So you have an idea for a business. After a little research, writing a business plan is the traditional next step. Unfortunately, writing a business plan takes a ton of time, but it does force you to think about every aspect of your business in great detail and define how your business will work. This is the greatest value in writing a business plan, but no plan survives contact with the
enemy customers. Rewriting a business plan once market reality is better defined is rarely practical.
Luckily, Alexander Osterwalder developed the Business Model Canvas, essentially a one page version of a business plan. The Business Model Canvas fits very well with the principles of a startup, providing speed and flexibility. As defined by Steve Blank, “A startup company or startup is a company or temporary organization designed to search for a repeatable and scalable business model.” He goes on to explain every portion of the Business Model Canvas here.
Eric Reis and Steve Blank have leveraged and build upon Osterwalder’s Business Model Canvas to help people design successful businesses. Reis stresses identifying and testing your assumptions in the Business Model Canvas and being a “Lean Startup” not in terms of spending little money, but in not wasting time on ideas, products, or services, that cannot be successful by identifying them as quickly as possible. Testing does require getting out of the building and talking to customers. This point cannot be stressed enough. Talking to potential customers is essential to finding out what they think about your product or service before you spend months or years building it! Of course, saying they like your product is not the same as buying your product, but there are ways to test that too.
The Business Model Canvas works well when you are ready to take a hard look at every function of your business idea. If you are refining your product, Ash Maurya’s Lean Canvas might be a better choice. The Lean Canvas focuses on defining the key aspects of your product and customers so that your riskiest assumptions can be identified, tested, and refined in to a viable product. The leancanvas.com provides a great online collaborative platform for you and your team to use the Lean Canvas with free plans for two users.
Looking for an example or two of the Business Model Canvas? Check out the links below:
Want to print out a copy of the Business Model Canvas? Try the PDF below.