When starting your venture, envisioning your idea is the first step in developing a business. Believe it or not, many founders don’t take the time to think about modeling the potential outcomes first — it’s more fun to build the product right away. However, before jumping in head first, it’s essential to understand what it is the business is trying to accomplish and if there are prospects interested in your idea.
If you haven’t thought through every angle of your idea yet, creating a business plan can help you think through the costs, revenues, channels, partners, target audiences, features, and more.
And don’t worry, this isn’t a dissertation — the anticipation is worse than the actual work. Typically, it is a one-time, one-page exercise that serves as a personal checkbox.
Instead of wasting your time with a never-ending business plan, we’re going to teach you how to envision your business with the Business Model Canvas. Let’s dive in.
What is the Business Model Canvas?
The Business Model Canvas was originally created for established businesses to forecast where the company is headed. At City Innovations, we’ve adapted a variation of the Business Model Canvas called the “Lean Business Model Canvas” that layers in lean startup principles. Using this, we can constantly validate our idea by gathering feedback, performing experiments, and iterating on the idea based on the findings in order to build the right product in the long run.
Overall, the canvas plan that helps you map out your company’s
- Top 3 problems the idea solves
- Top 3 feature solutions to solving the problem
- Unique value proposition
- Unfair advantages
- Customer segments
- Key metrics
- Cost structure
- And revenue stream(s)
Putting everything down on one page will provide you with a clear-cut, high-level overview of your business while helping you validate your idea along the way. Here are a few steps to start filling out your Lead Business Model Canvas.
Step 1: Get Your Idea Down
When working with our clients, we sit down with them over a two-day workshop to help map out their entire business plan in each of the following sections. The image below can be used as a template to get you started:
Step 2: Evaluate Your Confidence Level
Next, you’ll want to assess your confidence level in each section. Are you confident that each section has the correct information in it? Understanding your confidence level helps determine whether more time needs to be spent validating your business idea in any given area.
Color code each section with your confidence level:
- Red (low confidence): If you mark a section red, this means more work needs to be done to validate this section. Currently, very little data or feedback has been gathered and you’re not sure if the statements within the section are true or not. In this section, you’ve most likely only begun to ask people what they thought about your idea.
- Yellow (medium confidence): If you mark a section yellow, this means you’ve made good progress collecting qualitative data. However, you still need to perform your minimal viable test(s) to confirm your findings (see step 4). In this section, you’ve most likely done customer interviews and surveyed a larger sample size.
- Green (high confidence): If you mark a section green, you can prove this section is correct with repeatable data points and by performing a minimal viable test.
The overall objective is to turn each section green to validate your idea fully.
Step 3: Add Your Assumptions
Understand: There’s a 99% chance that everything you just filled out in your business canvas is wrong.
But don’t let that stop you from moving forward. This is where adding assumptions into your plan comes in.
There are hundreds of assumptions that you bake into any business. For example, you may be assuming that your customers are within a specific target market, but do you know that for sure? Or you could be assuming your venture’s top feature without really asking anyone if that’s a feature they want or need.
As you go through each section and determine your assumptions, you must also consider you business’s core assumption. For example, if “x” wasn’t true, your business would cease to exist.
Uber’s core assumption is that people will ride in strangers’ cars to get to where they’re going. The core assumption of Airbnb is that people will stay in a stranger’s house during their vacation. If Uber and Airbnb couldn’t say yes to their core assumption, then their business would fail.
Understanding your assumptions will help you determine which sections need to be validated at a greater level to confirm your business plans’ success.
Go through the canvas and mark the assumptions next to each section with a yellow text box, then move into step 4 to help you validate (or disprove) your assumptions.
Step 4: Determining Your Minimal Viable Tests (MVTs)
Once you have determined your confidence levels and listed all your assumptions, you can move into brainstorming your minimal viable tests to determine if your assumptions are true.
The main goal of creating an MVT is to ensure an authentic, quantifiable appetite for your solution and that an actual problem exists to be solved. MVTs do not need to cost a lot of money or time to perform. Think of it as a “gut-check” experiment.
For example, instead of building an entire file-sharing platform, Dropbox set out to develop an inexpensive MVT to test their business model. To do this, they made a landing page, a sign-up form, and a 2-minute overview video that they sent out to their target market. A quarter-million sign-ups later, their product was well thoroughly validated.
Now it’s your turn. Brainstorm MVTs to validate your assumptions and note them in the corresponding sections with a green text box.
Once complete, you have a backlog of minimal viable tests that you can validate.
Start Envisioning Your Idea Today
Before you jump into building your product, you need to fully envision it and determine its validity. Once you ensure that your business idea is validated, you can move into validating your product through the Product Validation Funnel.
Want expert assistance envisioning your business idea? Click here to contact us, and we’d be happy to help.