Using Lean Startup in the Pre-Sell Phase

by Rita Baker | Nov 30, 2016 | Lean Startup

In this series of posts we have looked at how to use Lean Startup during the ideation and discovery phases. We also dove into the experimentation process and the tools to use in the discovery phase.

In this post, we’ll look at how to use Lean Startup in your pre-sell phase.

What is the pre-sell phase?

The pre-sell phase begins when you have sufficiently tested your leap-of-faith assumptions of your business model to be confident that you have a shot at a viable business. This not because you believe so (as you did in the ideation phase) but because most (or all) of your business’s stakeholders (potential customers, suppliers, distributors, etc.) have told you so.

Typically, during the pre-sell phase you will be:

• Finding a (or several) co-founder(s)
• On-boarding your first employees
• Developing your product/service
• Starting to put into place some key partnerships

This is also the phase at which you will start getting real feedback from paying customers[1] (closer to the end of the pre-sell phase) and other stakeholders. It’s the reality test.

A test, unfortunately, many startup ideas fail.  It’s when you will either:

•  Make significant pivots,
• Change your mission entirely (go back to square one)
• Throw in the towel, or
• Confirm your business model

The end of this stage, when successful, is also often the time to go for seed funding.

Why continue experimenting?

So now that you have confirmed your business model, why should you continue experimenting?  It would be so much faster to just go full steam ahead and develop.

Your ideation and discovery phases were mostly planning.  As you know, plans usually don’t work out the way we think they will.

Also, during the time you take to put in place your business model, elements of your business’s eco-system as well as market realities will change. The higher the volatility of your business environment, the more important it is for you to test the elements of your business model while developing. Otherwise you may expand great efforts and resources to develop key partnerships, distribution networks, and develop your product/services for nothing.

This may not seem so bad from this end of the journey. Entrepreneurs who put every ounce of energy they had and every penny they owned (and some they don’t), for a few years, in a business that doesn’t lift off will tell you it’s as difficult as going through a death in the family. Some never fully recover.

Lean Startup experiments in the pre-sell stage

The mechanics of the experiments we saw in the discovery stage will be the same.

You will still start by asking yourself; Will the negative impact on my future business be significant if the assumption I am making (regarding whatever part of your startup you are currently working on)  isn’t real? If the answer is yes, you turn it into a hypothesis you can test. You design your experiment using tools to minimize your efforts, chose your metric and standard and execute your experiment.

By this time, you will be getting very good at experimenting. Hence most of your experiments will take you less than a couple of days to run and often only a few hours or minutes.

Also, because you will have gotten out of the building often during your discovery phase experiments, you won’t need to talk to your stakeholder face to face as much. Many of your experiments will be done on the web or over the phone. You can also hire people to do them for you.

There will be times however when you aren’t sure of your next steps. This is usually the flag that means you need to go be around your potential customers. Talking or observing them. They will invariably show you the way.

At this stage, you will not only be testing elements of your product/service you will also be testing your distribution channels. The web will be your first one if you’re using it.  Also, if you are thinking of launching in markets that are not physically close to you, now is the time to start testing with those markets.

Not only will you be familiarizing yourself with the tools to find those markets but also you will, hopefully, have developed the reflex to go to the Lean Startup community for assistance.

The tools of Lean Startup

Now that you will most likely have a, or several, co-founder(s) and employee(s), often not in the same city or working space, efficient communication will be a real need.

Slack, Trello and Dropbox may already be part of your daily routine. You may now want higher performance project management tools (such as Asana, Jira or Wrike[2]) or to start taking notice of Slack management best practices.

If you’ve embraced the integrated multiplatform communication route of Slack, you may also want to look at some of its competitors such as Bitrix24 and HipChat.

