How to Create a Winning Business Plan on a Lean Canvas

If you want to start a new business, the first and most important thing to do is organize your thoughts and formulate a plan for how you'll grow and expand, usually in the form of a business plan. A Business plan can help reduce mistakes and make your idea more clear and understandable and is usually necessary when seeking investment or a loan.

Creating a professional, well-researched business plan can take weeks or months. That simply isn't fast enough in this age of agile development, especially in the world of startups.

In this article, we explore lean canvases: a simple and minimalistic form of a business plan. Lean canvases are single-page and can be created quickly, avoiding unnecessary fluff and writing about things that aren't at the core of the new business.

A Lean Canvas is a 1-page document outlining the most important aspects of your business, in a clear and easy-to-read way.

A lean canvas extracts the most essential parts of a business plan into 11 blocks. These blocks are organized to walk you through the natural steps you'll take when creating a new business, starting with the problem you are solving and eventually getting to your advantages and how you'll get customers.

Whereas a traditional business plan can take weeks to make, you can create your lean canvas in a few hours. Lean canvases are professional and easy to review thanks to their compact form, making them a great way to show your vision to an investor.

We created a free-to-use lean canvas template you can use for your plan. Here’s an overview of what each section in the canvas should include:

1. Problem - Describe in 1-2 sentences what problem or point of frustration your business is solving. The best new businesses start by looking for an idea and then find a solution, so they can make sure their product or service is needed, and that customers are willing to pay for it.

2. Existing Alternatives - in which ways are people currently solving this problem? What products already exist that solve this problem?

   Competition is everywhere and is expected by investors, so you shouldn't be worried about having competitors. Later on in your plan, you'll demonstrate your benefits over your competitors and show how you will beat them.

3. Key Metrics - what are your key performance indicators (how you’ll measure success)? How have you done so far on those indicators (if you’ve already launched)? These are the ways you will measure the success of your business. Without a basic set of metrics or KPIs (key performance indicators) as they are often called, you'll have no way to track your progress.

4. Value Proportion - What does your business have that other businesses don’t? What have you figured out about the product or problem that sets you apart?

5. High-Level Concepts - Here you can talk about general trends you’re taking advantage of and make analogies to existing businesses. Overall trends in the economy (Macro Trends) can make or break your business's success, so it's important to address them. You can also address your TAM or total addressable market: what is the size of the market you are targeting, a large target market suggests that there is opportunity to create a large and profitable business.

6. Unfair Advantage - What is something your business has that can’t be copied easily by others? In other words, what sets you apart from competitors?

   This is the most important part that will make or break your business, especially when operating in a competitive landscape. For example, there were a lot of coffee shops before Starbucks, but by offering a better quality product and a better experience, they won their market over.

7. Channels - How will you reach customers? Will you expand by word-of-mouth, online advertising, referrals, etc..

8. Customer Segments - who are your customers? Where are they from? Why are you targeting them specifically? What is the size of your audience?

9. Early Adopters - these are your first customers, people who will give you a break when starting out and help you test and improve your product. These are curcial customers to prove your business model and begin scaling.

10. Cost Structure - What are your costs: usually divided into variable costs (or cost of revenue) and fixed costs. Fixed costs should remain the same over time whereas variable costs will increase as your revenue increases.

11. Revenue Stream - Where will your money come from: what are you selling? How much will you make from it? How will revenue change over time? You should consider the pricing for different models/services.

    The two major kinds of products you'll have are loss leaders - products that will lose money but draw a lot of traffic or new business, and higher profit margin products - products that will produce the majority of your business's profit.

    Knowing which products will serve what purpose in your business can be very valuable when pricing items, advertising, etc.

We’ve created a free-to-use lean canvas template that you can download and utilize for your new startup. This template will provide all the information needed to start building out your professional business plan that impresses investors, quickly and easily. So, get building!