Those looking to start a business face many challenges at the offset, ranging from acquiring funding to gauging market interest, along with many other things. Among their chief concerns is clearly and accurately describing what it is their business is meant to do for its target audience and how it purports to make a profit in the process. Crafting a full-fledged business plan is one way to go about things, but it could be overkill for startups that have yet to find their footing.
Creating a canvas—a visual representation of all of the primary points of interest related to your business and its ability to generate returns on your investment—may be the best course of action any new business owner could take to begin their journey. The relative simplicity of a canvas makes it easier to swap out ideas as you collect new information. Plus, your canvas can get all of the most important information about your business across with just a single page of highly visual intel. This makes the humble canvas a great rallying point for group discussions and planning.
To get started with your very own canvas, you should first decide on the type that best fits your business’s interests. We’ll cover both the business model canvas and the lean canvas here to help you make an informed decision when choosing your own.
What is a business model canvas?
A business model canvas is a simple visual tool first devised by the Swiss business theorist and entrepreneur Alexander Osterwalder. Osterwalder’s claim to fame rests largely on his work with business modeling and bringing the business model canvas concept to life. The business model canvas, as it was first defined by Osterwalder, is organized into nine distinct fields. Each of these takes the shape of a rectangle or box in which relevant information can be stored or added as needed. By placing all of these fields in close proximity to one another and on a single page to boot, the most critical aspects of a proposed company’s activities are made clear and can be adapted to mesh more effectively.
Each of the business model canvas fields are relatively easy to understand, and the canvas itself runs from left to right, visualizing practical details within your business at the leftmost side. On the right side, the business model canvas shows details surrounding your target audience and, in the middle, these blend into the concerns of the leftmost fields.
Here are all of the fields, from the upper left to the lower right:
- Key partners: Any third-party operators you foresee your business having to work with should be handled in this field.
- Key activities: Every single task that your company must complete to ensure the business can flourish should be mentioned here. This goes especially for activities that must be repeated regularly.
- Key resources: Resources range from the human to the intellectual, but they are all of vital importance to a growing company. Placing all known necessary resources in this field can help you visualize the scope of your business’s current offering.
- Cost structure: The cost structure associated with your business’s operations should make an appearance in this field.
- Value propositions: This field lies right where both halves of this canvas meet. It represents the happy exchange of value between your brand and its customers. Any manner of value proposition can be used to flesh out this field.
- Revenue streams: The actual detailed manner in which you expect your business to earn a profit from its activities should be here. There are multiple approaches, such as advertising, licensing, and subscriptions. Matching this with the rest of your canvas is pivotal for pulling off an actual business model.
- Distribution channels: The channels you choose to use for communication with your customers should be specified here.
- Customer relationships: For this field to prove effective, it should be filled with each of the types of relationships you intend to have with your defined customer segments. Think of these relationships as stages in the customer’s journey. Each stage can be expected to occur at a specific point in your customer’s journey and requires a unique approach to maximize your customer’s satisfaction. Examples of relationships include self-service, co-creation, and fully automated service.
- Customer segments: This field deals with the types of individuals or organizations you intend to target with your offer. To make the most of this field, you’ll need to invest some time into adequately researching your target audience and creating a few valid user personas to base your efforts on. High-level segments make for a great way to get started in filling out this field. These range from mass market segments to diversified subsets.
What is a lean canvas?
Whereas the business model canvas is chunky and filled with incredible amounts of detail despite its relatively concise format, the lean canvas leverages a similar layout primarily to illustrate the relationship between customers, their challenges, and proposed solutions.
Lean canvas fields take after those of the business model canvas but they’re modified to help cement their alternative meanings. In addition to unique value propositions, revenue streams, channels, and customer segments as seen above, they are as follows (leftmost to rightmost):
- Problem: This field is all about the issues you intend to solve with your offer.
- Solution: Your proposed solution to the actual problem you previously defined should go here.
- Key metrics: The metrics you use can determine the course you choose. Listing out your metrics up front can help ensure that irrelevant metrics are left out of the picture.
- Cost structure: Whatever costs you foresee for making your product should feature here.
- Unfair advantage: Any major, distinguishable advantage your company has over its competitors should be specified here.
Lean canvas vs business model canvas
For companies seeking additional funding, the need for a full business model canvas is greater, as is the need for a detailed business plan and pitch deck. For those simply looking to begin capturing their own share of the market by iterating rapidly, a lean canvas is likely to be the better choice.
Choosing the best option for your business comes down to knowing what your own course of action and growth trajectory should be. With those details understood, you can quickly choose the right canvas to convey your company’s identity.
If you’re still unsure of where to start, seeking expert guidance can prove effective. Here at VeryCreatives, we assist SaaS companies of all kinds in achieving product-market fit and launching successful digital products.
Book a call with us today to learn how we can help your business succeed sooner.
Download template: The Lean Canvas PDF