How can you transform your idea into an actual business? Going from idea to business is a challenge and honestly is what differentiates a wantrepreneur from an entrepreneur. One of the first steps for transforming your idea into a business is to be able to articulate your business model. This is where the Lean Canvas comes into play. The Lean Canvas is derived from the Business Model Canvas. The Lean Canvas is a 1-page business plan template created by Ash Maurya that helps you deconstruct your idea into its key assumptions. I use the Lean Canvas in two ways: the first one is to help me answer questions and see things that I don’t know or understand yet; the second way is to be able to put in writing my assumptions so I can communicate them with my team and/or test them down the road. Below I’ll go into more detail about how to use this tool to your advantage.
Know what you don’t know
I believe that what kills businesses is not knowing what they don’t know. How can that be? Simple. If you’re preparing to launch a business and know that your competitors are spending $200 per day in your target market, you may be prepared to invest $300 per day until you get enough traction. However, if you are not aware of that fact and do not invest enough, you will not see any traction on your new product and your business may perish. In my experience, when I’m thinking about a business and I don’t have enough background information on that industry, while filling out the Lean Canvas I get several questions that I cannot answer. Answering these questions is going to be crucial if I want to have a successful business. Once I can answer all my questions, I am going to be able to articulate the plan to future stakeholders.
Prevent Business Failure
Your business will fail if any of the following is true: you have a great product that no one wants to buy (no clear customer segment), you have a product that addresses a problem but doesn’t fix it (badly articulated problem), and/or you have a product that solves a problem and people want to buy but can’t articulate the benefits to the customer (value proposition). The Lean Canvas allows you to articulate, identify, test, and change these questions upfront before investing a penny into the business. When I was teaching entrepreneurship, most people could easily answer the solution box on the Lean Canvas but had a really hard time explaining the problem, identifying the customer segment, and articulating the value proposition. Answering these three boxes, I consider, are the most important part of the Lean Canvas.
As a side note, a customer is someone that pays money for a product, not someone that likes a product. There’s a big difference!
Articulate Your Mission
Having a clear compelling vision is going to be key to your success. You will need to sell your idea to future team members, investors, and (of course) customers. Having answers to all possible questions will allow you to be confident about your idea but, more importantly, show others that you have thought about everything and allow them to believe in your vision with the same passion that you do.
The Lean Canvas helps you articulate your mission. After filling out the Lean Canvas, you will realize that you can see who your customers are, what problem they have, how will your product or service impact their lives, how your solution will look like, the ways in which you will make money, how you will measure that you’re on the right track, how you will reach your customers, and your costs along the way. These answers become the basis of your strategic plan.
Like any plan, the Lean Canvas should be an evolving document. You start with what you know about the market, then you go and test your assumptions and modify the canvas based on what you learn. If you have read The Lean Startup, you will recognize the build-measure-learn cycle in action in this process. The idea is to be certain you know your risks, have validated your assumptions, and can confidently move forward when starting a business.