If your product is IT application, you’ll want to use one of the thousands of productivity apps available, often for free, to help you develop and test it. Tools such as Balsamiq Mockups , Fluid UI or HotGloo for wireframing.  GitHub, Zappier or LucidChart for developing your application. Test Fairy, Hiptest or SauceLabs for automated testing. Once your app is functional you can also put it up on Product Hunt and see what kind of reaction you get from a crowd of mostly innovators and early adopters.

If you are developing a non IT product, you can look for tools such as Ask Your Target Market (AYTM), Facebook or Survey Monkey and combine them with any potential customer email lists or profiles you have already collected.

You will also need to use your creativity to design experiments such as webinars or gatherings to have potential users interact with your product. Tools such as Meetup, Eventbrite, GotoMeeting will be very useful.

When you want to start testing packaging and pricing, A/B testing will be your friend. A/B testing is also very useful to test the conversion rates of different elements of your web pages. Tools such as Unbounce, Optimizely and LauchRock will be necessary unless you hold a degree in statistics.

If you are launching a new restaurant or brick and mortar business sites such as Potloc can help you find the best location and get feedback from potential customers.

Upping your game on metrics

Experimenting and collecting all this information is great. You’ll need however to store, crunch and make sense of all of this data.

You’ll also need to figure out what metrics will be the key ones for your business. If you haven’t read Lean Analytics (Croll & Yoskovitz) yet, you need to by now.

Analytics is one of the parts of Lean Startup that isn’t intuitive. There is knowledge involved here, quite a bit of it. The learning curve is steep. If you will be running an online business (fully online or parts of it) you definitely need some deep analytics knowledge in your company.

Zoho Reports, Segments and Tableau are all great options. Initially you may however simply use an Excel spreadsheet in conjunction with Google Analytics. By the end of this stage, you may find however that the home grown solution requires too much time to manage and you’ll see value in the previously mentioned apps.

As you can see applying the Lean Startup approach gets easier and easier as your startup grows.

The next post of this series will be on how to apply Lean Startup during the concierge phase of your startup.

[1] Although you may be selling at a discount or simply selling and reimbursing as your product is not yet ready.

[2] Doesn’t integrate with Slack

Lean Startup Tools – Discovery Phase

by Rita Baker | Nov 1, 2016 | Lean Startup

This post follows Lean Startup Experiment – Discovery Phase. It will help you find Lean Startup tools that will accelerate your experiments significantly. Many of these Lean Startup tools increase productivity and can also be used on a daily basis in your business.

None of these tools, aside from the Javelin board and the experiment log template were developped specifically to be used within the Lean Startup approach. They are simply productivity tools that enable fast and efficient Lean Startup experiments.

Lean Startup Tools

Lean Startup tools make continuous experimentation throughout your startup feasible. Many of those tools are free or cost very little. None of the tools presented in this post were developed specifically for Lean Startup.  They are simply productivity tools that are used by the Lean Startup community to increase their productivity.

The following are some of the tools I find most useful and often recommend when entrepreneurs are in the discovery phase. Keep in mind there are hundreds if not thousands more of these tools out there. A bit of googling and asking around will yield you many options to accomplish the same task.

Lean Startup tools to organise

These applications are great as they often work as a checklist as well as organisers. The following Lean Startup tools are all free or have free parts to them. Click on the titles for links.

LeanStack

Ash Maurya has graciously made his Lean Canvas application, which is very well made, free for your first project. It will help you keep a record of the various iterations, enable you to share with other team members and print your canvas.

Business Model Fiddle

Free business model canvas application developed by Johan Steenkamp. It has some really great features such as various colours for your post-its, picture and sketching capabilities as well as communication features for your team.

Budgeto

This is a great tool to start figuring out your cost and revenue model. It will act as a check list of all the items you need to take into consideration in your revenue statement.  As you progress in your startup, Budgeto will also take care of most of your accounting needs.

Lean Startup Tools to communicate/collaborate

Slack

If you don’t yet know about Slack, you must. It’s an instant messaging app, on stereoids, that allows you to connect just about any other popular productivity tool such as Dropbox, Google docs or Hangouts, Skype, Trello and hundreds more. It’s mobile friendly so it will enable you to keep in touch with your team wherever you are.

