Are you starting a new business? This guide will help you implement the Lean Canvas strategy to ensure your new venture gets off on the right foot.
As a new business owner or a beginner entrepreneur, having a framework for your business plan makes writing it easier and your approach very practical.
Implementing the Lean Canvas business plan can clarify your business goals, metrics, value prop, customers, and advantages.
Table of Contents:
- What Is Lean Canvas?
- What Makes Lean Canvas Effective?
- How Do You Apply Lean Canvas To Your Business Plan?
- Final Wrap-Up about Your Lean Canvas Business Plan
What Is Lean Canvas?
Source: Lean Stack
Lean Canvas is a business planning framework that helps you map out and verify your business model.
In other words, it helps you make sure that you're offering something that is profitable, viable, and needed by the market. It also ensures you're mitigating risks with your product or service.
Lean Canvas breaks down your business idea into significant areas, including marketing, revenue, customer segments, and metrics (just to name a few).
The goal is to create educated estimates and then verify those estimates in the marketplace.
Here are the 9 parts of the Lean Canvas business plan:
- Customer Segments
- Problem
- Solution
- Unique Value proposition
- Unfair advantage
- Key metrics
- Channels
- Cost Structure
- Revenue Streams
We'll go over what each section is all about, but first, let's cover why Lean Canvas may be useful for you.
What Makes Lean Canvas Effective?
Lean canvas helps organize the different areas of your business more practically.
All too often, new businesses and beginner entrepreneurs make false assumptions about what their customer segments need OR who those segments are in the first place.
Maybe you're building a creative business and are driven by your passion for it…
As great as this is, structure and research are still needed to ensure your business model is effective for the long term.
Yes, a research component comes with your lean canvas planning but it helps you make better estimates!
This leads to less of a learning curve when brainstorming how you'll grow your business.
Let's now shift gears into what each part of Lean Canvas covers.
How Do You Apply Lean Canvas To Your Business Plan?
1. Customer Segments
Customer segments deal with your ideal customers, the people you want to serve.
It's essential to get as detailed as possible, and you can start by creating customer avatars.
A customer avatar describes a person that represents your ideal customer.
It includes physical and psychological characteristics to help make your marketing message and product more personalized.
And the best part?
The customer segments you create from your avatars can be those you look for to beta test your product or service.
Customer segments and avatars cover:
- Age
- Gender
- Pain Point
- Interests/goals
- Preferences
- Location
- Job title
- Values
- Level of education
Narrowing down your customers increases the chances of winning more business because you're focusing your marketing instead of speaking to everybody.
2. Problem
"Problem" deals with the pain points and customer problems your product or service will solve.
Again, make sure to be specific:
- What problem is it, and why is it a problem?
- How are your customer segments handling their respective problem(s)?
- How are your competitors handling this problem?
So, for instance, let's say a black-owned nail salon is opening up in a neighborhood.
The founder "Michelle" noticed that women 18-65 in the neighborhood deal with the following problems:
- There's no nail salon within 11 miles of the neighborhood
- The somewhat close nail salons don't offer a wide range of nail color palettes.
- The other salons have long waiting times and are disorganized
- There's lots of traffic during the day when commuting to the other salons
Michelle can then include these problems in her Lean Canvas plan to power her solution.
Her business will be in higher demand because she's in a "blue ocean."
Aka, she's the only one solving that specific problem in the neighborhood.
3. Solution
Your solution is how you resolve your customer segments' pain points.
This section should break down what you plan on doing with your product/service:
- What experience are customers going to have with your product/service?
- How does your solution work?
- Why does your solution work?
Mapping out your solution helps you better articulate it to your customers.
You can also create FAQs around your product or service and put them on your website for your visitors.
This is an excellent way for potential customers to educate themselves on your offerings.
4. Unique Value Proposition
Here, you want to write down what makes your product or service unique:
- How are you different from competitors?
- Why should customers choose your solution over others?
A strong example of a unique value proposition is Amazon.
Amazon Prime's next-day delivery made them stand out to consumers compared to eCommerce brands that delivered 1 to 2 weeks.
Your value proposition should be simple to understand, making it easy to convey as a marketing message.
5. Unfair Advantage
Unfair advantage means something unique about your business that makes it difficult for competitors to copy.
Having an edge helps boost your value proposition and makes your business stand out.
Here are a few examples of unfair advantages:
- Being able to cut manufacturing costs of your product without reducing its quality
- Having business connections who can introduce you to your customer segments with ease
- Having brand authority in a niche market
- Insider information
- Having a large network
6. Key Metrics
Tracking metrics helps you follow the growth of your business.
These metrics could include:
- Revenue
- Number of customers
- Number of new customers per month
- Number of leads per month
- Customer lifetime value
- Customer win-rate
CRM (customer relationship management) is a tool you can use to track your numbers better year-round. It's not necessarily required, but it can keep your data organized, customers stored and gives access to marketing channels as your business grows.
And speaking of marketing channels, let's talk about that!
7. Channels
Channels deals with the marketing avenues you'll use to generate customers.
They can include:
- Social media
- Customer referrals
- Word of mouth
- Digital ads
- Email marketing
- Cold Calling
- Partnerships
Some avenues may give you a better ROI (return on investment) than others, so researching the top channels you want to begin with is important.
With more businesses having an online presence, digital avenues should make up a portion of your list.
8. Cost Structure
Cost structure deals with fixed costs (unchanging) and variable costs (changing) of your business:
- Product/service expenses
- Marketing expenses
- Team salaries and payments
- Processing fees
- Monthly rental pricing
- Cost to acquire a customer
Knowing these numbers helps your better track your bottom line and eliminate unnecessary expenses.
9. Revenue Streams
Revenue streams are the different ways your product makes revenue.
- Product/Service
- Partnerships
- Referrals to another business
Identifying the methods of revenue generation can help you narrow down the things to focus on.
For example, a roofing company makes most of its money from installing roofs and a smaller portion from cleaning gutters. Therefore, they should focus on marketing their roofing services to the right segment and add gutter cleaning as an add-on.
Final Wrap-Up about Your Lean Canvas Business Plan
A Lean Canvas business brings organization and direction to your new venture. It's a plan that only takes up one page and can be completed in under an hour.
Best of luck with your business planning and goals!