Find out why a one-page Lean Canvas is more effective for securing start-up investment than a 40-page business plan.

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March 26, 2021
Lean Canvas: How To Create a Business Plan that People
Will Actually Read
process.st/lean-canvas
Amanda Greenwood
March 26, 2021
Everybody has a plan until they get punched in the mouth…
– Mike Tyson
Which, let’s face it, happens to most start-ups and entrepreneurs. Around 75% in fact.
You have the best idea. You spend days, weeks, and months perfecting a 40-page business
plan filled with five-year forecasts, 18-month roadmaps, and in-depth marketing strategies.
You confidently pitch it to stakeholders and investors.
And then?
Then you get punched in the mouth.

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Potential investors go quiet or “haven’t had time to read it” and you’re left with an expensive,
wasted deliverable and a chunk of time that you’ll never get back. Worse still, your product
isn’t any nearer launching and you haven’t secured any buy-in or investment.
What. A. Waste. Of. Time.
Traditional business plans are of little use to start-ups, and of no real interest to investors.
But what’s the alternative?
A one-page business plan inspired by Eric Ries’s Lean Start-Up methodology and specifically
designed for emerging entrepreneurs: The Lean Canvas.
The Lean Canvas is a living framework that allows you to quickly capture your idea or
concept, thoroughly validate it, and then continuously share, improve, and most importantly
move on it.
Ok, I know what you’re thinking:
I have the answers to all these questions and more in this Process Street post.
Ready to dodge some punches?
How can a one-page Lean Canvas possibly replace a 40-page
business plan?
Creating a detailed business plan (complete with comprehensive forecasts, roadmaps, and
strategies) and pitching it to investors has always been the first step new businesses and
entrepreneurs take to secure buy-in or investment, right?
But why?
Why business plans don’t work for start-ups

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During the early stages of an idea or a business, all you really have is a strong belief, a clear
vision, and a lot of untested assumptions: You believe there’s a market for it. You think your
pricing will generate $X in revenue, and you hope your product roadmap will look a certain
way.
But you don’t really know. How can you? You haven’t tested the concept.
Of course, your business model might be based on similar businesses, products, or concepts,
which allow you to hypothesize the future. But you can’t provide any concrete proof or
evidence that your idea is going to work.
Which is surely the sole purpose of a business plan?
Plus, a business plan typically takes ages to write as it requires lots of detailed, accurate
information. And, it becomes obsolete incredibly quickly, as and when you encounter the
various operational and marketing challenges that inevitably arise.
So, instead of being a clear, factually accurate, representative proposition, a start-up’s
business plan tends to be a wishy-washy, out-of-date, speculative document.
And, what do investors, Angels, and stakeholders hate more than anything…? Exactly.
The alternative to speculative, inaccurate, & obsolete business plans
Start-ups face a vicious circle: You can’t prove your concept without investment, but you
can’t get investment without proof.

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The original concept of a business plan was to break this circle and give investors the
information they needed to justify a decision on whether to fund the idea or not.
But as we’ve already established, not only is a start-up’s business plan incredibly time-
consuming to create, it’s difficult to digest and full of guesses rather than reassuring facts. As
a result, all that hard work can often get bypassed by investors.
The answer to this dilemma is the Lean Canvas. The Lean Canvas is an actionable,
entrepreneur-focused, one-page business plan.
Inspired by Alex Osterwalder’s Business Model Canvas and the principles behind the Lean
Start-Up movement and eradication of waste, Ash Maurya developed the Lean Canvas
framework specifically for start-ups.
He felt that spending time creating a business plan that was often inaccurate, obsolete, and
ignored was unproductive and a wasteful.
“Waste is any human activity which absorbs resources but creates no value.” – James Womack,
Leanstack, Bootstrapping + Lean Startup = Low-burn Startup
So, he developed the Lean Canvas; a one-page, easy-to-digest document that:
1. Captures key investor-focused information that’s backed-up with proof;
2. Start-ups can complete quickly and iterate continuously.

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As you can see, the Lean Canvas is a set of nine blocks:
1. Customers
2. Problem
3. Solution
4. Channels
5. Value proposition
6. Unfair advantage
7. Revenue
8. Costs
9. Key metrics
Each block presents clear, concise, and accurate information in a digestible format. It takes
less time to complete, it’s easy to keep up-to-date, it gives investors the information they
need, and it paints a clear picture of the business or idea on one page (instead of 40).
What’s not to like?
How can I tell the entire story of my business on one-page?
OK, you get it: It’s a waste of time creating a semi-fictional business plan that won’t get read.
But, seriously? How can you convey how fantastic your idea is on one, single page?
To answer this, we’ll need to look at each of the nine components that make up the one-page
Lean Canvas framework.
Lean Canvas component #1: Customers ǑĝǑ
The first block to fill out is all about your customers. As you might do with a business plan,
you need to determine who your user base is and understand what makes them tick.