Trello

Trello is one of the many simple and intuitive project management tools out there. Trello is the only full application that still offers free access. It is very powerfull and still simple to use. Other project management platforms such as Asana and Basecamp are even more complete but don’t offer any free versions.

Dropbox

Definitely one of the best ways to share large files and documents. It’s as simple to use as can be and is entirely free unless you are a power user.

Lean Startup tools to run my first experiments

Javelin Experiment Board

Javalin first developed the Experiment Board for the Lean Startup Machine a couple of years ago. They are now developing it in an app and are still in the testing phase. Until the app is out, you can get a Google docs version of it and print it out.  Watch this great video tutorial, from Grace Ng, of how to use the Experiment board.

 This is Service Design Thinking

This book contains over a dozen techniques to help you conduct offline experiments. Each technique is well explained and illustrated with an example.  If you’re not familiar with data gathering techniques, it’s the best place to start.

SurveyMonkey

Powerful online survey creation and data analysis application. It’s free for basic forms and data crunching. It has more survey question options and data analysis capabilities than AYTM and GCS.  You must provide your own participants list.

Google Forms and Consumer Surveys

Google Forms enables you to create surveys that you can send to your own participants list. Google Consumer Surveys provides the participants and you only pay for completed questionnaires. Pricing starts at $0.10USD per completed survey.

AYTM -Ask your target market

Similar to Consumer Surveys AYTM offers highly targeted participants to answer  your surveys.

Pricing starts at about $1USD per participant. AYTM boasts over 25 million survey or experts panel participants.

Experiment log

As of writing this post, I haven’t seen any experiment log templates or application to facilitate the keeping of a journal of your experiments.

Hence, I created one for my own use that I will share with you. It’s a simple Excel spreadsheet that you can modify as you see fit. The important part is to keep your rows constant over time so you can have a base to compare.

Keeping an experiment log is a pain and requires some time and effort. Hence, if you don’t plan on going to VCs for funding, it’s not a must to keep one.

An added benefit of the log is that of a training tool when you onboard other members. Careful reading of this journal will help your new recruits know about your young corporate history and learn from you previous mistakes and wrong turns.

Note: I will add the experiment log template to this post very soon.

 Tapping into the Lean Startup community

Some of the most important resources found in Lean Startup are its local and international communities.  It is by far the entrepreneurial community that is the most generous with its time and knowledge that I have encountered.

Locally, you have Lean Startup Circles members that meet periodically to learn, practice and exchange on Lean Startup experiments, tools and resources. Circles have experienced coaches that can help you with any part of your experiments.

You can locate the Lean Startup Circle nearest you by consulting the list on the Lean Startup wiki. Most of them, such as the Montreal LSC, have a Meetup page, Facebook page and/or website where you can register to become part of the community.

Once you are part of a Lean Startup Circle community you will gain access to the Lean Startup Slack channels by asking your local organisers. These channels encompass hundreds of members that form a help community.

If you are stuck somewhere in your experiment, are looking for a tool, experiment design ideas, want to know how to go about testing a foreign market, your local and virtual Lean Startup communities will be there to help.

The next phase

Once you have acquired sufficient knowledge on your various stakeholders and have attained a certain level of validation with your business model, you will want to put it to the test.

The next phase will be about validating your business model where it counts; in the market. It is the true acid test. This phase is also sometimes referred to as the Valley of Death. It is when most start-ups end up dying in the Lean Startup approach.

This phase will also be when you start developing your product/service. The good news is if you can’t find any way to have your product/service fly in the market, you will not have spent months or years working on it.

The next post will guide you through this phase using Lean Startup. It will show you how Lean Startup can help transform, some (no, not all) ideas that would have died, into lucrative ventures. We will also present tools and tactics that can help you survive these difficult times.

