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Learn how to capture your business model and plan on a single piece of paper. This course teaches you how to create a Lean Canvas for your business
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Lean Canvas Lite
Noyes Limited
• GU MBA
• Startup Weekend
•Early stage consulting & advisory
Permission
• Be myself• Have fun• Be honest
Overview
• Introduction to Lean Canvas• 9 sections• 1 minute to fill-in• Coaching & Advisory
Introductions
• Name• Business/idea• Expectations
Areas of Focus
Problem Solution Key MetricsUnique Value Proposition
Unfair Advantage
Channels
Customer Segments
Cost Structure
Revenue Streams
Business Model
A business model describes how your company creates, delivers and captures value – Steve Blank
First Step
• Important step• Brainstorm possible customers• Create a list
Pick Customer Segment
• Pick strongest customer segment• Highest ROI• Be specific
Example Company
Barters Closet• Online clothing trading platform
• Pivoted
Example
Barters Closet• Broad: Anyone who has unwanted or unused clothing
• Specific:– Moms with children under 5– College Students– Hipsters (trend setters)– Thrift store shoppers
Canvas/Segment
• Use a canvas for each segment– College Students– Hipsters (trend setters)– Thrift store shoppers
Title
• Customer segment becomes canvas title
5 Minute
Customer Segment
Customer Segments
Target customers
Early Adaptors
Customer Segment Sketch
Moms with young children under 5
Early Adopters
• First customer to pay• Willing to pay for imperfect product
• Essential to identify & market• Revenue & Feedback
Example
• Barters Closet– Lower middle class– Use Pinterest & Facebook– Avid coupon users
Customer Segment Sketch
Young mom’s with children under 5
Early AdoptersLower middle class
mom’s who are tech savvy. Use Pinterest & Facebook. Most likely an avid couponers.
1 Minute
Problem
Problem
Top 3 problems
Problem-Customer Segment
• What problem are you solving• Drive rest of canvas
Big Problems
• Solve big problems– Customer– Investor
• Pain points
Top 3 Problems
• Research• Focus Group• Create list• Pick top 3
Example
• Barters Closet– Kids go through clothing quickly– Thrift store does not buy/trade– EBay expensive & time consuming
List Alternatives
• List current alternatives• There is always an alternative• Doing nothing an alternative
Example
• Barters Closet– Thrift stores– Consignment stores– EBay
Problem Sketch Kids go through
clothing quickly
Thrift store does not buy/trade
EBay listing fees are to high
Alternatives:• Thrift stores• Consignment
stores• Ebay
1 Minute
Unique Value Proposition
Unique ValueProposition
A single, clear compelling message that states why you are different and worth buying.” - Steve Blank
The Challenge
• Hard to get right• Use as marketing copy
A difference
• It must be different• A difference that matters
First Interaction
• First interaction• Capture attention• Best guess
Picking Your Words
• Pick carefully• Marketing & branding• SEO
Example
– Square: Start accepting credit cards today.
– Evernote: Remember everything.– MeetingBurner: Fast & simple desktop sharing.
How to Create
• Study UVP• Brands you admire• Deconstruct• Create passionate customers
Example
• Barters Closet– A community of mothers helping mothers through the exchange of clothes.
High Level Pitch
• Create a high-level pitch• Builds on familiar concepts• Quickly communicate message• Used with elevator pitch
Example
• Barters Closet– An online swap meet for mom's.
UVP Sketch
A community of mothers helping mothers through the exchange of clothes.
High-level Concept
An online swap meet for mom's with young children.
1 Minute
Solution
Solution
Top 3 features
Hypothesis
• Untested hypothesis• Define hypothesis• Match solution to problem
Minimal Features
• Minimal Viable Product• Create minimal number of features that will create value
Customer Focus
• Major mistake• Focus on customer needs
Match
• Match solution to problem• Many fail• An exercise in focus
Problem/Solution 1
• Problem– Kids out grow clothing quickly
• Solution– Create clothing trading platform• Allow mothers to trade/sell
Problem/Solution 2
• Problem– Thrift store does not sell/trade
• Solution– Allow users to sell/trade or buy
Problem/Solution 3
• Problem– EBay listing fees are to high
• Solution-Only charge commission on products sold.-No fees on products traded.
Solution Sketch
Create clothing trading platform
Allow users to sell/trade or buy
Only charge commission on products sold
1 Minute
Unfair Advantage
Unfair Advantage
Can’t be easily copied or bought
Unfair or competitive advantage
Duplication
• Not easily duplicated• Advantage not easily purchased
Good but Not Unfair
• More features• Less features• Design• Passion• Determination
Features
• Less features– Hard to protect– Easy to duplicate– i.e. Apple
• More features– Same issues– Not sustainable
Design
• Hard to create• Easy to duplicate• Hard to protect
Personal Attributes
• Passion & determination– Not quantifiable– Not sustainable/enduring– Able to be duplicated
Unfair Advantages
• Insider Information• Dream Team• Existing Customers• Celebrity Endorsement• Network Effects• Community• Organic Search• Patents
Unfair Advantage Story
• May arise over time– Facebook: Community– Zappos: Customer service– Toyota: Internal processes (Lean)
• Focus on what it will be• Or, leave it blank
Example
• Barters Closet– Community of mothers helping mothers
– Seasoned Board of Directors w/Ecommerce experience
Unfair Advantage Sketch
– Community of mothers helping mothers
– Seasoned Board of Directors w/Ecommerce experience
1 Minute
Revenue Streams
Revenue Streams
Revenue ModelLife Time ValueRevenueGross Margin
Importance of Pricing
• Price is a component of your product.