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Go deep and build up a customer profile for each group of customers you’re targeting. Get
under their skin and get to know them as people:
Who is your intended audience?
What type of person are they?
What are their likes, dislikes, and pain points?
What’s their average day like?
What makes them happy?
What frustrates them?
One thing you must do during this exercise is define who the early adopters of your product
are likely to be.
Identifying this group of people is essential because you can use them to validate your ideas.
Ask them questions, send them feedback surveys, and get them to trial your product. Collect
these valuable insights and use them to iterate your Lean Canvas, determine the direction
you take your product in, and justify your ideas.
Real customer opinions and feedback are valuable proof points that investors will trust.
Lean Canvas component #2: Problem Ǡ
The next step you need to take should be in the shoes of your customer. Walk a mile in your
customer’s shoes so you can identify the problems they might face with (and also without)
your product.

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Conduct interviews, carry out tests, or send out surveys to help you uncover the real issues
they’re likely to face or are already facing.
Interact with your product yourself, or ask an unrelated third party to give it a try. Consider
the experience from your customer’s point of view and objectively identify what works and
what doesn’t.
Take this back to your Lean Canvas and tweak your idea accordingly. Use it as evidence to
prove the concept you’re pitching.
Lean Canvas component #3: Solution ‫ݗ‬
Next, you need to describe what your product is going to do. What will it solve? What’s the
ultimate vision?
You might feel that your product solves several problems and is the answer to everything.
But, remember, this needs to be clear and concise.
So, play around with each solution to see what sticks. Assess your features and capabilities,
carry out research, collect feedback, and brainstorm with your team so you can narrow it
down to one or two solid solutions that are grounded in evidence.
Lean Canvas component #4: Channels ӣ
How will your customers find your product? How will they come into contact with you or
your product?
List every single channel or touchpoint that you could use to get your product in front of your
audience.

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You might want to use a mixture of paid channels, like Facebook ads or trade fairs, and free
channels like SEO or blog posts. Create a content strategy to help you decide where best to
center your efforts and show investors that you’re able to provide the best experience to your
customers at every step of their journey.
Lean Canvas component #5: Value proposition ‫ڡ‬
Write out a punchy statement that explains the core value of your product.
Think: Why would your target customer care about it? What will it do for them? What
problem does it solve? Why is it a better option than the competition?
Sell the end-benefit not the solution, and keep it short, catchy, and powerfully persuasive (eg.
the film ‘Alien’ isn’t a film about aliens, it’s “Jaws in Space”).

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Three words of warning though:
1. Don’t confuse a value proposition with a tacky slogan. For instance, M&M’s
“Melts in your mouth, not in your hand…” is a slogan, not a value proposition.
2. Don’t write a sentence that’s all hype and no substance. For example, “The
best product EVER made” is pure hype. There’s nothing to back it up and investors will
see straight through it.
3. Don’t use meaningless buzzwords or jargon. You might think that phrases like
“value-added interactions” make you sound like a prestigious expert, but they don’t.
They make you sound like a pretentious airhead.
This block is one of the most important ones to get right. Your value proposition is how
investors will see you and your product, and how they will describe you to other partners and
investors.
Lean Canvas component #6: Unfair advantage Ň
Whether you know it or not, you have an unfair advantage over your competitors. All you
have to do is find out what it is!
What makes you stand out? What puts you streets ahead of your competitors? What do you
have that others can’t replicate or acquire?
It might be your internal team; it might be in-depth knowledge or inside information; or it
could be your unique position within a community.
It’s there somewhere. Dig it out and put it on display.

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Lean Canvas component #7: Revenue Ұ
This is where you’ll need to identify the sources of income that will keep you and your
business afloat.
Create a simple pricing model and test it out on your early adopters. Does it work for them
and for you?
You might charge a subscription fee; you might generate income through advertising on your
platform; or maybe you’ll get customers to pay for their usage. Maybe it’s a combination of all
three!
Just remember to keep it as simple as possible, test it out, and keep iterating until it’s perfect.
Again, testing it out on early adopters backs up your concept.
Lean Canvas component #8: Costs Ҹ
I probably don’t need to tell you that over 90% of start-ups fail because they don’t consider
the proper costs of launching and running their business.
So, list all of your expenses.
Consider everything, from customer acquisition and retention costs, to distribution and
office overheads. And to make sure you don’t miss any key costs, work through each of the
nine blocks in your Lean Canvas and consider the costs that each might bring.
Lean Canvas component #9: Key metrics ӈ
To be able to prove the success of your product, you’ll need to set clear, easy to measure
metrics.
Outline what you plan to track and why.