The Lean Startup Experiment – Discovery Phase

by Rita Baker | Oct 17, 2016 | Lean Startup

This is the fourth post of a series that will try to show how Lean Startup can be useful at various phases of an organisation’s life.  This post is the continuation of Lean Startup in the Discovery Phase – Part 1 and will show you how to conduct a Lean Startup experiment in the discovery phase of your project

Your first Lean Startup experiment

In Lean Startup all ideas that impact your business model are to be considered as assumptions to be validated. Hence, experimentation is the hearth of Lean Startup. A Lean Startup experiment can be summarised by the Build, Measure and Learn loop.

Build

In order to build a Lean Startup experiment, you first need to transform your assumption into a hypothesis. A hypothesis has the form of a simple, objective statement that can be validated (or invalidated). This may seem simple but it is often one of the most difficult parts of the experiment.  It entails that you already have a significant understanding of your experiment participants’ lingo, environment and mindset.  Hopefully, you obtained some of this knowledge during your ideation phase when you informally discussed your project.

Your hypothesis must also produce results that will be actionable whether you validate or invalidate it.  If, for example, you state your hypothesis as: Customer segment A will always prefer my product to the other solutions presented, all you need is one potential customer to choose another solution to invalidate your hypothesis. What action will you take if you invalidate your hypothesis? None; as your business doesn’t require 100% of a customer segment to adopt your product to be viable.

Simply dropping the word ‘’always’’ in your hypothesis statement will allow you to take action if you validate your hypothesis (you’ll go forward with the segment) or invalidate your hypothesis (you will either pivot on your segment choice or adapt your product further to fill the needs of this segment).

It is also interesting to note that this hypothesis statement contains an unverified assumption. You assume that the ‘’other solutions presented’’ will be the most important substitutes to your product. The experiment, if well designed, will allow you to verify this as well. You may find out that your target segment uses other substitutes that you didn’t account for.

Once you have stated your hypothesis clearly, you need to design a Lean Startup experiment that will enable you to validate or invalidate it. As you now know, you will have a whole lot of these Lean Startup experiments to conduct during your start-up process. Therefore you will be thinking of designing not just any experiment, but the experiment that will require the least amount of resources to achieve your goal.  If your product requires expensive machinery to produce, you certainly don’t want to build the entire factory to validate your assumption. You’ll need to be creative and find ways to get your machine’s concept across to the people in your experiment in the least costly way (in $, time and other resources) possible.

The way you will have found to get your product concept message across will be your Minimum Viable Product (MVP). Hence, in this particular example, your MVP could take the form of a drawing on a napkin, on a computer (2 or 3D), in a video, a physical model with or without moving pieces or using a similar product that you supplement with explanations of what your product will do differently. Whatever you feel is necessary and sufficient (no more, no less) to get the message across.

You also need to keep in mind that your Lean Startup experiment should be replicable. This means that in a year from now, if someone else needed to audit your results, they could replicate your experiment and get similar results. In other words, don’t choose a period, a setting or participant profiles that will skew your results.

Measure

Once you have identified your MVP, you will need to decide what metric (data) you will be collecting and well as the standard it will need to measure against. In the example cited above, you would be collecting how many people in your experiment chose your product over other solutions that were offered to them. The standard, by definition, would have to be above 50% of your sample given your hypothesis states a preference.  Any results below 50% of participants in the experiment choosing an alternative solution would not show a preference. If your hypothesis statement did not imply a comparison but simply an interest in using your product, the standard (% of participants in this case) could be set at whatever you feel would be sufficient to demonstrate clear interest.

In order to reduce the objectivity of standard setting, you should try to get the input from someone who is very familiar with the stakeholders in your experiment in respect to your product/service.

