providing a lasting solution entails understanding existing problems. Being a very straightforward business model, on the Lean Canvas, you can only specify the top three problems of your customer segment. Ensure to be very specific and avoid ambiguity or vagueness.
As advised by the creator of Lean Canvas, you should use value-based pricing instead of cost-based pricing to define your revenue. Instead of calculating cost plus percentage margin as revenue, you calculate your margin by asking yourself how much will you be willing to pay for the value you’re offering.
Since you’ve already identified and outlined the problems, the next block as found on the Canvas is to create solutions. The solutions thus created becomes the products or services of your new venture. You can either create a solution for each problem or create one solution that solves all the problem.
#5. Unique Value Offer
First, you identified your market (customers), outlined opportunities (problems), and created value (solutions), it’s time to put forward a message that captivates the attention of your market. Therefore, your unique value offer is a simple, clear and compelling message that makes a visitor interested in your product or service. This becomes your tagline, catchphrase or slogan.
Channels are your route to market. They are various mediums to reach your customers—else you can have the most awesome product or service but as long as it can’t get to your customers and it’s not readily available, your venture will be a whopping failure. These channels can either be online and offline. Examples include email lists, referrals, social media platforms, retail outlets, content marketing, ad services, and events any form of gathering that brings your target market together.
One of the beautiful features of the Lean Canvas model is continuous testing and evaluation which is only possible when you define some performance measure—which we refer to as metrics. You could start by identifying one thing that will indicate success or failure. Metrics are usually numbers that helps you measure progress. Start with something simple and measurable, such as measuring weekly or monthly revenue and define the smallest outcome you can accept as a success which will serve as your benchmark.
Highlight all your costs—fixed and recurrent costs. Fixed costs are all one-off costs while recurrent costs are costs that are repeated. Some costs include software and hardware costs, subscription, office rent, web hosting services, diesel/fuel cost and others.
#9. Unique Advantage
Lastly, what is that thing you are bringing to the table that no one else has seen before? The answer to this question becomes your unique advantage, unfair advantage, competitive advantage or barriers to entry. Think of this as the extra powers, the super power that gives you the extra boost, such as ease of service, self-service, home delivery, speed or user-friendly environment. According to Ash Maurya, it’s much better to have a blank box than to list weak some unfair advantage just to complete the task.
As amazing as the Lean Canvas is, it is not enough to replace a business plan. However, it is a clear road-map to tackling businesses uncertainties and challenges.
The Lean Canvas is not cast in stone but it is a very dynamic document that changes regularly over time. It must be consistently updated upon on continuous testing and innovation.
Designing a business plan or strategy using this Lean Canvas is like squeezing the juice out of the fruit. It will help you better suited for a fast-changing and highly competitive market.