Startup Canvas: Your Business Model On A Single Page
A good beginning is half the battle—and that applies to startups just as perfectly. You may create a convincing business plan that might take about 40 pages and include unchecked assumptions or data that are bound to change over time. Or you may start with forming your ideas as an accessible business model on a single page within a couple of hours.
Startup canvas is just as vital for you as for the team that will build your software product. First of all, it helps you to shape a proper vision of your business with answers to the main questions about your product and the problems it's going to solve. The vision of your business helps to shape the vision of your product. It is essential for understanding of your further actions and decisions. It helps you to describe your main ideas concisely, modify them, and polish them to precision. It is portable and accessible for potential investors, partners, advisors, and, finally, your development team.
Meanwhile, the goal of your development team is to help you to build a product that will solve the identified problems of your target users, corresponding with your business goals. Your canvas can properly help them to get the understanding and make valuable suggestions that will improve the product. Therefore, the canvas becomes the document of the highest priority, the locus and the basis for the entire project documentation.
This is what a blank Startup Canvas looks like. It is based on the widespread Business Model Canvas by Alexander Osterwalder; it has been modified according to the needs of software product businesses.
Now we'll help you fill it out easier and faster, with a real example for easier understanding.
This is where we start: your future product has to solve a certain problem that has to be defined, while your team has to find the optimal technical solution. A well-stated problem prevents you from creating a wrong product.
How we defined the problem: we wanted to solve the problem of businesses that wanted to showcase their products and services with a visually compelling mobile gallery to existing and potential customers.
Now the question is: who has these problems? Who might be in search of solutions? Can your target audience be segmented? Keep in mind that different segments might require separate canvases, if some other pieces of the puzzle differ too (e.g. channels or existing alternatives).
How we defined customer segments: we wanted this product to be applied widely. We listed all segments where such a product would bring benefits, from designers and photographers to museums and jewelry stores.
Unique Value Proposition
What makes your product stand out against competition? Why should your users/customers prefer it over any other competitor? What makes it unique and worth buying? This is what you are going to highlight for your customers and promote.
How we defined UVP: the main idea was that the product could be easily branded and modified according to the customer's preferences, and would further show their products and services in the most attractive and informative way.
Solution defines main features that present your Unique Value Proposition. This is basically your Minimum Viable Product that will be launched on the market. Considering that one of the keywords is 'minimum', be concise when defining it. Use the experience of your team to modify the solution towards better effectiveness. Therefore, you'll get rid of all things unnecessary and get a faster delivery.
How we defined the solution: it would be a cross-platform application available for free download. There would be an administrator panel for dynamic updates of content, in-app means of making orders, and focus on attractive high-quality pictures.
What is your advantage over competitors that cannot be bought or copied? Few startups have it from day one, so you may leave it blank for a while. However, once you enter the market and succeed, your direct competitors will follow in your wake, so this will be your defense against them.
How we defined unfair advantage: our company already had reputation on the market and a customer base. We could ask them to share the news of a new product.
What are other tools that are used by your target audience for the same purpose? You need to know their strengths and weaknesses and gather ideas for your own product, which will be shared with your team in search of the optimal solution.
How we defined existing alternatives: our target audience used the most widespread tools for presenting products and services: social media pages, websites, printed catalogs, custom apps, and Magento, an open-source e-commerce platform.
What are the relevant key metrics that will show the success of your product on the market and achievement of your business goals? Keep in mind that wrong and/or numerous metrics lead to pursuing wrong goals and wasting resources on unnecessary activities.
How we defined key metrics: first of all, it's the total number of customers and correlation between revenues and expenses (profit, which is probably the best metric). The secondary stats that we were interested in were active customers, available templates, customizations, orders, and users per day/month.
Indicate several existing examples that illustrate features of your future product. This will be helpful for your team's understanding; moreover, they can have valuable ideas from their experience.
How we defined the high-level concept: we thought that about.me (the previous version) would make a nice example of the information component, while Behance for mobile devices would illustrate the graphic component.
How will you reach your users/customers? Write down all free and paid channels. As for a supporting website/landing page, your team can handle that easily.
How we defined channels: as usual, direct sales is the main one. Then come personal contacts and recommendations. We would have a landing page, and the product would be promoted. Moreover, we could promote finished products of our early adopters in order to show our potential customers what they would get in the end, after all the customization and polishing.
Who will be the first users of your product? Maybe your team will have to tailor your product to their specific needs.
How we defined early adopters: we figured out that our product would be most popular for exhibitions (fine art galleries and photographers).
Make a comprehensive list of your costs. Good budget planning facilitates effective development, and it's also one of the most interesting pieces of information for potential investors/stakeholders.
How we defined the cost structure: first and foremost, it's product development and costs of maintenance and customization for early adopters. Among other costs we considered the most significant was active promotion.
This is where you pick a revenue model – upfront payment, freemium, subscription, advertising, etc. You should also think of break-even point, lifetime value, gross margin, and other related things. Think beforehand, because your revenue model most likely constitutes a part of the implemented functionality.
How we defined revenue streams: since we took over the maintenance duties, customers would subscribe to use the application. We would brand and customize a template for them. There would be standard and extended templates, which would also have different price. As an additional service, we could provide customers with stats of user activity.
Eventually, we got this artifact:
As for our story, we successfully made a product and called it Presentation Box. Since then we applied it to create two beautiful cross-platform products – first for a photographer, then for an art gallery. Feel free to check them out in our portfolio and on the App Store.
October 13, 2016
Long and turbulent is the way from a startup idea to the first version of a software product launched on the market. But it's... more →
Fixed price is not just a pricing model in custom software development; it predefines project processes and responsibilities of... more →