When measuring, you aren’t looking for statistically significant results. This would be ideal but too costly in time and other resources. Instead, you will simply be looking for a clear direction in the data. If your experiment data doesn’t show a clear direction, you will need to include more participants. Occasionally, your experiment will not show a clear direction. You gather whatever learnings you can from it and move on to designing another experiment to validate your assumption.

A word of caution here, despite wanting to go as fast as possible in your Lean Startup experiments you still want to conduct them in a way that will get you to validate or invalidate your hypothesis.  If your data collection methods are not done properly and your results are seriously skewed, you will have wasted your time and energy.  Hence, you still need to have some basic knowledge of primary data collection techniques. Here are a few good sources of basic information on data collection that you should take a look at if your knowledge on the topic is nil or very low.

• Survey and Questionnaire Design – Jane Bourke et Al.
• Data Collection – P. Pulliam Philipps and C. A. Sawarski
• Lean Analytics – A. Croll and B. Yoscovitz

Learn

During your first Lean Startup experiments, which should be conducted face to face with your participants (this would be the Get out of the building part), you will have the greatest amount of learnings.

While you conduct your experiment, you should always leave room for the unplanned. If a participant reacts in an unanticipated way, run with it and dig into it.

Try to avoid justifying your product/service. Embrace all the comments you will have, especially the negative ones. Dig as much as you can into those. They will give you the best insights. Let the participants talk and listen to the words used, observe body language and notice expressions they use. If at all possible video or tape-record your interactions.

Keep an open mind. It won’t help your start-up if the participants understand your point of view or for you to tell them how you understand their problem. It will however help you tremendously to understand their point of view and what they perceive their problems are or your solution to be.

Your first Lean Startup experiments will help you learn what your stakeholders think about your business model assumptions, as well as all the assumptions you didn’t know you didn’t know. On top of this, you are also learning how to conduct an experiment.

Expect to make mistakes, a lot of them, in the entire build, measure and learn process. That’s ok. Learn from them as quickly as possible and always keep your ultimate goal in mind. If you start an experiment and realise you didn’t state your hypothesis correctly, design it right or choose to collect the right metrics, make immediate changes. Don’t persist with 10-20 other participants with a flawed experiment. Your ultimate goal is to validate a hypothesis, not run an experiment. Similarly, if you had planned to involve 50 participants and you have a very clear direction after 15[1], stop.

The experiment log

If at any point in time in your start-up process you will be going to venture capital firms for funds, you will want to record your experiments in a log. Your Lean Startup experiment log will document your progress as a start-up. It will show how you dealt with the unexpected, all your learnings and the progress made towards a product/market fit. The data collected in your experiment log will also serve as input in your innovation accounting. Innovation accounting, developed by David Binetti, is one of the more complex but exciting component of Lean Startup. You can learn more about innovation accounting in these previous posts on how innovation accounting is changing the rules, how it’s done and on the concept of innovation options.

Practice makes perfect

As you may have figured out by now, applying Lean Startup requires effort, lots of it, and discipline. Well, that is the reality of starting a business.  Lean Startup experiments have one purpose; to bring you closer to having a profitable business or perennial organisation.

You may not be very good at the whole build, measure, learn thing at first. That’s ok. Just keep at it and practice, practice, practice. It gets easier, much easier, I promise.  After a few Lean Startup experiments you will start getting the hang of it. Not only will you already have a better understanding of the mindset of your stakeholders, you will develop tools and processes that will make experimenting much faster. You will also develop skills that will enable you to identify critical assumptions quickly, as well as spot, absorb and act on useful information more efficiently.

After a few dozen Lean Startup experiments, the build, measure, learn process will become second nature to you and others, applying it, in your organisation.

Using Lean Startup is similar to buying an insurance policy. It does require more efforts initially than if you simply build your product and service and take it to market. The benefits are that you won’t be building a product or service that will never lead to a profitable business.

Our next post will present some of the tools to help you run your experiments faster, cheaper and more efficiently.

[1] As long as your sample is not completely biased. Your participants sample has to somewhat reflect the overall population of the stakeholders of your experiment.

