Lean Canvas—Before You Write a Business Plan, Try This

The Lean Canvas Will Make Your Business Plan Better

I was talking with a friend of mine earlier about what it takes to start a business. We talked about vision, strategies for innovation, funding, market research, etc. Like lots of entrepreneurs, me included, he also said he felt like he needed a business plan, which meant he needed information and a process for creating a meaningful, effective business plan.

Everyone talks about a business plan, but few entrepreneurs actually create them. And when they do, they are usually a lot of wishful thinking designed to get money-loans or investors. The Small Business Administration has a helpful series of articles outlining the contents of the various sections a model business plan that are worth reading.

I have found, though, that before you start your business plan, there are several tools that will make the business plan process much easier and more useful. Some are simple: write down 5 people you know personally that would buy the product or solution you’re selling. Some are more complex: SWOT analysis, PEST analysis, TOWS Matrix.

One of my favorites is the Lean Canvas.

If you are familiar with the brilliant work of Alexander Osterwalder in his Business Model Generation, you will recognize similarities between the Business Model Canvas and the Lean Canvas.

Lean Canvas

Lean Canvas

Business Model Canvas

Business Model Canvas

Differences Between the Lean Canvas and the Business Model Canvas

There are significant differences between the two, of course. The Lean Canvas adds Problem, Solution, Key Metrics, and Unfair Advantage and removes Key Activities and Key Resources, Customer Relationships, and Key Partners. We’ll discuss the reason for these variations this week as we walk through the various aspects of the Lean Canvas and applying them to a specific business.

In the meanwhile: do you have a business plan? If so, do you use it? If not, why not?

Our Worst Possible…

american-airlines-us-airways-merger

Seth Godin describes American Airlines as, “our worst possible domestic airline.”

Ouch.

I read that on Seth’s blog more than a week ago, and I can’t stop thinking about it. It resonates more than all of the merger hoopla, all of the rebranding, the pretty plan painting, everything. “The new American” has flooded our television networks, magazines, websites with all their newspeak. And still, they are “our worst possible domestic airline.”

This got me thinking about smaller companies, local startups and companies like mine. If we don’t deliver on our promises of quality, no amount of marketing-speak will change the minds of those we disappoint. We can’t fake it with people that know us, that have taken us up on our promises. So we’d better get it right with them.

If we do get it right, then we can spend our marketing dollars on hoopla to attract new customers. Our current customers will already know us and, if we do it right, maybe even love us. And if they love us, there’s a good chance they’ll talk about us.

Are you keeping your promises? Are you doing it in a remarkable way?

If You’re Going to Surprise Your Customers, Don’t Do It Like This

Tonight I went to one of my favorite places to eat—a hole in the wall that serves inexpensive but tasty Tex-Mex. I ordered the Beef Fajita Salad like I always do. Always. I like to think it’s because I’m sure of myself and know what I like, but maybe it’s because I don’t like surprises, and I’m afraid of change.

Why am I telling you this? Because the salad I ordered, the salad I always order, was different tonight, and not in a good way. Surprise!

where's the beef

As I looked down at the sad little pile of lettuce, I was thinking: Did they hire someone and not train him? Did they run out of ingredients? Did they forget to care? I actually dug to the bottom of the bowl, thinking maybe my salad had been tossed, and the “good” ingredients had migrated down beneath the lettuce leaves. No such luck.

Michael E. Gerber, author of The E-Myth Revisited, shares a story about his barber and the importance of systems to deliver consistent, repeatable positive customer experiences. Gerber went to the barber the first time and had a wonderful experience. He told friends, he went back. The second time things were still good, but not quite as good. What might have been a good experience (without any reference to the past experience) was a little disappointing by comparison. He didn’t tell any of his friends. The next time, things were a little different again, a little worse, and the fourth time was Gerber’s last. His experience kept changing, kept disappointing, and eventually he found another barber.

What can we learn from this? A few things:

Be careful how you craft and create your customer experience. If you don’t have a system to deliver the same positive experience consistently, you will disappoint your customers. The restaurant has a recipe for Beef Fajita Salad, but they don’t have a system for making and delivering my dinner consistently.

Even if you’ve created a system, you need to establish a minimum standard of service experience below which your employees will not go. That standard should include honesty. It would have been better for the waiter or cook to tell me they were out of the ingredients, rather than try to sneak one by me.

Be careful who gets to control your customer experience. I can pretty much guarantee the owner of that Mexican restaurant wouldn’t have tried to sneak anything by me. I’m a good customer, a loyal customer. I’ve spent a lot of money there, and I’ve introduced a lot of my friends to that place. But tonight my relationship with that restaurant was in the hands of someone who didn’t care that much. As a business owner, that’s scary.

