Taking the leap of faith with your own ideas to create a successful business is not an easy task for anyone. This makes success in the first few steps that much more important. At NEXT Studios we have adopted the LEAN Canvas as the straightforward and consistent way to enable Entrepreneurs to think about their idea in a bigger context, how to turn the idea into a viable business.
What is the purpose of Lean Canvas?
With experience, the Lean Canvas allows entrepreneurs with an idea to think through the basics of the business model and have a way to communicate those to others in ~60 minutes. A Lean Canvas is a short (about one page) business plan for your idea. Cutting out all non-vital information and identifying the critical assumptions, this process is perfect for starting off your entrepreneurial venture. A Lean Canvas will provide a structure and can guide the action plan for the founder geared to uncovering problems worth solving.
What are Lean start up principles?
Lean startup principles are built around intense customer focus and the desire to find problems worth solving. Using the Build, measure, learn loop to learn quickly from your target customers about the problems they have, and not what you think a market wants. This is a fundamental sentiment behind Lean startups. This is in contrast to older “build it they will come”methods in which a startup would create a product or service from scratch and then hope that a market would form around it. Being customer focused, and singularly driven to solve their problems takes out some of the risks involved with being an entrepreneur.
Furthermore, you may be asking if there are some solidified steps in the Lean startup process, and there are. There are in fact five, so what are the five initial steps of the Lean canvas?
1 – Problem. It is hyper critical to start with the problems you want to solve – NOT the thing you think you want to build.
2 – Existing Alternatives. How do your customers solve these problems now ? Do they know it’s a problem and doing nothing is ALWAYS an alternative !!!
3 – Customer Segments. Find the groups of people that have these problems, these might be cross industry, cross demographics and may not align to a typical customer persona.
4 – Early Adopters. You cannot build a solution that solves everyone’s problems from the start, but you can solve problems for your early adopters. Be specific here, who do you know (names, numbers, emails) that would purchase your solution to solve their problems.
5 – Unique Value Proposition. Why you ? Why should your early adopters pay any attention to you?
Note above – we have not talked about the thing you want to build yet – That is number 6 in the process!
Over the course of the last six months, NEXT Studios has run its Lean Canvas based Discovery Week for several groups of founders. The fundamental purpose of this week was to discover problems worth solving. Some of the quality lessons learned were as follows:
- Problems To Be Solved: Our Discovery Week found that most start-ups have difficulty identifying the problem that they solve and for whom. We spend a lot of time working with founders to really dig in here..
- Customers VS Users: In Business to Business sales, solving the users problem does not always lead to a sale. We worked with the founders to figure out in addition to the user’s problem, what problem do they solve for the person writing the check – the customer (cost reduction for example).
- Metrics: Focus on Dave McClure’s Pirate metrics (Acquisition, Activation, Retention, Revenue & Referral). Everyone is focused on revenue, however revenue is a trailing indicator of traction. We often hear founders talk about how they have views on social media, or their website (Acquisition) but don’t have email addresses, contact information, followers or other ways to reach back out to potential customers (Activation). Often we work with founders that have built some kind of application / web site but have not instrumented it in a way that shows usage data (Retention).
- Trust The Process: the Lean Canvas provides the critical thinking framework for evaluating an idea and frankly working through that process is uncomfortable. NEXT Studios team really enjoys coaching early-stage Entrepreneurs on their journey to make them comfortable with discomfort
How do I create a Lean Canvas template?
NEXT Studios encourages the use of Leanstack.com where founders can create Lean Canvas online, invite others to collaborate and leverage a wide range of learning materials.
How do you fill key metrics in Lean Canvas?
The key metrics in a Lean Canvas should show how you are gaining (or losing) traction. Focus on measures for your business that align to Dave McClure’s Pirate metrics (Acquisition, Activation, Retention, Revenue & Referral). Andresssen Horrowitz has some great lists of Metrics. It’s up to the entrepreneur to find metrics that work for their business in each of the areas of Acquisition, Activation, Retention, Revenue and Referral. Demonstrating traction to investors is critical. Revenue is a trailing indicator that you have a business model that works.
Dominate the Entrepreneurial Landscape with Next Studios
Being an entrepreneur means you have to be in love with the problems you are trying to solve. This process can make or break your business, and Next Studios wants to make sure you get to put more focus and energy into those success stories! Innovation is our core product and our three-phase process will get you substantial investors in six months, where our competitors can take up to two years.
If you want to learn more, check out our NEXT Community and NEXT University programs. We would love to hear from you, so please do not hesitate to reach out. Our team is looking forward to innovating with you.