It is a great challenge for every entrepreneur to put a business idea or business model down on paper. Even before launching a new business, founders need to summarize their vision in a tangible format. This helps them to get a more precise idea of their project. This also makes it easier to communicate the project plan to other people involved – for example, business partners or investors.
The problem: In the past, a founder had to draw up a detailed business plan project for this. This could take several weeks if not months. The time that could be used much more productively elsewhere.
The Lean Canvas method and the corresponding model are intended to remedy this. In this article, we will show you how to work with Lean Canvas. Also at the bottom is a link to a printable Lean Canvas template.
Lean Canvas: definition, origin, and principle
Entrepreneur and author Ash Maurya first introduced the Lean Canvas principle in 2010. The model is based on the Business Model Canvas, which Alexander Osterwalder developed in 2008 and is now used in various sectors of the economy.
Ash Maurya is the author of the book “Running Lean” and is himself a founder and CEO of Leanstack – a company that helps young startups in their early stages with various tools and courses. His relatively new approach is no longer only used in startups, but now also in many established companies, universities, and other organizations.
Lean Canvas is a business plan project that fits on a single page. Here, companies or startups clearly present their business models, new product launches, campaigns, etc.
The purpose is also to deconstruct one’s idea and think about the most important aspects and elements of a new venture. At the same time, the business idea can be fleshed out.
A Lean Canvas is divided into the following nine thematic blocks:
1. Problem
2. Solution
3. Unique Value Proposition
4. Unfair Advantage
5. Customer segments
6. Key metrics
7. Channels
8. Cost structure
9. Income source(s)
With Lean Canvas, the first ideas for the different areas should manifest themselves after about 20 minutes. You may have already thought about these segments in advance without structuring, verbalizing, and writing them down. Lean Canvas should support you in this. But don’t rush yourself if you can’t write down all the information right away.
Plan project problem
An entrepreneur should understand the problems of his potential customers. In this area, you list the most important difficulties of your target group for which you want to offer a solution.
Solution
What is the solution to the questions and problems of your customers? In this area, formulate the answers or corresponding approaches that you offer. The field is also a very important part of the business plan.
These solutions probably won’t come easy to you. However, you deal specifically with how you can satisfy the needs of your customer segments or target group(s).
Unique Value Proposition
This field represents the central focus of the Lean Canvas. This is your service or a product idea. So at this point, you can define what unique value your offer has.
Unfair Advantage/Unique Selling Proposition
Your unique selling proposition distinguishes you from your competitors. So your competition can’t copy or buy it. It can be difficult to identify this one or even more characteristics. However, it is worth taking some time to think about how you have an advantage over other companies in your field of activity.
Customer segments
To see what problems your customers are having, you need to understand them. So think about what your audience looks like, where they are from and live, how old they are, etc.
Key metrics
This field is all about identifying important activities and metrics of your business that you need to monitor later. This way you can see how people are interacting with your company, product, or service.
Channels
Think about which channels you can and want to use to reach your customers. So it’s all about the marketing of your new business.
Marketing can be done over the internet, for example using a company website, a search engine-optimized company blog, or social media. Classics such as TV, print, or radio advertising can also be part of your marketing mix.
Cost structure
In this field, you represent the costs that arise from the production of your product or the operation of your service. These include costs for personnel, technology, marketing measures, market research, etc.
Make a list of your one-time and recurring costs. With this, you can estimate how many customers you need to cover these financial expenses and generate profits.
Income source(s)
Ask yourself how you want to generate revenue and what prices you want to charge for your product or service. Calculating the price is a crucial part of your Lean Canvas. On the one hand, you have to consider how much time, work, and possibly raw materials you put into your offer. On the other hand, you have to estimate how much your customers are theoretically willing to pay for it. You also have to calculate how high the price has to be for you to make a profit.
Lean Canvas vs. Business Model Canvas – a comparison
The lean canvas model and the business model canvas both aim at lean corporate planning. Accordingly, there are some similarities, but also significant differences.
As with the Lean Canvas, the Business Model Canvas has the areas “Customer Segments”, “Channels”, “Income Sources” and “Cost Structure”.
However, the Business Model Canvas offers the following fields that cannot be found in the Lean Canvas:
- Key partners (e.g. suppliers)
- business relationships
- key resources
- key activities
Ash Maurya assumes that his Lean Canvas will only lead to success if entrepreneurs identify the factors that are most risky for them. So he removed some fields that didn’t seem relevant enough to him. He replaced them with the Problem, Solution, Key Metrics, and Unfair Advantage sections.
In his eyes, fields like “key activities” and “key resources” are more likely to help other people understand the business model. Maurya, on the other hand, wanted to focus on helping entrepreneurs understand and formulate their own business idea.
He also assumes that the “Channels” field already covers the business relationships and that a separate field for this is therefore no longer necessary. The same applies to the key activities box, the contents of which are already defined in the cost structure and channels fields.
The new structure should make it easier to identify problems and find solutions for potential customers. At the same time, Maurya didn’t want to give the founders too much space and freedom so that they don’t get bogged down in the details. These are not all that important in the first phase of the foundation and can be added later.
Conclusion: Lean Canvas for the planning of the project
The lean canvas model is used to substantiate a still rough business idea or a business model that is not yet fully developed. Founders can use such a plan project to present their company to potential business partners or shareholders, for example.
Above all, the nine fields of the Lean Canvas should help young entrepreneurs to organize their thoughts about their own businesses and to work them out more precisely. It also motivates start-up founders to ask important questions about their customers and the company’s risks, define key indicators, and consider which solutions they can offer.
So if you have the goal of getting a startup off the ground, filling out a Lean Canvas early on is very worthwhile. This increases the chances of success for a new service or product idea, without all factors having to be set in stone, as is the case with a business plan.