Idea for a startup? Test it with Lean Canvas
The Lean Canvas is not a business plan. But startups – mainly in the development phase, use this powerful tool that helps them in environments of great uncertainty and risk. Therefore, even before starting a business plan, it is necessary to establish the “client-problem-solution” relationship. This is the most important step when developing a business idea. It is essential to start from this point to understand the potential of the startup. This is what Lean Canvas is all about.
If you have one or more business ideas tucked away in your drawer, put them to the test with Lean Canvas. Below we describe the 9 blocks that make up the Lean Canvas.
The 9 Lean Canvas Blocks to Visualize the Potential of Your Business Ideas
1# Problem (and existing alternatives)
Here the goal is to describe in detail the problem and the business opportunities that you have identified with your idea. It is advisable to list 1 to 3 problems.
Startups often fail right at this point. The problem needs to be well identified and understood to create an adequate and robust solution, otherwise time, effort and money will be wasted, and sales will fail compared to the initial expectation.
In this block, keep a space to write down existing or similar alternatives on the market, if any.
2# Solution
Description of the solution for each problem mentioned in block 1.
3# Key Metrics
When developing an idea for a startup, the best thing is to define the key metrics that allow you to reduce future risks and better orient yourself in the first few months.
4# Value proposition (and quick description of the idea)
Having identified the problem and found the solution, what value will this bring to your customers? Will it really be relevant? What makes this solution unique?
This block must be filled out clearly and simply, almost like a pitch to present to potential investors.
In this block, take advantage of the lower part to make a quick description of your idea. Even better if you can compare your product/service with another known one. For example:
- Whatsapp: free sms for everyone
- Netflix: a video club at home
When these two businesses were launched, ideas for chat apps or streaming services were not yet widespread. Therefore, it was necessary to communicate them in familiar terms so that everyone could understand what they were and their potential.
5# Competitive advantage
What is it about your business idea that is impossible to copy? What makes it so unique that you wouldn’t even consider selling it?
If you can answer these questions, you’ve found your competitive edge.
6# Channels
List your way to your customers. Which sales and distribution channels are most suitable?
7# Customer Segmentation (and Early Adopters)
In this block, describe your type of customer. At the bottom of it, imagine what kind of customer will be the Early Adopter of your product/service. Don’t neglect this lower part, as Early Adopters are the ones giving the initial boost to startups and, to a large extent, their best form of advertising.
Don’t know what early adopters are? They are a group of users/customers who are open and willing to test new technologies and solutions.
8# Cost structure
Now let’s get to the numbers: you must detail the fixed and variable expenses necessary to launch your business idea.
9# Sources of revenue
Finally, how will your startup be profitable? List possible sources of revenue here.
To consider
Lean Canvas is a powerful tool for startups. The “customer-problem-solution” focus helps to realize from the beginning the true potential of the startup. When you manage to complete this model, you should, from the outset, have the basis for a pitch, capable of attracting investors in the pre-seed stages. However, it does not replace a business plan, which covers more topics and helps to structure the entire business and strategy.
When filling out your Lean Canvas, do it with as much research as possible and fill it out clearly and objectively. Review it as often as necessary, exchanging ideas and getting feedback from others until you feel confident with what you have filled in.
Lisboa Investments focuses much of its expertise on launching innovative startups. If you need help with your Lean Canvas, get in touch.
Additional readings
If you want to delve deeper into the methodology and philosophy that led to the launch of Lean Canvas, we advise you to read the book “Running Lean: Iterate from Plan A to a Plan That Works”.
As complementary reading, you can read the article by the author of the book, where he justifies the emergence of Lean Canvas here.
