A hackathon is all about making assumptions and taking risks. But what if we tell you that we can help you to de-risk your solution and to create real evidence to convince the audience of the fact you are almost 100% sure your idea is what the customer has been waiting for?
In this final race stage, we will give you insights on how to make your business model explicit using the Lean Canvas and explain to you how to validate your assumptions using the Seth & Dunn Experiment Report Canvas. It is the final stretch towards the finish line.
Build the first version of your business model with the Lean Canvas
The Lean Canvas is a more customer centric adaptation of Alex Osterwalder’s Business Model Canvas, that better fits the needs of early stage innovation projects and startups. It is a tool to build an actionable business plan in a short time-frame. The canvas is used to make your business model and the assumptions you make concerning the model more explicit.
How do you fill in the Lean Canvas? 10 steps towards the first version of your business model
Want to know how to take the first steps towards a validated business model? In the following part our Seth & Dunn coach Wim Van Emelen explains to you how to use the Lean Canvas to build the first version of your business model. You can use the Value Proposition Canvas as input for your business model.
2. List your target CUSTOMER SEGMENTS
List and briefly describe the customer segments you want to target with your business. In addition you can list the customer segments which you think will be the early adopters of your solution. You can refer to the customer segments for which you build your Value Proposition Canvasses.
3. Describe the top PROBLEMS your customers are facing
Each customer segment you want to target will have a set of problems they are facing. List the top 1-3 problems you want to tackle with your business. Afterwards you can think about and write down existing alternatives to tackle these problems.
4. Define the top features of your SOLUTION to tackle these problems
Describe how the features of your products or services can eliminate some of the problems the customer experiences. You can use the pain relievers and gain creators of the value proposition canvas as input.
5. Determine the STREAMS of REVENUE for your business
In a profit business context you can try to answer the question “how are we going to make money with your business?”. Determine the sources of money you are going to need to make your business profitable. In a non-profit context you can also think of revenue streams as e.g. image boost of your organization.
6. Formulate the UNIQUE VALUE PROPOSITION you are offering to your customers
The unique value proposition is the value you promise to deliver to your customers. Describe in one sentence why your solution is different than others and why your customers should buy / invest time in your solution. Additionally you could describe the high-level concept of your solution by using analogies e.g. Pinterest is the Youtube for pictures.
7. Sum up the CHANNELS you are going to use to reach your customers
Channels are ways to reach your customers. Sum up the channels you are going to use to have enough access to your customers and at the same time to get enough learnings. Channels can be e.g. e-mail, social media, blogs,…
8. Define the KEY METRICS you are going to use to monitor your business
Each business needs metrics to monitor their performance. List 1-3 metrics you are going to use to monitor the performance of your business in the early stages. Think about metrics who look at acquisition, activation, retention, referral and revenue linked to your customers.
9. Determine the COST STRUCTURE of your business
What are the fixed and variable costs of your business solution? List all costs linked to taking your business to market.
10. Describe your UNFAIR ADVANTAGE
List the real competitive advantages you have with your business that cannot be copied and cannot be bought. This could be e.g. inside information or existing customers.
Tips & Tricks for creating the first version of your business model
1) Use your Value Proposition Canvas as input for your Lean Canvas.
2) Use only 30-60 minutes to create the version of your Lean Canvas. Making your first version is all about making assumptions. Later on you will validate this assumptions to create a validated business model.
3) The first version of your business model is based on a lot of assumptions. You probably are not sure that the problems you listed are the real problems of your customers. Start by a top 3-10 of most riskiest assumptions which you will validate. Use the Seth & Dunn experiment canvas to structure your validation process (more info below) and get out of the building.
4) Based on your validations, iterate over your Lean Canvas. Start from version one and adapt it until all riskiest assumptions are validated.
5) Use post-its to fill in the canvas. This will make it easier to iterate over your Lean Canvas.