In The E-Myth Revisited, Gerber recommends business owners eliminate discretion or choice at the operating level of the business. When I first read that it seemed harsh to me—I used to love to give people lots of discretion about how they do their jobs. I like to think it’s because I trust people, which I do. I also think it’s because I was lazy and didn’t want to create a system or hold people accountable, which is unfortunate.

That turns out badly more often than I care to admit. The truth is that if you want to build a profitable, sustainable business you need to deliver consistently positive experiences to your customers. If you don’t have a system for doing that, you don’t have much of a business.

If you’d like some help figuring out how to create the systems you need to deliver consistently great experiences for your customers, call me. I can help. My mobile is 214-850-7911.

Also, if you want to help me put my kids through college, you can click on my affiliate link and buy The E-Myth Revisited. If you don’t want to, that’s ok, but go down to your local library or borrow the book from your Uncle Frank. It’s one of the best books for small business owners I’ve ever read. And I’ve read almost all of them.

Hey, Entrepreneur—What’s Stopping You? [Strategies for Dealing with Fear]

I was just listening to Dan Miller’s excellent podcast, and he mentioned that during a recent webinar for prospective entrepreneurs, the most frequently cited reason for not starting a business was fear. Sometimes fear of failure, often fear of success.

Image courtesy of Stuart Miles/ FreeDigitalPhotos.net

Image courtesy of Stuart Miles/ FreeDigitalPhotos.net

I wish I had an easy answer for that one. I don’t. The truth is, starting a business is scary as hell. It can feel exhilarating and terrifying. It can get you jumping out of bed with a million ideas to make things better, and it can keep you awake at night when you’re not sure how you’re going to pay your people or your bills.

There is a cold aloneness that can sometimes creep in, make it seem like starting a business isn’t worth the risk. The good news is, there are ways to deal with it. Here are four ways I have dealt with fear that worked for me:

1. Start small. Notice I didn’t say, “Stay small.” But when you’re starting a new business, the last thing you want to do is get in over your head before you have a chance to prove your idea is going to be successful. Successful might mean more money, or it might mean more time—you get to decide. But whatever it is, test your business idea before you throw yourself in the deep end.

I have a friend who started a food company. He and his wife invested more than a quarter of a million dollars on production equipment (ovens, packaging machines, etc.). He leased space for production and offices. He bought expensive advertisements. The business didn’t make it, and he ended up with crippling financial stress as they cashed in their retirements to avoid bankruptcy.

I have a friend who wanted to go into the cake/pie/dessert baking business. She asked my advice about leasing space. I told her to sublease space from someone who already had the equipment and test her idea out—she would know within three months if she should move forward. Within a month, she was sure she didn’t want to be in the dessert business. The work was long and tiring. What was fun at home was misery as a business. She saved herself a world of heartache by testing on a small scale.

2. Hustle. All successful entrepreneurs I know hustle. Working hard takes the edge off fear—it’s hard to sit in fear when you’re on the go. It’s hard to think about two things at once, and if you’re thinking about what action you can take to make your business better, you don’t have much time to give in to the fear.

When I started my first business, I worked hard. Crazy hard. 12-16 hours a day, seven days a week kind of hard. Was I scared? Absolutely. I had negligible start up capital, no marketing or sales experience, but I did have two employees and an office. I was afraid a lot at first, so I worked to fight the fear. Eventually the fear subsided, and the days became more normal (it’s all relative for entrepreneurs, as you know. “Normal” meant getting down to 10 hour days, 6 days a week, plus a few hours on Sunday). Still, I doubt that I would have made it if I hadn’t hustled. I would have let the fear take control, and it just might have buried my business.

3. Find a teammate. Sometimes a teammate is a business partner. Be careful with that. It can sound so appealing. Spread the risk, spread the work. But if you don’t pick the right partner, it can be a disaster. I know this from personal experience, but I can’t talk too much about it for legal reasons.

I can tell you this, though—if you are the one burning the midnight oil while your partner is goofing off, you will resent her. If you are the one sacrificing for the sake of the business while your partner is having “business meetings” at the local steak house, you’re going to have a hard time. You think you know someone well? You’d better, because you might be stuck with them for a very long time.

Sometimes a teammate is a spouse or significant other. That’s awesome when it works, but make sure you have complementary personalities. If your stress stresses out your significant other, you’re both in trouble. On the other hand, if your SO is level headed and can encourage you to work through the fear, you’re in luck.

4. Work with a business coach/consultant. If you’re like me, you’d probably try any of the other suggestions on this list before considering working with a business coach/consultant. I get it. I was just like you. I didn’t have money to hire anyone else to help me—I already had two employees to help with the tactical work of my business. I was busying trying to make enough money to pay them, and minimizing expenses seemed like my only option.

