9 Steps to Writing a 1-page, Lean Startup, Business Plan
So it’s the middle of Covid and you’ve decided to make that business you’ve been noodling around with a reality. You want to become a startup entrepreneur. What do you do now?
One of the best ways to launch a successful business is to use a scientific method that has been proven to give you a leg up. Called the Lean Canvas method, and based on the Lean Startup methodology, it takes you through a variety of steps that help you ensure that you have answers to all the questions that you’ll need to address to ensure your business is a standout. It focusses on identifying problems and helping find solutions and at the end of the day, it allows you to be able to explain your entire business in one page. Imagine the “elevator pitch” of business plans. How much thinking do you have to do about your business before you can distill it into an elevator pitch? A LOT! This is the same – you do all of your thinking and planning and testing up front until you can distill the information into one clear and easy to understand page. While the long form static business plan isn’t used so much anymore, this one pager becomes a living, breathing document which is constantly being iterated and updated
Wanna know how?
Your business plan is going to have 9 section as follows. They show up in a particular order because that is the order in which you’ll move through the process until you can fill in that section with the couple of sentences and/or images that show the details of that section. The steps are:
- Customer Segment
- the Problem
- Unique Value Proposition
- Revenue Streams
- Cost Structure
- Key Metrics
- Unfair Advantage
You can use this template to create your one-page biz plan:
Wait…it STARTS with customer segment??
I know. It might seem strange to start there, but if you don’t know who they are, you can’t identify their problem(s). Even if you have a business idea, the Lean Canvas method asks you to go through the process from the start to make sure you’ve actually got an idea that will succeed. And one of the things that prevents startups from succeeding is that the entrepreneurs forgot to make sure that there is actually a target market that wants the thing they’re trying to sell.
So the Lean Canvas method asks you to look at the customer first to see what issues that segment of the market has and which ones are as yet unsolved or unsatisfactorily solved. You often do sections 1 and 2 closely together or at the same time.
A better solution
Once you’ve figured out who the customer is and what the issue is, you can address the problem with your own solution. All the evidence indicates that the best solutions have to be exponentially better than what is currently out there. That means not just a little bit better, faster, stronger, cheaper or lighter, but 10X better, faster, stronger, cheaper or lighter. If you aren’t offering a solution that is exponentially better, it is unlikely that people will switch from their current solution, even if it is sub-optimal, to yours.
One of the other things that it is important for entrepreneurs to understand is that there is a difference between a “nice to have” solution and a “need to have” one. The “nice to haves” have to be a LOT better than the current alternatives than the “need to haves” which probably don’t have any current alternatives and which, as such, are a significant unsolvable pain point for the customer.
Along the same lines, entrepreneurs also have to understand that there is a difference between issues and opportunities. There are some unsolved issues that are just not going to get fixed, or if you do find a solution, people aren’t going to pay for it. Opportunities are problems which people would pay to have fixed. Don’t waste time on anything that isn’t an opportunity.
A value that’s unique
So now that you have been able to fill in the problem and what you would do differently, you need to drill down to the ACTUAL product. What is the UVP – the Unique Value Proposition – ie how does your product differ from what is out there now? How have you solved the identified problem? You’ll obviously have to have a handle on the competition to develop this one.
Where are your customers?
Then you need to get into the nitty gritty. What marketing and advertising channels will you use to bring your idea to market and reach your customer? You’re going to have to create an offer experiment, with a “hook” (a thing you say or show to get people’s interest or attention). You’re going to need to show those people a Minimum Viable Offer (like a prototype) to gauge their interest and let you test the assumptions you’ve made. This is something you’ll want to do a lot – assume, test, prove/disprove assumptions, continue or pivot, rinse, repeat! The Lean Startup method uses this testing so that you don’t make costly mistakes or take unnecessary risks by moving too far, too fast.
What’s the right price?
Next you’ll figure out how you’re going to make money. You need to prove you have a sustainable business model with the ability to have money coming in. Do you have the right price; the price at which people will buy but at which you’ll also be able to make money.
Have you figured out your costs?
There are costs that are one offs, and those that are ongoing and part of figuring out the sustainability of your business model is knowing what those costs are and therefore, how many sales you’ll need to make to keep the lights on.
One thing that people don’t set up in advance nearly enough is the set of key metrics that will help evaluate how the business is doing. They spend a lot of time reacting and just flying by the seat of their pants but often that means that they spend time on the wrong things; the things that don’t matter or don’t matter as much. Before you get crazy busy, figure out what metrics will actually tell you if you are moving in the right direction and what activities support those metrics so that you can focus your scarce time and resources on those things.
Finally, be able to articulate your Unfair Advantage. That’s your “secret sauce” – the thing that you have that no one else has. The thing that makes you standout because it can’t be copied or bought.
On your way!
If you progress through all of these steps and fill in boxes on the one-page template above, being aware of the fact that you need to complete them in pencil for awhile as they’re likely to change as you test and iterate and pivot, you will be well on your way to a sustainable business. And you’ll have done it without getting into massive debt or taking massive risks until the business justifies it; until you know that you’ve answered the questions and dealt with the problems that are going to undermine your chances of having a successful startup.
So what’s holding you back? The best time to start is today. Good luck.