Lean Canvas is the new Pitch Deck!

I hit a low point with my business last week. Every entrepreneur that I talk to goes through this, and I’m no different. I eventually solved the problem with a Lean Canvas, but I started by asking myself the tough questions:

• Is this working?
• Do I want to keep doing this?
• Would it be easier to just get a job instead?

My consulting business took off quickly last year and I was busy through May—almost too busy. Then it slowed down, which was fine because I needed a few weeks to wrap up wedding planning, get married (yay!), and go on our honeymoon.

Now I’m married and I want stable, predictable cash flow that I can grow over time. What to do?

The answer is to treat my business like a startup, of course. I spend all day advising entrepreneurs and it’s time to take my own suggestions.

The first step is to create a Lean Canvas. We’ve talked about how our goal as entrepreneurs is to create a working business model, NOT just a cool product or service. We can sit in front of our computers all day doing awesome stuff—which I did making music full-time for two years—but if we’re not getting paid then it’s not a business. It’s just an expensive hobby.

I’ve written and advised on a ton of pitch decks, executive summaries, and business plans. These are great tools, but making changes can be difficult and time-consuming.

The great thing about a Lean Canvas is that you can put it together in an hour and then start having conversations about it with your team, potential investors, and your new wife ;) It’s easy for people to understand and it’s easy to update as you get feedback — much quicker than a pitch deck, executive summary, or old-school business plan. Here’s what I put together:

Once you’re comfortable with your Lean Canvas, it’s easy to create your pitch deck—because you already know what you’re going to say.

I’ve created a Lean Canvas template that you can use, based on Ash Maurya’s adaptation of Alex Osterwalder’s Business Model Canvas. Maurya offers a tutorial on how to fill out each box, and please see below for my quick walkthrough along with the specifics of my business.

Grab my free Lean Canvas template.

And check out my Rocket Pro Forma if you need to quickly create investor-ready financial projections.

First, you’ll notice that the each box seems to have a random number in front of it. That’s the order in which you’ll want to fill out the Lean Canvas, and I’ve added animations to the template I’m giving you so that each box appears individually when you’re walking someone else through it. 

Maurya divides the Lean Canvas into Product on the left and Market on the right, which I find helpful. It’s also important to remember that you’re starting with your best guesses. You’ll need to “get out of the building” (thank you, Steve Blank) and talk to potential customers in order to refine your strategy.

1. Customer Segments: Describe your customers—Start with a general description like, “My customers are startups.” You’ll have a chance to narrow this down through in-person interviews, and you can get specific about your early adopters in the box below. 

2. Problem: The top 3 pain points your customer face—Many of the founders I talk with are trying to raise money, so they send me their pitch decks, and many need help with sales and/or marketing including strategy, execution, and coaching team members. I also talk to founders who are looking for accountability in the form of weekly meetings where we set goals and prioritize what to focus on. Having this type of external commitment combined with the perspective of someone who’s been there before—and is doing it now—helps them move forward much more quickly.

3. Existing Alternatives: How your customers are solving the problem right now, and how much they’re paying. It doesn’t have to be directly competitive: people can walk or bike instead of taking Uber, for example. If people aren’t doing anything to solve this pain then it may not be a big enough problem for them to actually use your product or service.

Most of the founders I talk to are using a combination of free and paid advice (including from investors), joining accelerators and incubators, reading books and newsletters, and taking classes. The biggest challenges I face from a revenue perspective are that startups get lots of free suggestions and/or they bring on advisors for equity. It’s clear that I need to provide more value than either of these options.

Okay, we’ve filled out the first three boxes. Remember how we said that these are our best guesses? 

Now it’s time to validate or disprove our guesses around customers, the problems they have, the existing alternatives they’re using, and what they’re paying. We have enough info to start running “problem interviews” with real live human beings. We’ll use what we hear to narrow our focus on who our early adopters will be. We’ll start getting inside their heads and learning to speak their language. And we’ll be amazed at how quickly our perspective changes once we’re talking to actual people.

My goal is one problem interview per day until I truly understand my potential customers. Sometimes I’m talking to people I already know, and sometimes I’m meeting new entrepreneurs and offering them free advice on their pitch deck or strategy. In either case I’m checking my assumptions and trying to uncover as much additional information as possible. 

