Lean Canvas (2/2)

Lean Canvas (2/2)

Let’s continue with the Lean Canvas.

In the previous lesson, we saw why we should use the Lean Canvas instead of a typical Business Plan, and how to complete the first and most important parts of the Canvas: customer segment, problem, and value proposition.

Lean canvas solution
The Solution of your Lean Canvas should explain how you intend to solve the problems and therefore deliver value to your customers.

A common pitfall is to list too many features or to list 3 but implement 10. So, list only the very core features.

Ask yourself: is there an existing product that I could use in a way it is not intended for, in order to deliver my value proposition?

– Keep It Simple Stupid! (KISS)
– Less is More

(More details about the KISS principle in the additional readings section)
Minimum Viable Product (MVP)

The solution that you should implement each iteration is call the minimum viable product (MVP). It is a product with just enough features to gather validated learning about the product and its continued development.

One seeks to minimize the total time spent on an iteration. The process is iterated until a desirable product/market fit is obtained, or until the product is deemed non-viable.

Lean Canvas channel
Contrary to the Solution element of your canvas, Channels is usually one of the most risky parts of your business model. You might identify the problem and build a small solution for that, but to build a business you need to put your product in front of enough customers.
Start testing channels from day one. It’s alright if your initial channels are not scalable.

For example: 
1. Make a list of 1st degree contacts
2. Ask for introductions
3. Email list from teaser page
4. Blog readers
5. Facebook, LinkedIn, Twitter
6. Adwords, Facebook Ads
7. Cold Call/Email
8. Sponsor group/events
9. Other

At the same time, try to identify where the scalable channels come from and start some tests with a limited budget.

Scalable channels could be:

1. Content Marketing
2. Advertising (online/offline)
3. Sales Force
4. Referrals

Lean canvas cost structure / revenue stream
The goal of these 2 sections is to determine if the project is economically viable.

1. Outline your fixed costs
2. What are the variable costs? What is the Customer Acquisition Cost (CAC) ?
3. What is the Customer Lifetime Value (CLV or LTV)?

From the previous Cost/Revenue analysis, determine the following:

1) How do you build enough runway (number of months before you run out of cash)
2) What is your break-even point? How many customers do you need to break even?

Set yourself a success criterion. For example, creating a business that brings in $5M/year. How many customers do you need to reach that goal? What share of the market does it represent?
One critical point you need to consider is your pricing. Price is part of your product positioning as it determines your customers: people who regularly buy $3 water bottles are not the same as those who buy $1 water bottles. Both segments exist and can be profitable.

Techniques to assess your price:
1) Cost-based pricing
2) Value-based pricing

We recommend value-based pricing, because customers hire your product to get a job done. They will naturally compare against the existing alternatives, not what it costs you to deliver your solution.

Lean canvas metrics
What are the key numbers that tell you how your business is doing? If you’re building a for-profit business, the ultimate metric is your profit. But what are the indicators of future success?
Identify the customer actions that drive value to your product. For example, for Youtube, a good metric could be the number of videos uploaded.
[Optional] 5 Key Metrics for Your Lean Startup
Lean canvas unfair advantage
How will you defend against competitors? An unfair advantage is something that cannot be easily copied or bought.
What is a good unfair advantage?
1. Insider information
2. Personal authority
3. A dream team
4. Existing customers
5. The “right” celebrity/expert endorsement
6. Large network effects
7. Community
8. Organic Search Ranking (SEO)
9. Patents

Being the first mover is generally not an advantage: Apple, Toyota, Ford, Google, and Facebook weren’t first. They were “fast followers” that benefitted from a mature market.

You might not have an unfair advantage in the beginning. Facebook was the 11th or 12th social network. But you should try as much as possible to start in a customer segment or industry in which you do have an advantage.

Aim for a strong competitive advantage and establish a barrier to entry for competitors.

[Optional] How to Create a Lean Canvas
Check out this article to learn more:
[Optional] Why Lean Canvas vs Business Model Canvas?
Jim Rohn Sứ mệnh khởi nghiệp