Lean Startup in the discovery phase – Part 1

by Rita Baker | Oct 4, 2016 | Lean Startup

This is the third post of a series. It will try to show how Lean Startup can be useful at the discovery phase of an organisation’s life.  The previous post dealt with the ideation or concept stage of a start-up which precedes the discovery phase.

The inspiration for this series comes from my own experiences, as well as those of entrepreneurs and intrapreneurs I have worked with throughout my career. Too much time is wasted on projects that never reach the market or never achieve profitability.

What is the discovery phase?

The discovery phase comes after you put serious thought and work on your business model. During the ideation stage, you asked yourself:

• Who will my customers be?
• What value will my project bring them?
• Who will enable my business?
• How will I connect with my customers?
• How will I make money and what are the costs involved?

All of these questions you answered yourself (or with your partner-s).  This means that your answers are not facts but assumptions.  These assumptions may be based on secondary data or past experiences but they remain assumptions as they aren’t the direct answers of your stakeholders. Hence, until your potential stakeholders answer these questions the answers you put down on your business model canvas will remain assumptions.  Any future ideas you have for your business that significantly impacts any part of your business model should also be treated as assumptions.

Key Assumptions

You will need to verify all of the key assumptions in your business model to minimise your various business risks. Key means that if the assumption you are making isn’t verified your entire business could:

• Not take off
• Have much lower returns
• Take longer to take off (increasing the risk of running out of runway) or
• Suffer significant impacts (like serving a different clientele or being based in a different city)

This means you will have dozens of assumptions to test during the discovery phase and hundreds, if not thousands, over the lifecycle of your organisation. The two most important meta-assumptions (as they are composed of many assumptions) aka leap-of-faith assumptions, are the value hypothesis (which will lead to product/market fit) and the growth hypothesis (that will enable you to scale your business).

Risk reduction and other benefits of Lean Startup

All these tests on your assumptions are the cost to reducing your commercialisation start-up risk (as well as the product and financial risks by ricochet). Other benefits to using a Lean Startup approach are lowering marketing costs due to having a product/service that will meet the needs of your target markets more closely. You can also expect a better work environment as well as significantly higher levels of customer satisfaction and innovation in your company once it’s up and running.

So how does one go on to test an assumption to see whether it’s true or not? You do what any good scientist would do; you convert your assumption into a hypothesis, then design and conduct an experiment to validate it.

Our next post will show you how Lean Startup experiments are done during the discovery phase.

Lean Startup during the ideation stage

by Rita Baker | Sep 19, 2016 | Lean Startup

This is the second post, following an introduction post, of a series that will try to show how Lean Startup can be useful at various stages of an organisation’s life. The inspiration comes from entrepreneurs and intrapreneurs I have worked with throughout my career, including myself, who wasted way too much of their time on projects that never reached the market.

The very first stage of any start-up is the ideation stage. This is the stage when you will come up with, what you think, is a solution to answer a need you perceive to be present in the market.

Should I embark on a start-up project?

Just before your ideation stage, or during, you will have reflected on whether or not to embark on a start-up project.

The context you are in at the time will vary but it is important as it most often will be a defining factor of your motivation.

Given this isn’t a post on entrepreneurial psychology; I won’t delve too much into motivation. I can however tell you that insufficient or wrong type of motivation is, by far, the most important reason for failure of a start-up in my observations.

Very few types of businesses can be developed or managed part-time. A start-up is rarely a part-time job. The only stages at which you can get away with doing it part time are the ideation and early customer discovery phase. After, it’s a round the clock activity where you only get a few hours of sleep and have no life outside of your project for a long while.  If you are at a very busy time of your life for years to come, you may want to reconsider the timing for starting a new venture.

