During my Startup Help sessions with entrepreneurs worldwide I am frequently asked to review a 1-page summary of their business assumptions. Usually the team has filled out Ash Maurya’s Lean Canvas or Alexander Osterwalder’s Business Model Canvas.
I recommend that entrepreneurs – especially those new to Lean Startup – fill out a canvas. After 3 years of using them myself and with hundreds of startups I can identify situations where they are critical – and situations where they are less useful. I hope this post inspires more thinking & helps you decide whether a 1-page business model is useful for your team.
Benefits of 1-Page Business Models
Much Better Than a Business Plan
Many entrepreneurs still think they need to write a business plan. My advice is to start with a 1-page canvas first – you can always write the plan later.
I wrote a business plan for my first startup; it was among the most useless exercises I’ve ever undertaken. AFAIK, nobody every read it and with good reason – most startups sink or swim based on a few assumptions & execution. It makes a lot more sense to just write those assumptions down and figure out if they’re true – exactly what you can do with a 1-page model canvas.
Great for Extended Team Communication
Startup life is a whirlwind. Founders are often shocked to realize that team-members, investors and mentors have radically different notions of what the company does. As a startup investor & adviser I empathize: remembering what a team is doing weeks after the last meeting is tough.
1-page models are excellent for documenting how a vision evolves and keeping everyone on the same page. They are are succinct and portable – exactly what a startup needs in today’s fast-paced world.
Excellent for Existing Markets or when Customer Problems are Clear
If you’re entering an existing market or one where you’re solving a clear customer problem, a 1-page canvas is an excellent way to document learning – much of what you need to discover can be figured out through dialog with potential customers (Steve Blank’s “Get Out of the Office” motto).
You’ll get new insights from every potential customer conversation – a canvas is a great place to document them.
Great Teaching Tool
1-page business models do an excellent job laying out the high-level problems that every business has to solve – perfect for a classroom. Filling one out takes 30 minutes and sets the framework for an engaging dialog at schools or accelerators.
Limitations of 1-Page Business Models
Less Useful for New Market (“Blue Ocean”) Products
If you’re creating a new market you’ll find a 1-page business model less useful because there is so little available data – particularly in the beginning. Sure, you can fill out a canvas but you’ll quickly realize that 95% of your effort is around trying to understand the customer problem.
Success in creating a new market means acquiring deep empathy for what customers are trying to do and evangelizing like hell – it can take months or years. The most effective process I’ve found for these situations is Jeff Gothelf’s Lean UX.
Lack Dimensions of Risk & Time
Most Lean Startups spend 90% of their time around a few key questions such as:
- “Am I solving a real problem?”
- “Can I get paid to solve it?”
- “Can I scale the sales process?”
Startups need to identify the biggest risks early and begin testing them. Which risk are biggest? What’s the best order to test them? It is hard to get this type of guidance from a 1-page snapshot1.
Running a startup with just a 1-page business model is like doing finance with just a Balance Sheet and no Income or Cash Flow statements – it provides only 1 dimension.
Why I Don’t Have a Canvas for My Startup, soHelpful.me
Simply put, I’m a single founder trying to create a new market. I’m carefully and selectively working with a few talented people to get insights into their problems and identify ways that I can solve them. Each day I get a little closer, but at this point all of my energies are going into testing problem assumptions and whether I’m creating value.
Referencing Ash’s Lean Cavas, my risks are Problem, Revenue Streams, and Channel. Testing them is slow, tedious work.
Perhaps you and your team have filled out a canvas and are struggling with the right order to test everything. Feel free to schedule some time with me, I’d be happy to help you out.
- To put it differently, I’ve been in meetings with startups where everyone stares at the sheet and wonders, “what are we doing TODAY? What risk is biggest? How are we testing it?” ↩