What is Business Model?

Its a visual template that documents an existing business model/the process of

developing a new model, invented by Alexander Osterwalder, and this method has
become an alternative to the traditional business plan that was not flexible for use in
newly emerging companies.

The business model canvas contains 9 elements, which are:

1.key partners.

2.key activities.

3.key resources.

4.value proposition.

5.customer Relationship.

6.customer segments.

7.channels.

8.cost structure.

9.Revenue streams.
The pros and cons of using a business model
distinguishes this model is that it identifies the main activities that generate value and
business returns (revenue), encourage the creation of strategic relationships with
customers and partners, and also enable testing the model against the market.

However, there are drawbacks to using this model, which is that it does not
accommodate commercial activities at very early stages of development, and allows
risky assumptions without providing a clear way to verify them،and focuses just on the
end-shape of the business.

What is Lean canvas?

The Lean canvas is a one-page business model template created by Ash Maurya, and it's
a more direct way to evaluate a business opportunity than a business board template.
The idea is based on assumptions (focusing on the problem to provide the best
solutions), to save time and effort to achieve the desired goal.

We should use it when coming up with ideas and new business models. (And thus the
team does not get involved in writing extensive work plans, and this helps to save time
and improve performance).

Lean canvas that determines potential industry profit ability Easy to complete, gives a
good high-level overview of your business, also integrates internal and external factors.

The lean canvas contains 9 elements, which are:

1.Problem.

2.Solution.

3. Key metrics.

4.Cost structure.

5.Unique value proposition.

6.Unfair advantage.

7. Customer segments.

8.Channels.

9.Revenue streams.

10.Review.

How to create a
lean canvas?
Step 1 - Problem :
What problem does your product to solve? How common is this problem? how many
people have the problem? How much would people be willing to pay to fix this
problem?

Step 2 - Solution:

What top three features does your product have that work toward solving the problem?
Are there other businesses out there with a similar solution?

Step 3 - Key metrics:

What are the indicators you can use to determine whether your product is working
correctly? Your key metrics can be a mix of engagement statistics, revenue, and
customer satisfaction scores.

Step 4 - Cost structure:

List all operational costs, What is the cost of customer acquisition? What about
distribution cost? Identify key partners in the venture and look up costs of potential
suppliers or manufacturing, shipping, and other logistical issues to get at the true cost of
operating.

Step 5 - Unique value proposition:

What are you bringing to the table that your competition is not? How many competitors
in the same space, and what can you do to separate your business alone from theirs?

Step 6 - Unfair advantage:

How can you ensure that your product cannot be copied? What steps are you taking to
ensure your maintain a competitive advantage?

Step 7 - Customer segments:

Who are the prospects and how do they connect to the problem? identify specific
personas among the potential customer base, how they perceive the problem ?

step 8 - Channels:

What paths to reach customers? Understanding the customer segments is critical to

informing this step. Know where the audience is and know how to reach them?

Step 9 - Revenue streams:

What is the revenue model? Gross margins? Lifetime value of the product recurring
revenue and how much value you expect to generate from each customer over time!

Step 10 - Review:

Step back and consider everything you’ve mapped, and share with the team for
alignment. Use all of the information to spot weaknesses and strengths in the business,
and to hone in on the overall strategy.

The differences between lean canvas vs business model canvas :

 When Ash Maurya adapted the business model canvas for lean startups, he spotted
four elements that, weren’t crucial for startup founders. and He replaced them with
those that made more sense for lean startups.

1-Adding the “Problem” and removing the “Key Partners” .

Identifying the problem is a starting point for any business, and the “key partners”
component is taken out because when a startup is unknown with an untested product,
the pursuit of key companies is a form of waste (of time and effort in vain). The search
for partners should be a later step than defining the problem. The first concern is
defining and understanding the problem.

2-Adding the “Solutions” and removing the “Key Activities”.

The “Solutions “element in the lean canvas ( developing a simple solution and checking
if it works).

At the same time, the “Key Activities” element from the original business model canvas
was removed ,because key activities should derive from the “Solutions,” after they have
been tested !

3-“Key metrics” instead of “Key Resources”.

Key metrics were introduced to the lean canvas to give business owners a way to tell
whether they’re on the right track or not , initially, startups may be drowning in all kinds
of data and numbers. It’s important to discern which of them are important and
indicative of growth. Using the wrong (or too many) metrics as signs of growth can lead
to enormous waste.

Remove “Key Resources” ?! that in the digital age, new-product development isn’t as
resource-demanding as it used to be. On top, some of the key resources can also fall
into the “unfair advantage” box.

4- “Unfair advantage” instead of “Customer Relationships”.

An unfair advantage in business is the shield against copycats and plagiarism, On day
one, this Element can be blank But over time, it should inspire business owners to look
for their unfair advantage that makes their solutions hard to copy.

This Element took the place of “Customer Relationships” in the business model canvas.
That’s because startups don’t usually strategize their first relationships with clients.
Rather, raw interactions emerge through customer interviews, product tests, and
feedback.