4. Solution: The top 3 features of your solution—Narrow your focus based on the pain points you’ve validated, so you can define an MVP (minimum viable product, or in my case a minimum viable service) that’s the simplest path to solving a true customer problem. I’m offering paid consulting services, plus I’m starting to create online classes and webinars that will allow me to help more people while also moving me beyond just the hourly stuff.

5. Early Adopters: Specific description of the people who will take a chance on your unproven product or service—The problem interviews that I’ve done so far have helped me determine that my early adopters are going to be startups with some form of validation, meaning that they’ve raised money or been through an accelerator program. In just a few days of conversations I’ve already been through a few iterations of problems, existing alternatives, and unique value propositions.

6. Revenue Stream: Revenue model including the price you’ll charge per unit / subscription—Anchor your pricing to the existing solutions that your potential customers are using today. I’m targeting $150 per hour for my consulting. I haven’t decided on a price point for any of my online products yet—the online business will actually require a separate Lean Canvas because it’s a different business with different customers.

Okay we’ve filled out the first six boxes and we have what we need to establish pricing and create a mock-up, but we’re still not ready to develop an actual product yet. Now’s the time to run “solution interviews” with potential early adopters to validate our solution and pricing by securing a commitment to purchase—before we’ve even built anything!

7. Unique Value Proposition: Single clear, compelling message that will break through the clutter and convince your customers to buy—I’m testing two messages: 1) Achieve accountability and focus via regular conversations with someone who’s been there, and 2) Quickly determine the best strategy based on your current situation. My conversations are revealing a third option around coaching new team members.

8. Channels: Specific paths to customers—I talk to a ton of entrepreneurs and investors, and so far that’s been my biggest source of customers. I also publish weekly articles containing practical suggestions for startups based on what I’m seeing. LinkedIn and FounderDating are both places where entrepreneurs hang out and it’s productive for me to join conversations there.

9. Cost Structure: What will you need to spend money on, and what is your burn rate—My larger goal is to move some of my business online (self-directed and group education for entrepreneurs) so I can grow beyond hourly consulting and help as many entrepreneurs build successful businesses as possible. In the meantime, the consulting has to pay the bills while also allowing me enough free hours to keep selling, do pro bono work with entrepreneurs, and build the online business.

Okay we’ve filled out the first nine boxes, and now we can calculate our break-even by dividing our burn rate by our pricing. I need a minimum of $10k per month in order for this to be worth my time vs. getting a job, which means I need to bill 67 hours per month at $150. I’m going to time box it by giving myself three months to show that I can average at least my minimum in order to keep working on the business. It’s good to have a goal and a deadline! 

In a future post we’ll learn how to construct a traction model based on our breakeven.

10. Key Metrics: Key user activities you will measure in order to stay on track—You can reference Dave McLure’s “Pirate Metrics” (adapted into the more comprehensive “Customer Factory” by Ash Maurya in Scaling Lean) for guidance. I’m going to start with three metrics, all designed to tell me if my unique value proposition is resonating with prospects and if my customers are happy with my service: A) the percent of new visitors to mikelingle.com who sign up for the newsletter (value proposition), B) the number of repeat customers (customer satisfaction), and C) the number of referrals (both value proposition and customer satisfaction).

11. Unfair Advantage: What’s unique about your business that can’t be easily copied or bought—Start by reading two great articles by Jason Cohen: “No, that IS NOT a competitive advantage” (features, patents, price, PhDs and MBAs, better at SEO, etc.) and “Real Unfair Advantages” (dream team, domain expertise, personal authority, existing customers, etc.). 

In my case people respond to these: a) I’m good at figuring out the best strategy based on the current situation, b) I have experience starting companies, growing them, raising money, and mentoring other entrepreneurs, c) I meet a ton of entrepreneurs and investors all the time and I speak both of their languages.

Okay once you have all the boxed filled out with your best guesses it’s time to share your Lean Canvas with your team and your advisors. See what people think ASAP in order to strengthen your strategy.

Grab my Lean Canvas template.

Good luck, and leave your comments, questions, or a link to your Lean Canvas below!

Mike Lingle is obsessed with helping founders grow their businesses. I'm a serial entrepreneur, mentor, and executive in residence at Babson College. Check out my Rocket Pro Forma if you want to quickly create your financial projections.