A factor that is rarely a reason for a startup failure is that the project owner didn’t have the right entrepreneurial profile. [1]

I do believe that anyone can be an entrepreneur but not everyone is born one. I would make the analogy to a concert pianist. Some may be born great pianists but a majority of them become great only after tens of thousands of hours of practice, coaching and basically dedicating the majority of their life to it.

Of course, if you are tone deaf, don’t know how to read music and don’t have any of the discipline required to practice long hours daily, the road ahead may be a very long and hard one for you.

It should also be noted that there is a strong correlation between knowledge of the field your start-up is in and success in launching a company.

Hence, the more you know about your field and the more of the entrepreneurial aptitudes you possess, the ‘’easier’’ and faster your start-up journey will be. Otherwise, you simply need to accept that you will need a co-founder’s help and/or be working harder and longer at it.

The Lean Startup approach

The ideation stage or concept stage is when you start thinking about not only your product/service idea but also the entire business model.

Even before you have anything other than you want to start a business figured out, you should talk about your idea with people around you.

You really need not worry your idea will get stolen (unless you are in an industrial environment and competitors are listening). I have often seen multiple entrepreneurs or teams work on very similar projects simultaneously. All of the times, they took very different paths along the way that resulted in very distinct businesses, when they persisted.

When talking to people you know about your business idea, listen to their impressions and feedback. Some of it will be helpful later on.  It will also get you used to handling the various reactions you can get when discussing your project.  Don’t worry about not always sounding coherent. It’s normal. Your mind is still not set at this point and it shouldn’t be.

First Lean Startup tools

The very first work tool I recommend to lean startup students will vary according to their type of project and their experience answering the needs of their target market.

If your project is heavily IT based or it’s a first one for you in a fast moving market[2] you are unfamiliar with, I recommend using the Lean Canvas.  The Lean Canvas will help you focus on what is the problem you are trying to solve and notions such as metrics. It will force you to explain what makes you better than the, likely, dozen or more competitors out there. A second step would then be to work on the business model canvas. It is important that you follow the recommended path to fill out the canvases. You first start with your customer segments and follow with either the problem you are trying to solve or the value proposition.  Notice that the solution is NOT the starting point.

If you already have a few years experience answering the needs of the market you are aiming for, or your project is not addressing a fast moving market, I suggest going directly to the business model canvas.

The business model canvas will allow you a deeper dive into your value proposition as well as the elements that will impact your cost and revenue structures.

The following resources to help you fill out both the lean and business model canvas.

• Lean Canvas tutorial – From the author himself, Ash Maurya
• National Bank’s My Business Model – Click on whatever part of the canvas at the end of the video to see the other ones
• Strategyzer’s Business Model tutorial – To be followed with the Value Proposition canvas tutorial

There are literally thousands of texts and videos available on the web to help you fill your canvases. A simple Google search will lead you to them.

Do your math

Although it is still too early for you to have a good idea of all of your costs and revenues, create a rough version of your income statement either in an Excel spreadsheet or with the help of an application such as Budgeto.

The purpose of this exercise is in no way shape or form to get to reliable net revenue projections. Any numbers you will produce at this point in time for your project are not worth the paper they are written on.

The objective of doing this rough draft of your financials is to get an idea of what parts of your business generate the larger costs and how exactly the money flows in. You can do some sensitivity analysis with fictional numbers and understand how various choices of business model components (like suppliers, distributors, pricing strategies, etc.) will impact your profitability.

The more you play with your financial model, the better the understanding you will get of what business model scenarios make financial sense and the ones that don’t.

Our next post in this series will look at the customer discovery phase of your project. It will take for granted that you have mulled your idea over thoroughly, have gotten some informal outside feedback, and are now confident about a first version of your business model.

[1] Some accelerator programs, owned by venture capital firms, will request a personality test before accepting you. That is because they are not willing to wait for anyone to develop those traits. Doing so would entail higher risks and longer return periods for them. Failing their entrance test doesn’t mean that you cannot be an entrepreneur.

[2] By fast I mean having significant market shifts happen within 6-9 months.