7 Actionable Steps to Craft a Lean Business Model Start small, use a proven approach, anticipate change and pay attention to customer opinion and market research.
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Having big dreams -- like running your own business or turning your idea into a company that can change the world -- is pretty ambitious. And it's only possible if you build your startup on top of a solid business model.
Let's face the facts. You may think you have a clear business plan and a great business idea, but in reality, you have a bunch of hypotheses. You can waste your time with an old business modeling approach -- write a lengthy document and include lots of charts and data in it -- or you can begin your entrepreneurship journey in a more professional manner and use business model canvas.
Related: Successful Serial Entrepreneur David S. Rose: The Business Model All Startups Need To Be Using
Business model canvas is a shared visual language that can be used as your reference point and the sketch board to plan, grow and drive your startup. It's a strategic move towards designing your innovative business model.
I've assembled a list of seven tips to help you develop a lean business model.
1. Avoid copying.
The whole point of entrepreneurship and building a startup is to offer something genuine and unique; something that can add value to people's lives. Instead of copying another startup's business model, you should use design thinking techniques to generate innovative business ideas that are disruptive and innovative.
2. Anticipate change.
As an entrepreneur, change is your greatest ally. Time is often against you, so don't waste it on perfecting your first business model. The truth is, your business model will change as soon as you go through the customer acquisition phase. General rule of thumb -- never fall in love with your first business model.
3. Find the right epicenters for your business, and start from there.
Depending your business model pattern, also known as business strategy, you might start the ideation process from different building blocks of your business model canvas. You have to find the right epicenters to help you differentiate your business model. Use any of these four starting points.
Your best strategy would be to concentrate on the resource-driven epicenter if you want to leverage an existing partnership or your current establishment and assets.
If you plan to improve productivity, then your option will change to the offer-driven epicenter. You have to start with your value proposition and improve the way you are addressing customer pain points. This way, you'll even be able to mitigate risks and reduce costs.
Related: How to Develop and Evaluate Your Startup's Value Proposition
The customer-driven epicenter is the best option to start with, especially when you want to penetrate a particular customer segment of your industry and offer them something they couldn't afford to buy previously. Your starting point of ideation would be your new customer segment and its characteristics.
Finally, the finance-driven epicenter is used as a starting point of ideation process when you focus on innovating the charging mechanism in your industry, adding new revenue stream and disrupting the way your competitors do make money in your industry.
One thing you must not forget is the fact that business model canvas is like a balloon. As soon as you move one element from one building block, it affects the entire business model.
4. Iterate often.
Your first idea is nothing but what you think might work. Draft your first version, complete all nine building blocks of your canvas, and develop your initial business model. Once completed, start testing it outside the building by listening to your customer feedback and iterate accordingly. Who knows, you might even end up developing something totally different in comparison with your initial idea.
5. Include your customer's opinion.
Many businesses spend tons of money in market research, but they tend to forget to include the most important factor to their customer acquisition and product development cycle -- their customer's opinion. If you don't have a huge R&D budget, start conducting low-cost market research and get to know your potential buyer's feedback. The more you know about your customers, the better your position.
Related: Why Market Research Matters
6. Leverage an empathy map.
It's not about how cool your business idea is, or how amazing your product looks. It's all about how you can use it to touch your customer's heart. To achieve that, you must design both your business model and your product/service to address your customer pain points. Answer these questions:
- What does she like to do during weekends?
- What influences her?
- What do you know about her attitude in public?
- What does success mean to her?
- What worries her?
7. Draft with these two approaches in mind -- agility & lean startup.
The trick is to be able to develop your business model and move to product development as quick as possible. Next comes testing your model and your prototype with your customers, and finally, adapting to market demands or pivot whenever necessary.
It's unfortunate to see that many entrepreneurs fail because they count too much on what they think is going to work. The best way to find out whether your business idea is the next big thing is to start small, use a proven approach, and design a business model base on the above mentioned techniques.