Forget the Business Plan – Start With the Lean Canvas

And for the value they offer, I think they are mostly useless (especially in the early days of creating a business).

Most business experts say it should be 30 to 50 pages, as a minimum.

There is so much experimentation and testing in the early days that making around 50 pages of assumptions could be a massive waste of time.

A tool I’ve used and worked on with a few businesses that has helped people get focused and plan in less than a half hour is the Lean Canvas.

The Lean Canvas is a one-page document that you fill out to get a simple view of your product and market.

As engineers, entrepreneurs and innovators, it’s easy to fall into the trap of creating solutions without a viable business.

The Lean Canvas has always helped me quickly determine if something will be valuable, usable and feasible when initially testing business concepts.

Anything we can do before spending money to mitigate risk, is always a huge win.

So grab a coffee and fill out this canvas first.

Here’s an example of a blank Lean Canvas. 👇

Either print it off, sketch on your touch screen, or my personal favourite is just typing in on a free tool like Figma.

You can hop around as you like, but I usually go in this order.

Check out this article if you are getting stuck on a square and want some examples.

Who are your target customers?

There is a deep connection between a company’s problems and its customer segments.

You cannot think about one without thinking of the other.

And get specific, think of the actual customers; what are they like?

As an example, are they content creators, hiring managers or people who have cats?

The more focused the segment is, the easier it is to create something that will resonate with this customer segment.

Pro tip: Don’t use some umbrella term like SMEs (Small and medium-sized enterprises) as it’s far too broad.

To be successful, you need to have a problem that people want to be solved.

In this box, try listing up to three issues your customers have.

This should be a single, clear and compelling message of why you are different and worth buying.

You don’t always have to be the only one who does this either; a lot of great businesses are improvements on existing businesses.

Google wasn’t the first browser on the scene.

It would help if you had an idea of how to solve the problem you are targeting.

In this box, try up to three features your solution will offer.

How will your business make money?

How you charge your customers can impact how easily you can attract customers. From perceived value to validation, this can be a tricky balancing act.

In the business world, sometimes we think about customers and target audiences as one in the same thing. But for instance, with Uber, Taxi drivers are needed to run the business but are not the customers.

Think about your pricing model. It’s tricky to nail and will probably take some experimenting to find the perfect fit.

You can, however, think about how you will charge.

Is it a monthly subscription, one-time payment for a license or even transactional when selling a physical product.

This is something you will need to include.

Here are some example revenue models if you are stumped.

How much will it cost to run this business?

What resources, investments and ongoing costs will it take?

Fixed Costs are the rent, taxes and interest expenses. They’re less likely to fluctuate over time in comparison with variable costs, which can vary based on how much you make or what kind of materials needed for your business venture is increasing/decreasing at any one point during its operation.

I swear by OKRs (Objectives and Key Results) for this. Check out the little video below if you’ve never heard of OKRs, as it summarises Measure What Matters.

What metrics will you follow to deem the project successful or know that you are going in the right direction?

Will you monitor downloads, reviews, sales and/or usage?

What revenue should your company have to be profitable?

What’s most important to your business, and how can you monitor it?

How will you reach your customers?

For example, common channels to reach your customers might be via a website, social media or email.

Maybe you’ll promote it with some paid ads.

Although in the early days, we usually think about how we initially get in front of customers to test demand and make some money try and think of the customer channels as a journey.

How will you reach your customers before a purchase, during the purchase and afterwards?

This can often be the toughest square to fill out.

What will give your business some protection against competitors?

Think about what you have that nobody else can buy.

It could be some breakthrough technology, an existing customer base or a kickass team unlike anyone else’s.

Pro tip: First to market isn’t an unfair advantage. Although it might help early on, it doesn’t mean you will own the market for long. Netscape got destroyed by Microsoft, which then was lost to Google.

The Lean Canvas was a template created by Ash Maurya that helps you deconstruct your idea into its fundamental assumptions. It is adapted from Alex Osterwalder’s Business Model Canvas and optimised for Lean Startups.

That’s all for this week, have a great week ahead, and I’ll chat with you next week! 👋