• Perception of value• Keeps you in business• Signals branding & positioning
Customer
• Determines your customer• Communicates value
Example
Example
Why Charge
• Set expectations• Raises customer commitment • Creates cash flow• Address business model challenge
Free Trial
• Free-Trial pricing method• Pre-determined period of time• Force conversion decision• Iterate faster
Barters Closet Example
• 15%commission on sales• $1 shipping & handling fee
Revenue
$1 shipping & handling fee
15%commission on sales
1 Minute
Cost Structure
Cost Structure
Customer Acquisition CostsDistribution CostsHosting, People, etc.
Accuracy
• Impossible to 100% accurate• Focus on known costs• Margin for error
Research
• Broad understanding• Lean approach
Fixed & Variable
• Broad understanding of fixed & variable costs
• Action in uncertainty
Fixed Costs
• Time-related– Salaries– Rent
Variable Costs
• Production-related– Rise with increase– Fall with decrease
Scaling Costs
• Costs that increase incrementally with use or growth
• Fixed or Variable– Rent– Hosting cost
• Broad Understanding
Cost Structure Example
• Barters Closet– Trading platform development $45,000
– Credit card fee-3%/transaction– Rent - $500– Web hosting $200– Monthly salaries
• Entrepreneur - $600• Designer - $600• Developer - $1,000
Fixed
• Barters Closet– Trading platform development $45,000
– Rent - $500– Web hosting $200– Monthly salaries• Entrepreneur - $600• Designer - $600• Developer - $1,000
Variable
• Credit card fee-3%/transaction
Scaling
– Rent - $500– Web hosting $200– Monthly salaries• Entrepreneur - $600• Designer - $600• Developer - $1,000
Cost Structure Sketch
Trading platform development $45,000Credit card fee-3%/transactionRent - $500Web hosting $200Monthly salaries
Entrepreneur - $600Designer - $600Developer - $1,000
1 Minute
Key Metrics
Key Metrics
Key activities you measure
Measure
• Key component of lean start• Conventional accounting• Measure activity• Measure engagement
Identify
• Identify 2 metrics that drive your business
• Pre-revenue– First user– First customer– Think about engagement
Action & Success
• Divide metrics into action & success metric
Action
• Quantify engagement– Beta trial– Open email– Respond to email
• Goal is data points• Move towards success
Success Metrics
• Associate with action• Financial metrics• Success at each phase• Metrics depend on situation
5 Common Metrics
• Customer Acquisition Cost• Customer Retention• Viral Reach• Turnover• Revenue
Key Metric Example
• Barters Closet– Key Action: Get users to upload “Closets.”
– Success Metric: $3,000 monthly sales
Key Metric Sketch
–Key Action: Get users to upload “Closets.”–Success Metric: $3,000 monthly sales
1 Minute
Channels
Channels
Path to customer
Reach
• How you reach your customer• Right product-right path• A.K.A. Product/Market fit
Reality
• Many channels• Inapplicable today• Viable at later stage• Realistic• Develop strategy
Build & Test
• Build, test & measure from start
• Use small samples• Scale when validated
Free Fallacy
• No such thing• Human capital cost• ROI calculation challenge• Focus on key metrics
Paid
• Search engine marketing• Keyword competition• Learning to optimize
Inbound VS Outbound
• Inbound-pull messaging– Blogs, SEO, E-books, white papers, webinars
• Outbound-push messaging– SEM, print/TV ads, trade shows, cold calling.
Initial Channel Strategy
• Lean channel strategy• Testing & measuring• Creativity & risk taking• Experiment & have fun
Scale Channel Strategy
• Learning to revenue• Know how to reach customer• Scale– Internally– Outside professional
Channel Example
• Barters Closet (Current)– Friends/Family– Facebook/Blog/Twitter– Thrift fashion bloggers– Thrift stores– Trading events– Seasonal trading parties
Channel Example
• Barters Closet (Future)– PPC campaign– Facebook target ads– Paid advertising– Street team– Inside sales team
Channel Sketch
– Friends/Family– Facebook/Blog/Twitter– Thrift fashion bloggers
– Thrift stores– Trading events– Seasonal parties
Example
Best Practices
Sketch in One Sitting
• Sketch in one sitting• Sketch quickly• Get your ideas on paper
Blank Sections
• It’s ok to leave blank• It’s ok to come back• Some elements take more thought• Evolves over time
Think in present
• Predict the future (business plan)
• “Doer” attitude• What hypothesis are you testing?
Picking a Canvas
• Create canvas for each segment• Choose best canvas
Ease of Reach
• Take path of least resistance• Build, learn faster
Margin
• Highest margin
Market Size
• Large enough market• Stepping stone• Build a business
Mentor
• Seek outside help• Indentify blind spots
Services
• Business Model Creation• Pitch Decks• Go-To-Market Strategy• Business Plans• Advisory
Workshop
• Slides available• [email protected]• www.noyeslimited.com