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Identify the indicators that will demonstrate how well your company is doing. For instance,
you may choose to measure the number of users, downloads, or social followers you get; or
you may focus on retention figures, brand interactions, or costs, etc.
Fill in this section of your Lean Canvas with the metrics that are most critical to the problem
you’re trying to solve with your product.
Now you’ve seen what goes into a Lean Canvas, can you see how it’s possible to tell the whole
story of your business on one page?
Not quite?
Key things to remember when creating your Lean Canvas
The trick to creating an effective Lean Canvas that fits onto one page is to:
Fill in all 9 blocks in the above order and work your way through each one logically.
Fill each block with concise notes and link-out to images, documents, and other related
information.
Remember it’s a fluid, working document that’s not set in stone.
To test the Lean Canvas out before you share it with investors, go through each step and relay
the story to yourself:

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We will help [customers] solve [problem] by providing them with our [solution].
They will know about us through [channels] and they will be convinced to join us because
[value proposition] and because we [unfair advantage].
We will charge them by [revenue] which will cover our [costs].
We will measure our performance by tracking [key metrics].
It should all flow nicely, like a story where everything is linked. If it doesn’t, it needs more
work before you show it to investors.
Is a Lean Canvas really enough to help me secure investment or buy-
in?
But wait a minute. Don’t investors expect to see a business plan? Will they take a one-page
Lean Canvas seriously?
Why the Lean Canvas works for start-ups
The Lean Canvas is centered around validation and justification. It’s about working the idea
out, asking for feedback, and using that feedback to iterate your plan until your idea becomes
a valid one.
Your Lean Canvas then becomes living proof that your concept will work. Investors will value
proof of concept 10X more than 40 pages of empty promises and unfounded statements.
Not only that, but it’ll take you hours, not months to put together. So, if you get punched in
the mouth again, it’s no biggie. Just go back and rework it based on investor feedback.
And it’s quick and easy to update; it moves as you move, allows you to pivot, and it means
that you can get your product out to market quickly. These are all reliable indicators for VCs,
Angels, and investors that a start-up can take off.
“It lets you focus on building your business faster, by capturing your idea, collecting feedback,
and iterating on it dynamically.” – Infolio, How to Create a Lean Canvas
To prove the Lean Canvas concept even further, let’s take a look at it in action.
The Lean Canvas in action
Below are two hypothetical Lean Canvas examples from a couple of familiar companies who,
although it’s difficult to believe, were start-ups themselves once…!
Google

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In summary, Google’s Lean Canvas story (if the Lean Canvas existed back in 1998!) might
have gone a little like this:
We will help all web users to find what they’re searching for easily by providing them with
technology that allows them to search and find relevant content.
They will know about us through other users and they will be convinced to join us because
they’ll be able to find what they’re looking for quickly (unlike with competitors) and because
we have an innovative combined citation-ranking system.
We will make money through investment and advertising revenue which will cover our hosting
and development costs.
We will measure our performance by tracking the number of search requests and the
percentage of users who end their search on the first page.
Facebook

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And, Facebook’s Lean Canvas might have gone like this back in 2004:
We will help all college students to communciate with their peers online by creating an online
communication platform that will allow them to connect with their friends, share photos, and
chat.
They will know about us through referrals from other students and they will be convinced to
join us because it’s a student orientated communication platform and because we have
invented a new type of website: A social network with social features!
We will make money through investment and advertising revenue which will cover our hosting,
development, and payroll costs.
We will measure our performance by tracking the number of daily, weekly, and monthly active
users.
To conclude…
Despite the obvious benefits of the Lean Canvas, it has to be said that:
“A one-page document of this kind may not satisfy every potential investor at every financing
stage. But many investors will consider a document like this to be more than adequate.” –
BSchools, Can a Lean Canvas Replace a Traditional Business Plan?
I think we can all agree that the moral of this story is: don’t waste months agonizing over a
hefty business plan that no one is likely to read.

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Instead, create a Lean Canvas. Tell the story of your business with key information that’s up-
to-date and backed by research, testing, and customer proof. Get the ball rolling in one
afternoon, with one page.
Think of it this way, which would you rather do:
“Spend 6 months pitching investors so you can refine a story based on an untested product? Or,
spend time pitching customers so you can tell a credible story based on a tested product?” –
Ash Maurya, Leanstack, Bootstrapping + Lean Startup = Low-burn Startup
I’d rather roll with the punches with a Lean Canvas. You?