Generally, a business model contains a company’s strategic and financial approach to its market. It captures how a business intends to sell its products or services, the costs attached to the sale, and most importantly, the target market. A business model canvas provides the structure that allows a business to thrive. However, it is not the only template that can help structure a business model, and the Lean Canvas is a popular alternative that can help this endeavor. A business model canvas contains a detailed one-page representation of a business strategy, vision and marketing ideas. On the other hand, a Lean Canvas is a one-page sketch of a business plan that focuses on business problems. In this article, we will compare the lean canvas vs. business model canvas and talk about their various similarities, differences, and advantages.
What is a Lean Canvas?
Visualize holding a 50-page book, and you need crucial information that resides inside of this book. Wouldn’t you appreciate a one-page summary of that book that provides you with the information you need at a glance?
The Lean Canvas is created with this in mind and focuses on the core details that can get a business off the ground. The Lean Canvas is a page-long summary of a business plan. It focuses on its value proposition and the problems a new business could face.
Start-ups often use the lean canvas as they are new and surrounded by uncertainties. Survival is paramount to founders, which means a plan that puts the risks and problems as priorities. The lean canvas allows the founders of a start-up to remain focused on surviving and pivoting their business model as their business grows.
Elements of a Lean Canvas
Below are the elements that make up a Lean Canvas. These will be slightly different than those of a business model canvas but help portray a unique picture of your value proposition and ideal customer
- Problem: Like all businesses, your goal is to sell or provide a service as a start-up. The market must need what you want to deliver.
- Solution: Many start-ups are competing for the same market as you. This means your solution must be positively different from what is already existing.
- Key Metrics: These are the crucial consumer activities such as leads generated, new users, or market penetration.
- Revenue Generation: You must solve the issue of revenue generation to stand a chance as a start-up.
- Expenditure List: List out expenditures you have made in running the business.
- Customer Channels: Your lean canvas must contain the means you want to use to get customers to notice your product or service.
- Advantage: You should know the advantage you have over competitors.
- Unique Value Proposition: The value proposition is key to the Lean Canvas and details the unique value that your business can bring customers.
- Customer Base: You must note where your customers are coming from and their core persona.
- Prioritizes the problems a start-up could likely face
- Easy to understand and share
- Easy Update of contents
- Narrowly restricts business performance
- Prioritizes immediate value instead of the future goals
What Is a Business Model Canvas
The business model canvas is more inclusive than the lean canvas as different businesses can use this template. The business model canvas contains a business’s marketing, operational and strategic plans. The business model canvas is interestingly also a page despite its details.
This template is an alternative to the traditional business model with its detailed yet simple look. Alexander Osterwalder created this model for different businesses. This model serves as the foundation for the activities of companies, new and old.
Business Model Canvas Elements
These are the essential elements of a business model canvas. Like it’s described, this is the most accurate distillation of a traditional business model, and the elements will reflect some of the most important facets of your business.
- Customer Segments: This section lets you know and research the people you would like to convert as customers.
- Customer Relationship: You have your customer segments, but what relationship do you want to have with them? Document the kind of relationship you would like to have with customers.
- Product or Service Value: You are not the only business that has provided a solution to consumers through your product or services. You have to show things that would make consumers choose your product. Let them know the distinct benefits your product has.
- Channels: It is how a company communicates with the customers to tell them about the value they would get from the company’s product or service.
- Key Activities: These activities are the ones you will use to show the value of your product and service.
- Revenue Generation: Your business model canvas must contain the different ways you can make money.
- Crucial Resources: These are the vital assets that allow your business to function.
- Important Partners: These are the other companies you would need to perform crucial activities that will allow you to provide customers with value.
- Costs: You have to provide the amount you have spent during business operations. A costs list lets you know if your business plan is working or not.
- Targets customer need
- Easy access to operational demands
- Brief and easy to understand template
- It doesn’t focus on customer value
- Not very accommodating of start-ups
Lean Canvas vs. Business Model Canvas: Differences
So, lean canvas Vs. business model canvas. Let us explore these two templates. You can see that each is similar yet so different from the other. The differences between these two are;
- Lean canvas focuses on entrepreneurs, while business model canvases emphasize customers, entrepreneurs, advisors, and consultants.
- Lean canvas targets start-ups, while business model canvas targets new and existing businesses.
- Lean canvas encourages start-ups to focus on the problems their businesses could likely face. The rationale is that a new business needs to solve a problem before anything else. Alternatively, the business model canvas examines revenue streams and business assets.
- A start-up using the lean canvas competes differently. They compete using their product’s unfair advantage over their competitors and exploit it. Companies using the business model canvas focus on the value of their product to beings to stay market relevant.
- Customers are a luxury for start-ups using the lean canvas, and they don’t emphasize customers. Having a helpful product is the key there. Customers are everything with a business model canvas, as companies using that model are already popular in the market.
Lean Canvas vs. Business Model Canvas: Which is the Best?
Your choice should depend on your business reality. As a new business, the lean canvas gives you the practicalities needed to survive as it is simpler and more problem-oriented.
A more grounded company would find that the business model canvas is a better fit for them as it focuses on optimizing their processes to achieve future goals. These companies have already passed the start-up phase and have a product to sell.
Notwithstanding which you decide to go with, adaptability is crucial as you will need to make changes from time to time. If you liked this article, make sure you check out our other materials, like the various lean canvas advantages, and if you want another option for a business model, check out our innovative CO-STAR template.