Eventually, though, I realized that I was going to go crazy or lose the business or both if I didn’t get some help. Not answering-the-phones type help. Not data entry help. I needed someone to tell me what to and how to do it. I needed someone to guide me as I worked my way through the challenges I was experiencing. I needed someone to show me solutions where I could only see problems; someone to give me perspective and hold me accountable to do what was most important.

Honestly, that’s why I do the business consulting I do now. I know what it’s like to go it alone, what it’s like to be afraid, to have a million questions and a million concerns and not have anyone to talk to. It sucks. It can suck the life out of you. No one should have to go it alone.

I also know the profound disappointment of hiring a consultant who doesn’t understand what it’s like to start a new business and try to grow it from the ground up. So many consultants I know have never started a business, never had to worry about payroll. They have no idea what it’s like to be on the hook for everything and everybody. If you’re going to hire a coach or consultant, make sure they have done what you are trying to do.

Those are four of my favorite ways to move forward in the face of fear: start small, hustle, find a teammate, and work with a business coach/consultant. All four strategies have all made an enormous difference in my life and have allowed me to go from fearful to successful.

How do you deal with fear? Shoot me an email and let me know.

 

Website Launch Hiccups—What to Do and How to Do It

One of my companies, Advanced RehabTrust Home Health, had its new website launch today. That’s fun — I was like a proud papa, telling everyone to check it out.

Until I noticed that the web developer didn’t fix the phone number like I asked them to. And the Pinterest button is linking to my personal Pinterest account instead of the company’s. I suppose visitors to my home health website might want to see my pin proclaiming, “Apple Cider Vinegar: The Ultimate Problem Solver,” but I’m not sure.

Apple Cider VinegarSo what do you do when things go wrong with your website launch?

1. Stay calm. It is going to take a little time to get things fixed. You can take action, but you can’t control everything. Freaking out isn’t going to help.

2. Contact your web developer as soon as you notice something is wrong. Be friendly and pleasant while being specific about your concerns. You could say, “You no good son of a gun, you should have fixed this right the first time!!!!” But what good will that do you? Remember, you’re looking for a solution to the problem. If you are rude, the solution is likely to come later rather than sooner.

3. Get help. As soon as I noticed there was a problem I asked friends to start checking the website and letting me know if/when they find anything wrong, odd or out of place. Crowdsourcing works wonders. Don’t be so embarrassed that something isn’t right that you don’t ask your friends and/or family to help you. They are on your team. They are rooting for you!

4. Keep checking. As much as your web developer might want to get everything right, sometimes they don’t. Even after I had submitted my list of urgent corrections, and received an email that they had all been taken care of, I went onto my website to make sure the corrections were all done. Guess what… they weren’t! So I very politely emailed my web developer about the corrections again….

5. Maintain perspective. A website glitch, or a website crash, is more than likely a small speed bump in the life of your business. It’s challenging and potentially embarrassing, but it’s not going to ruin you. And if your website visitors are like most people, they will understand when your website isn’t perfect. They might even think of you as more human. Studies show we tend to like people who make mistakes better than people who are perfect.

Danny Iny’s Firepole Marketing website has a great blog post on Disaster Recovery Planning for your business. Website glitches aren’t usually disasters, but it’s still good to have a plan in place, just in case.

 

 

The Startup Owner’s Manual—Part 8—The Deadly Sin of Emphasizing Execution

Emphasizing Execution is a deadly sin? Seriously? One of my favorite business books of all time is Execution by Larry Bossidy and Ram Charan. Nevertheless, in Steve Blank and Bob Dorf’s The Startup Owner’s Manualthe authors assert that the 3rd deadly sin is “Emphasis on Execution Instead of Hypotheses, Testing, Learning, and Iteration” (11).

And there it is again—a startup is not a small version of a big company. In a big company, execution is (almost) everything. In a startup, you are trying to figure out what to execute, so you must develop hypotheses, test them, learn from your tests, and iterate or pivot based on what you’ve learned.

I have a friend who is starting a very promising business (I’ll tell you more about it soon). He’s got a great concept, and it looks like he is going to be able to help a lot of people. But what he has now is a hypothesis, which he is testing, and he is learning/growing as he goes. Instead of building a “go-to-market” solution before introducing it to the world, he is testing, talking to potential customers, finding out what they really want, what they really need, and what they would be willing to pay for. Based on the conversations he is having, the tests he is performing, he is tweaking his offering, dialing it in.

If you’re an entrepreneur, that’s your job. “If you build it, they will come,” makes an awesome movie but it’s a terrible startup strategy. Emphasizing execution in the real world usually looks like building a baseball diamond in the middle of a corn field, then losing your farm.

