Hello Entrepreneurs at heart! today we cover the Lean Canvas process, as usual, we will have a practical discussion related to it as another tool to help us better prepare for our startup, and the reason is because most Startups fail from a lack of (paying) customers.
What we are looking for a repeatable and scalable business model. Now, let’s focus on your initial goal: to get the better chances of success of your venture, and to minimize and reduce as possible the risk of failure. Your ultimate goal, might be to make the jump into a full time entrepreneur. It’s also pretty common to have chaos when we first start but your goal should be to look for an organize and effective way to work on your business and to establish processes that will enable your team to be as efficient as possible. It is important to say that product is only of many critical aspects that will make your Startup work.
The Lean Canvas proposition has 9 segments to model your company, you will need to put careful consideration to accomplish our first goal: To minimize risk and maximize rate of success.
PROBLEM (1) – top 3 problems
SOLUTION (3)- top 3 features
KEY METRIC (6) – key activities you measure
UNIQUE VALUE PROPOSITION (2) – single, clear, compelling message that states why you are different and worth buying
UNFAIR ADVANTAGE (7) – can’t be easily copied or bought
CHANNELS (4) – path to customers
CUSTOMER SEGMENTS (1) – target customers, who is your customer?
COST STRUCTURE (5) – customer acquisition costs, distribution costs, hosting, people, etc
REVENUE STREAMS (5) – revenue model, life time value, revenue, gross margin
The Lean Canvas comes from the idea of constant improvement and constant iteration for your business. One of the key concepts is that we like to create business as Entrepreneurs, but it is important that you always focus on one equation, one that will remind you to keep focus on the business and avoid the distraction:
Make something: product or service,
Be able to sell it multiple times
Have a profit at the end.
Long term you will need to keep focus on this, stay to the fundamentals of your business. For this exercise I recommend you to use, the Lean Canvas website, you can later go check the show notes, and start thinking of your next business idea or put your existing idea to the test!
1. Customer segment: who is your customer? your book readers, are early in the internet and willing to purchase online.
1. Problem: what problem you see? what opportunities do you see? who are your competitors? book stores are expensive, wide inventory, able to give recommendations from a broad audience. Other bookstores, catalogs, clubs, but they did not resolve the issues Amazon was trying to deliver.
2. Unique Value Proposition | High Level Context: top 3 features: Your single compelling message to make an unaware visitor a potential customer or prospective consumer. Earth’s largest bookstore. Amazon wanted to be the
3. Solution: your solution to each problem defined before. Amazon’s solution was to have “To have all books available for sale”, also to have web based customer reviews, Ship direct from distributors.
4. Channels: paths to customers, or how are you going to sell to the customers. For Amazon, it was the channel they were providing to get the books to customers.
5. Revenue Streams: Amazon’s was the sale of books, Shipping Fees at the beginning
5. Cost Structure: a list of your fixed and variable costs for the key processes. For Amazon develop web platform, customer service and staff, logistics, fulfillment. The books themselves.
6. Key Metrics: how are we going to measure how our business is doing? sales, customer count, # of sales, market size basket, # of subscriptions, conversion rate, return rates. Amazon looked at sales conversion per visitor; average sales per transaction; Total sales per visitor ratio.
7. Unfair Advantage: something that can’t be easily copied or bought. It is technology? the way you execute something? At Amazon, they had unlimited selection of books with great prices.
I like the Lean Canvas makes us think of the term Unfair Advantage, as we need to find ways to be unique in our industry or at least within our Geographical market. We can never get too comfortable with our success as believe me, there are other people out there trying to take your business out. So you have to continuously reinvent yourself and the way you bring value to the consumer, once and again!
Share with our entrepreneurial community how you think the Lean Canvas Model helps you better understand your business. If you struggle to effectively use this business model proposition, let us know, we would love to help! Cheers!
1. Build you Lean Canvas Model at this free and cool website! https://bmfiddle.com/f/#/local/settings