Should you create a business model canvas or should you validate your startup using the lean startup approach?
Establishing a start-up is no easy feat, and every start-up requires a lot of groundwork and careful research.
You might have come across the terms business plan, lean start-up methodology, and the business model canvas. While they are interlinked in certain aspects, there is a thin line between the three.
If you're unclear about what they are or which you should employ, this article is for you.
Interestingly, in the long run, you'll probably need at least one of those and cannot do without using any - and we will tell you why.
A business plan is a document that was traditionally used to summarize multiple aspects of the business, services, and products. It includes financial projections, staffing, operations, and more.
When you pitch your business to investors, many modern investors won't care to see a proper business plan document. Still, you should expect they would ask you about every component of such a document. It's how you get to analyze and strategize with your team about the vision of your company. So, while you might not need a "business plan document" in hand while pitching to investors, be ready with all of the business plan components either in a different format or different level of granularity. For example, when discussing go-to-market, you might not have a complete summary of all the possible channels you can use to sell your products but instead have a single slide detailing the channels you'll employ in the next 24 months.
The lean start-up is a methodology that focuses on constructing testable hypotheses facilitating viable products. This methodology enables entrepreneurs to answer questions on their business as they go along.
The methodology is described as a scientific approach to creating a start-up and delivering products to customers faster. It reduces risk due to the iterative process and determines if the business model is workable or not. The methodology emphasizes customer orientation, and the lean model ensures capital efficiency, which is required at the start-up stage. By "learning as you go," the company gets a better understanding of its customers and their needs compared with running just on assumptions without testing them.
The Business Canvas Model is a visual tool created to allow entrepreneurs to capture and communicate a holistic description of their start-up. The Business Model Canvas maps and outlines key features, the product design, and your value proposition. Once completed, it tells you the exact vital points you need to address when building your company. You can describe, design, challenge, invent, and pivot your start-up based on the business model canvas.
The model provides a complete picture of the business that can later be used to test and search using the lean start-up methodology. The tool is a valuable tool for planning, and it needs to be revisited after every substantial experiment in the early days of the company.
Now that we've understood what each term means and how they work, it is time to see how to put them together. Many entrepreneurs take one approach and stick to it, but we would recommend that, first and foremost, you do some experiments and see what works best for you. Search for examples of business plans and business model canvas and read through them. Try to see what makes sense and what is redundant. Once you have a good "feel" on how these two documents can describe a business, we recommend you do the following:
create a business model canvas as soon as possible
You should limit this effort to 1 day. Once it is done (and it won't be perfect), mark the parts you feel your assumptions are solid and the parts where you are not sure.
For each item – write a short description of how you'd test your assumption.
e.g., if you assume you can sell your software guided tours via the OTAs, it is worth testing whether:
Do the OTA's sell/push any guided tours today?
If not – why not? No need? Not willing to partner?
If yes, are those 3rd party tours? Are the same tours sold across multiple OTA's?
Use the lean start-up mythology to test and answer your questions. Many people think of the lean start-up to build a product, and they are focused on the features. It is a methodology to develop every function of the company. Are your paid ads more efficient using LinkedIn or Tik-Tok? Of course, you can't test every wild assumption, which is why start-ups require a bit of art and a lot of luck. You might step on many "misses," not due to a fault on your end. You didn't find an experiment that validates your assumption.
Once an assumption is somewhat validated, spend the time researching and building a document around your research. Having all those documented bounded will create a proper business plan, but unlike the business plan document, this will be a live process that is continuously tested and updated. You will never be DONE writing it, but rather, you'll continually update and change it as you go along.
Building a successful company takes careful planning, in-depth research, understanding of the market, customer needs, and luck. Everybody knows it. But it does not mean you should try to take shortcuts around planning and building fail-safes into your company. Instead, you should fully employ these tools to build confidence both in your start-up and yourself.
A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!
Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.