Field of Dreams

Field of Dreams

It’s All about the Presell [Lessons from Disney]

One of the things that makes Disney World so magical is the presell for the events, rides, etc. A good rollercoaster (such as the Rock ‘n’ Roller Coaster at Disney’s Hollywood Studios) is made great by the presell.

When a rider approaches the Rock ‘n’ Roller Coaster, they first walk into a “recording studio” where they see the members of Aerosmith putting the finishing touches on a new recording. The band has to leave for a show, but they convince their manager to call for a super stretch limo to bring their fans (the prospective rollercoaster riders) to the show. As riders walk through the doors, they are met with a rollercoaster that looks like a super stretch, and they are whisked off to “the show.”

What can we as business owners learn from this? I think if we remember that the sale is important to us, but the experience around the sale is what will build fiercely loyal fans among our buyers. Our buyers want to have a good experience, and if they have an exceptional one, they will talk about it.

How can you bring excellence to your presell? What could you do to give your customers the experience they crave? What would get them talking about you with their friends? Could you systematize the process and make it automatic?

Ask Yourself These Questions [Knowing What You Now Know]

Image courtesy of Michelle Meiklejohn / FreeDigitalPhotos.net

Image courtesy of Michelle Meiklejohn / FreeDigitalPhotos.net

If you are an entrepreneur, you’re probably as busy as you can imagine ever being. Even when work seems like all you can do, all you want to do, and all you will ever do (I know the feeling), I want to encourage you to pause. And reflect. And to reflect, ask yourself these questions:

  • What is working right now?How can you leverage that/do more of that/have more done within your company?
  • What’s not working right now? Should you take a different approach? Give that up altogether?

Brian Tracy talks about “Zero Based Thinking.” In a nutshell, ask yourself:

“With what I know today about past situations like this one and the way that I dealt with them, would I want to do the same thing again this time?”

  • If the answer is yes, then the proper course of action is to continue the tried-and-true procedure relevant to the situation in an attempt to achieve the desired outcome.
  • If the answer is no, then exit it as soon as possible.

It’s amazing how asking good questions can help you make the most of your amazingly busy schedule.

Death Ground—Sun Tzu’s “The Art of War” and “Top Chef”

“Ground in which the army survives only if it fights with the courage of desperation is called ‘death.'”

“In difficult ground, press him; in encircled ground, devise stratagems; in death ground, fight.”

“Throw the troops into a position from which there is no escape and even when faced with death they will not flee. For if prepared to die, what can they not achieve? … In a desperate situation they fear nothing; when there’s no way out they stand firm.”

204499_med

I am finally watching the season finale of “Top Chef” and the two finalists could be quoting Sun Tzu’s The Art of War. “This is it. Press forward. Hold nothing back.”

Desperation makes interesting things happen. Sometimes those things are triumphant, sometimes cataclysmic, but if they are truly born of desperation they are rarely boring.

Are you fighting in your business or for your business? If you aren’t fighting, you aren’t really on Death Ground. You might be on Annoyed Ground, Inconvenienced Ground, or even Kinda PO’d Ground. But if you are on Death Ground, you will fight.

What’s your strategy? And how are you going to get out of this alive?

If you need help figuring that out, email me.

 

 

The Startup Owner’s Manual—Part 7—The 3rd Deadly Sin

In Steve Blank and Bob Dorf’s The Startup Owner’s Manualthe authors warn fledgling entrepreneurs of the 3rd deadly sin: focusing on launch date.

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Having a launch date in mind isn’t the problem, per se. The real problem is that when you focus on/commit to the launch date, you sometimes don’t allow adequate time to work through the Customer Development process, do the tests, prove or disprove the hypotheses, and improve your offering. Instead, you sacrifice what you are producing for the sake of the launch.

Sometimes that’s because there’s an event you want to release your product at to get buzz. Have you seen the 4K TV‘s announced at this year’s CES? Sometimes you want to launch in time for the Christmas rush. But what if your product isn’t ready? Should you still ship it then?

I know there’s a lot of pressure to launch. Founders want to launch, investors want to launch, and colleagues want to launch. The pressure to get out there and start selling something is immense, and the thought of being done with the prelaunch phase of your business may be so tempting that you lunch even when you know you’re not ready. So you rationalize: “Maybe you’re over-thinking this. Maybe the customers won’t notice that you upon it is crap. After all, Google releases bad products, Microsoft releases bad products. Even Apple released an iPhone with a crazy antenna problem. Why can’t I go ahead and launch, then work it out as I go along?

Unfortunately for you, it’s unlikely that you or your company have enough of the customers’ good will to make up for a bad blunder at launch. And stumbling out of the gates can be more than just an inconvenience to you and your customers. It can be fatal to your business.

What’s the answer? Trust the process. The customer development process is designed to help you launch when the time is right, and to lunch well when you do.