I frequently speak with entrepreneurs who believe that their idea, or expansion, will be the next Ring or Uber. They are ready to start writing their business plan, seek funding and find their development team. Their passion is palatable which is why I do what I do, but finding out if the idea is, as Lori Grainer of Shark Tank fame, says “ a hero or a zero” at this stage, would save a lot of time and money.
If you have an idea or want to add a new product to your existing business, I recommend completing these 9+1 steps. The 9 steps are part of a Lean Canvas created by Lean Stack. Lean Canvas (see sample below) is a one page planning tool that will help you define your venture’s key metrics (customer segments, problem vs solution etc) that, when completed, will either be the foundation of a solid business or a clear indication to try again.
The +1 step at the end is my addition and will be the most important step of all.
9 STEPS TO SEE IF YOUR IDEA CAN BECOME A BUSINESS:
The Lean Canvas is a living document and it will continue to morph over time. It might be interesting to print each version and hang them up; the evolution will be fascinating.
STEP#1: CUSTOMER SEGMENTS:
- List your target customers and users: Customers are those who pay you; users don’t.
- Early Adopters: List the characteristics of your ideal customer, those that will be your first customer. This step will prove invaluable when you start designing your go-to-market strategy.
STEP #2: PROBLEM
- List your customer’s top 3 problems. Think what Uber would have written: #1: taxis are too expensive #2: taxis aren’t available when you need them #3: you don’t know how much a ride will cost until you are in the cab.
- Existing Alternatives: (Competitors and their solutions): List how these problems are being solved today. Uber: smart taxis, car services, ride share programs.
STEP #3: REVENUE STREAMS
- List your sources of revenues from every source.
STEP #4: SOLUTION:
- Outline a possible solution for each problem listed. Keep it short.
STEP #5: UNIQUE VALUE PROPOSITION
- Single clear compelling messages that turns an unaware visitor into an interested prospect. Uber: Taxi service on demand
- High level Concept: List your X for Y analogy (e.g. YouTube=Flickr for videos)
STEP #6: CHANNELS:
- List your path to customers: List 3-4 paths that define how you will acquire your customers. SEO or depending on social media are typical responses but what path can your idea take that distinguishes your startup from your competitors?
Steps #7 & 8 are challenging at the idea stage but don’t skip them.
STEP #7: KEY METRICS:
- List the key numbers that tell you how your business is/will be doing. This isn’t about revenue: it is the numbers that will determine your rate of success.
- Uber might include:
- #1: the number of rides a day
- #2: the number of riders
- #3: the number of drivers that sign up
- For Garmz, a clothing company:
- #1: new designs uploaded
- #2: conversion rate to actual sale
- Uber might include:
STEP #8: COST STRUCTURE
- List your fixed and variable costs: If you are entering a new market, do you research and plug in appropriate numbers.
- Start with the fixed costs that you project, through experience and research such as overhead, fixed salaries and contractor costs, hosting etc.
STEP #9: UNFAIR ADVANTAGE
- Something that cannot be easily copied or bought. This could include IP, industry connections. A dream team, celebrity endorsements: anything but ‘commitment and passion’. Uber, and this is my thought, would have listed their proprietary logistics software. A client of ours offers a common service but have famous spokespeople involved that are internationally recognized.
STEP 9 + 1:
Take your idea and get out of the bubble founders too often live in, find potential customers and ask if they would buy what you want to build. Not if they think it’s a good idea or if they like it, but will they buy it. This is not a sales pitch and you shouldn’t be looking for validation; you want and need feedback. What is their pain and what are the tools they are currently using? Ask as many questions as you can but most importantly, listen. Collect as much feedback as you can and write another Canvas. Don’t try to sell them, but by all means, ask these potential customers if they will be willing to be your beta testers or, if appropriate, if they will join your Board of Advisers. (If you can get a signed NDA go for it but if not, ask anyway: the feedback at this stage is critical.
These 9 steps are the first steps in a long, ever changing process. Your first plan will have many iterations before, during and after launch but it is an exciting and exhausting experience. Enjoy the process.