Business Posts

The Lean Business Model Canvas: A Business Plan for Entrepreneurs

New entrepreneurs often assume that before they can start up, they need a detailed written business plan. But traditional business plans tend to be more useful for established businesses that are looking to scale up. Most new startups don’t need a plan that’s extremely detailed; the point is to get to the key things that matter.

At NaperLaunch, we encourage new startups to use the Lean Canvas, a 1-page business plan template designed especially for entrepreneurs. Created by Ash Maurya and adapted from Alex Osterwalder's Business Model Canvas, it helps you quickly assess the strength of your business idea by prompting you to examine essential aspects of your business early in your entrepreneurial journey.

With the Lean Canvas, you can focus on identifying problems and solutions. There’s only so much space to use, which means it’s necessary to boil down key points into the most important information.

The Lean Canvas covers, at a high level, all the major aspects of your company. It helps you determine whether your product or service should be created in the first place. It also helps you decide whether it is possible to build a sustainable business around a particular set of products and services.

The canvas breaks your company into nine building blocks, as shown in Fig. 1. Individually, they help you define your business in a logical order. When assembled in this configuration, they create a Venn diagram–like way of thinking about your organization.

The Lean Business Model Canvas
Fig. 1 The Lean Business Model Canvas
  1. Problem - This is what your product or service will solve for people. What problem(s) are you solving? Is it an adaptation or new product/service? Are you bringing lower cost, better design, more features?
  2. Customer Segments - These are the people that have the problems you’ve identified. It’s important to learn as much as you can about them, such as who they are, where they live, and how many of them there are.
  3. Unique Value Proposition - The heart of the canvas, the UVP is how you will set yourself apart from your competitors. It will guide you in your pricing strategy and your marketing messages. We describe the process of writing a UVP in this blog post.
  4. Solutions - What is your business going to offer that solve the problems you identified? Your offering should be something that your customer wants and for which the customer will pay enough to make your business profitable.
  5. Channels - What marketing and distribution channels will you use to reach your target audience (eg, Business to Consumer, Business to Business)?
  6. Revenue Streams - What is the market willing to pay? How much will you make and from where?
  7. Cost Structure - What will your solution cost to implement? Are you satisfied with your break-even analysis, and if not, how will you improve it?
  8. Key Metrics - What are the drivers for your business? What key performance indicators will you use to evaluate or predict performance of company activities or other specific outcomes against set goals?
  9. Unfair Advantage - What competitive advantage can you and your company develop, exploit, and maintain?

When completing the canvas, answer the questions starting at the top left with Problem, and continue to Customer Segment at the top right. Continue numerically until you've answered all the questions. You'll notice the boxes are out of order, but the Lean Canvas is designed this way to optimize your thoughts. When assembled, you'll see common themes emerge from the boxes that touch each other.

If you’re interested in creating your own Lean Canvas, the Naperville Public Library offers several resources to help you get started:

  • The NaperLaunch Academy offers a focused curriculum to help entrepreneurs develop fundamental business knowledge and learn the Lean Startup process. The next series of workshops kicks off Wednesday, Oct. 6 with Business Conceptualization, a session devoted to the first seven boxes of the Lean Canvas; the following session on Startup Financial Essentials, explains how to fill in the last two.
  • The library’s Gale Business: Plan Builder software, accessible at the library or from home with an NPL barcode number and PIN, is an interactive tool that walks users through the process of creating a Lean Canvas, and eventually, a business plan and strategic marketing plan.
  • If you’re interested in learning more about the Lean Startup process, this blog post is a good starting point. For more information, you can find Ash Maurya’s books, including Running Lean and Staying Lean, in the library catalog.
Posted: 
Tuesday, October 5, 2021 - 15:00

Startup Basics: Choosing a Business Location

Choosing a location is a crucial step in starting a business. There is more to identifying the right location than just finding an available structure to occupy. How you go about choosing your business's location will define your organization.

A business location strategy takes planning and research and a willingness to thoroughly vet all your options. Finding the right location involves both identifying the desired qualities of a potential space and considering your needs as a business owner.

Here are some key factors to consider when selecting a location for your small business:

  1. Location Type and Zoning Restrictions

    The location you choose will depend on the type of business you operate. Consider the location type that makes the most sense for your business and customers, whether it’s home-based, retail, mobile, commercial, or industrial.

    In almost every case, where you can locate will be dictated by local zoning ordinances. Contact your city and/or county clerk’s office for information about ordinances or zoning restrictions could affect your business, as well as any special considerations such as required structures and taxes.

  2. Costs and Budget

    When weighing business locations, it’s important to the overall cost, not just the rent or mortgage. Costs that can vary significantly by location include standard salaries, minimum wage laws, property values, rental rates, business insurance rates, utilities, and government licenses and fees.

    In addition, income, sales, property, and corporate taxes may vary significantly from place to place. Some state and local governments offer special tax credits for small businesses; you might also find state-specific small business loans or other financial incentives.

  3. Customer Demand and Competition

    Consider who your customers are and the importance of their proximity to your location. If your customer base is local, does a sufficient percentage of that population match your customer profile to support your business? Does the community have a stable economic base that will provide a healthy environment for your business?

