What makes a solid business plan? That really depends on what your goal is. While some endeavors, such as seeking a business loan, may still benefit from the lengthy verbose business plans of the past, today’s investors would often rather see a to-the-point summary of what companies have to offer. This is where the Lean Canvas style of business planning comes in. With this style of plan, you can say everything that needs to be said using only one page of space. The Lean Canvas is also a great barometer of where you are as a business. If you are seeking investments or chasing federal grants such as SBIR, your business should be at a point where you can easily answer all the key points in a Lean Canvas business plan. So what goes into the plan, exactly?
Begin your Lean Canvas business plan by illustrating the top 1-3 problems your idea or product aims to solve. Also, include a brief summary of how these problems are addressed today and what gaps or shortcomings exist in the current solutions. Try to demonstrate an unmet need and the inability of competitor products to solve the problem well.
Now that you have listed the problem and illustrated where current companies fail to adequately address it, you can discuss how your great new product will disrupt the industry and offer a better solution than the current state of the art. Some improvements to mention could be price, usability, efficiency, or proficiency.
In this section of the Lean Canvas, use quantifiable data to prove the success, initial or anticipated, of your business. Things to highlight here include growth in the form of capital or customer acquisition. Pre-revenue companies can include market data that speaks to the potential success of their business or product given market trends.
Unique Value Proposition
In this section, let investors know why you are awesome. What does this solution or business offer that can be found nowhere else? Does it save customers time and/or money? Is it more ergonomic, more effective, or more personalized? Many people use an “X for Y” analogy here, such as Youtube’s famous X for Y analogy, “Flickr for videos.” Show the investors why your business is worth their time and attention and, ultimately, their capital.
In this section of the Lean Canvas, businesses must showcase the lasting advantage they have over the competition. What aspect of their product is difficult or impossible to duplicate or possess? Businesses must demonstrate to investors that they will have a true market advantage over competitors in a long term way and that the product is not a passing fad that can easily be recreated by other companies.
The objective of creating a product or service is to sell it and generate income. Investors need to see that a business understands HOW to sell their product. Where are you sourcing your customers? How are you spreading the word about your product? Is your marketing plan reaching the intended target audience and leading to sales? What is your backup plan if your initial plan fails to deliver? The “channels” section of the Lean Canvas is all about how you will get to your customer base.
Many services or products will have multiple segments of potential customers. USe the customer segments section of your Lean Canvas to list all the different profiles of potential customers and users you intend to focus on. Describe the profiles of each potential customer. Also include some information of early adopters, the ideal customers for the product who are likely to be some of the very first to purchase the product or service.
List all fixed and variable costs in this section. What will it take to get up and running? Will you be purchasing or renting space or hiring employees? List all the costs that accompany these activities, such as building insurance, utilities, fringe benefits, HR, Accounting, etc. What about ongoing costs? Will you require web hosting services? How about materials, which are often a variable cost due to fluctuations in the market? List all expenses needed to function as a business in this section.
This is one of the most important aspects of the Lean Canvas. How will you generate a profit? Investors want proof that their investments will be profitable in the long run. Clearly list how you plan to generate income in a sustainable, ongoing way. What sources of revenue will you have? B2B? B2C? Perhaps both? Outline these details here so investors can see
Lean Canvas distills the essence of your project into a concise, digestible summary of your business’ merits. This is a quick and effective way to create a solid business plan to share with investors.
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