The traditional business model canvas was popularly used by many companies. Even though it has its advantages, there are some loopholes in them. Lean canvas can be used to eliminate those loopholes. This canvas is especially used by many startups and entrepreneurs. In fact, it was created to suit the needs of entrepreneurs and startups.
The lean concepts are created to reduce the cash investment, higher quality products, and customer satisfaction. They are popularly used by startups with limited investment. In this article, you will be able to learn about the lean business model canvas.
Lean Canvas was created by Ash Maurya. It was mainly to help SaaS startups but slowly they gained a lot of popularity. The founder of this method admitted that he did not expect this method to gain such popularity in such a small amount of time.
This model helps you in starting the plan with just hypotheses. It is greatly useful for startups. They are a strategic document with hypotheses and help you in building actionable, entrepreneurs-focused business plans. This model mainly focuses on problems, solutions, competitive advantages, key metrics and much more. They are very much similar to the business model canvas but at the same, they are much different. It has its advantage over the business model canvas.
Lean canvas helps you in breaking down your ideas into key assumptions. They are a one-page business plan which is startup oriented. It encourages focusing on a problem and then building up a business plan. The nine elements of the lean canvas are given below.
Problem: Every startup was started to solve a particular user problem. For example, Uber was created to help people travel safely and easily. Similarly, in this element, you will have to list down three main problems. Try to understand your targeted customer problems. These are the problems you will be mainly addressing in your startup. This is the most prioritised problem which you are promising to solve.
These problems could be understood through surveys, focus groups and much more. Once the people are clearly stated and understood then you can focus on solutions.
Solution: Once the problem is defined and understood, the next step is to find the best solutions for the problem. For this, you can conduct a lot of customer surveys, interviews and much more to get a grasp on what your customers are looking for in a solution.
Then proceed to build solutions through your features. Analyze each of the features you are offering to solve a customer’s problem. Try to segregate the strengths and flaws. Figure out a way to come up with the best optimal solution. This is the first basic step in your startup.
Key metrics: The success of any business is measured through its performance. By evaluating whether or not the business process has served the people. For example, if your startup is based on apps, then the success depends on the number of people who have installed the app, good reviews and much more. These are considered to be the key metrics. Any business has specific metrics which can be used for monitoring purposes.
Customer Segment: This is considered to be one of the most important elements of the model. Customer segments simply mean your business’s targeted audience. Which community of people are you trying to sell your products or services to? This is answered in this section. This could be based on customers behaviour, needs and other traits. It can be based on demographics or psychographic. It is very important to understand more about your ideal customers.
Unique value proposition: Sometimes there are so many other businesses that offer the same service or product as your business. So it is important to come up with a solution that makes you unique from your competitors. And it also helps your stand ahead in the market. UVP is a promise that you make to your customers which should always be delivered. It also means giving reasons to your ideal customers why they should choose you over others.
Channels: Channels simply means the ways through which you can reach your ideal customers. It can be anything such as blogs, ads, social media, radio, TV, podcasts and much more. It is not necessary to be on all of these platforms, it will be great to just be on those platforms where you can reach your targeted audience.
Revenue Streams: It is important to have a proper revenue stream for the smooth functioning of the business. It is one of the key factors to run a successful business. So it is advisable to decide how you are planning to price your business.
Cost structure: Some people may underestimate the importance of cost structure and revenue streams. In this section, you will be noting down how much it costs to take your service to the market and deliver it to the customers. These are the operational costs.
Unfair advantage: In this element, you will note down something that makes you very unique and stand out against all your competitors. Something that cannot be replaced. It can be anything such as reputation, customer service, best product, solution, best team and much more.
- The lean business model was created specifically for entrepreneurs.
- Through this, the entrepreneurs could focus on the main business problem and solutions. It works well with startup ideas.
- Along with Unique Value Proposition, unfair advantage helps the entrepreneurs to think more about their uniqueness.
Lean canvas focuses on the entrepreneurs, thus making them think a lot about things that matters the most. The key ideas could be easily jotted down either alone or with a partner. It can be written on a piece of paper to get clarity. These elements help a lot in stating the basic business plan and solution. Hopefully, this article helped you understand the lean business model canvas.