    Research different demographic aspects about your local area, particularly around your desired location, for example, purchasing power and disposable income, means of transportation, average age and population, recreational activities and hobbies, and family status. This information will help you determine the potential demand for your product or service.

    In addition, knowing where your competitors are located will allow you to better gauge demand for your product or service compared to other companies. Ideally, you want to secure a location that’s not saturated by your competition. Look for areas where your product or service is in high demand and/or where your competition is low. If possible, you’ll want to find a location where the other businesses on the block are complementary, to ensure that your business fits into the local market.

    Library resources such as Gale Business: DemographicsNow and Reference Solutions are helpful for finding information about individuals and businesses in a particular geographic area.

  4. Employees and Recruitment

    Finding high-quality employees is crucial to your business success. What skills do you need, and are people with those talents available? Consider what is most important to your current or future employees. Does the community have the resources to serve their needs, such as restaurants and grocery stores, childcare, banks, or schools?

  5. Accessibility and Parking

    Consider how accessible the facility will be for everyone who'll be using it, including customers, employees, and suppliers. Find out about the days and hours of service and access to locations you're considering. No matter how attractive your business is, sufficient parking should be a key consideration.

    When considering your options, ask yourself which location site makes it easier and cheaper for you to get the raw goods you need to operate. What sort of deliveries are you likely to receive, and will your suppliers be able to easily and efficiently get materials to your business?

  6. For more information about this and other topics, consider registering for the NaperLaunch Academy workshop series or scheduling a one-on-one appointment with a business librarian or NaperLaunch coach.

Posted: 
Tuesday, September 14, 2021 - 16:00

4 Key Components of a Business Plan

In a previous blog post, we described 5 main purposes of a business plan. But once you decide to write one, what should it include? While the level of detail will depend on the specifics of your business and whether you’re writing the plan for yourself or to use as part of a pitch for funding, any business plan should include these four components.

  1. Company Information
    Your business plan should provide detailed information about key aspects of your company. Some of the information in this section and the next one will grow from your lean business model canvas:
    • Ownership: What is the company’s organization structure (eg, sole proprietorship, partnership, LLC, S corp., corporation)? You should understand why you’ve selected that structure.
    • Mission: Why are you going into business? What impact do you intend to have in your community or marketplace?
    • Value proposition: What is your unique offering? What makes your service or product a better value to a customer? (This blog post explains what should be included in a unique value proposition.)
    • Key Partners: Who are your business partners and your potential strategic alliance partners? Who are your professional advisers and investors? Who are your coaches and mentors? All of these people are as much a part of your team as your employees.
    • Key Resources: What are the resources you will tap into to be successful? What past experiences qualify you to operate this business? What are the organizations that will support your efforts (eg, incubators)?
    • Revenue Streams: How will your business make money? Identify your services or products.
  2. People
    Your business plan should identify key people and businesses connected to your business. These may include:
    • Strategic Partners: These people are not owners or employees of your business; instead, they own or represent other businesses that can align their marketing with yours to help you grow. (For example, a realtor may have a strategic partner who is a loan officer.) Your plan may identify types of businesses until you know specific businesses entities that will align with you.
    • Investors: Identify any individuals who have invested sums of money into the capital needs of your business. They may be equity owners or other financial investors.
    • Officers and Employees: In the early stages of your business, your plan will identify positions until actual names are known.
    • Vendors and Suppliers: Identify every entity that will provide services or materials to your business. This may include banks, accountants, attorneys, insurance agents, other professionals, manufacturers, retailers, wholesalers, utilities, car dealerships, schools, government agencies, and so on.
    • Customers: What types of customers or customer groups will you target? List specific names if known.
    • Competitors: Identify your business’ competitors, including what they offer and their strengths and weaknesses. How will you compete against them?
  3. Strategy
    Your business plan should outline your business strategies. Begin with your vision statement: where you will take the business and what it will be in the future. Then identify the key objectives you will achieve to fulfill your vision. As described in this blog post, this information is the start of a strategic plan that will include:
    • Management and Oversight: How will the business be organized, who will do what, when, how, and why.
    • Product or Service Delivery: How will the business perform its mission of delivering products and services – what channels, methods, and quality?
    • Sales Forecast: Predict the financial benefits of opening this business. The plan should show expected sales by product or service.
    • Staff Hiring and Management: Who will you hire and what qualifications will you be looking for? How will they be managed, and what are your expectations of staff?
  4. Finances
    Your business plan should include numbers to back up what you’ve described in the narrative sections of your plan. These financial projections should include:
    • Funding request: How much capital will you need and how will you raise it?
    • Capital infusions: List expectations for specific rounds of investing and specific investors.
    • Debt: Will you use debt financing? In what ways? How much? What are your expectations?
    • Equity: How much of the company’s equity will you and your partners retain and how much will be given up to investors? Begin to identify the valuation of your business.
    • Expenses: Account for expense categories and specific expenditures.
    • Revenues: Account for revenue streams and amounts.
    • Profit: Forecast all financial aspects, including profitability.
    • Financial Statements: Create pro-forma financial statements based on the expenditure and revenue forecasts you’ve developed.
  5. For more information about this and other topics, consider registering for the NaperLaunch Academy workshop series or scheduling a one-on-one appointment with a business librarian or NaperLaunch coach.

Posted: 
Friday, September 3, 2021 - 08:00