The differences between the business plan and lean canvas - Essay Example

Essay, Business Lecturer: The differences between the business plan and lean canvas The business plan as proposed by Alexander Osterwalder outlines the several prescriptions that form the structure of the building blocks of the business activities. It allows both an existing and new businesses to focus on strategic management, marketing as well as operations. On the other hand, the lean canvas as proposed by Ash Maurya, is a development of the generation of the business model. It outlines an approach that is more problem focused, and it majorly targets startup businesses and entrepreneurs. In terms of the target, the business plan targets both existing and new businesses while the lean canvas target is purely the startup businesses. As the business model canvas focuses on investors, entrepreneurs, customers, advisors and consultants, the focus of the lean canvas is purely for entrepreneurs only. The business plan lays emphasis mainly on the customer segments, customer relationships and channels for all the businesses. In contrast, the lean canvas lays less emphasis on the customer segments since the startups lack a tested or known products for sale (Dudin 2). The approach by the business plan is that it lays down the required infrastructure, lists the sources and nature of financing and the anticipated business revenue streams. The lean canvas, on the other hand, begins with the problem, the proposed solution, the channels to be used to achieve the solution, the costs to be involved and the revenue streams that are anticipated. With regards to competition, the business plan focus is on the value proposition in both the qualitative and quantitative terms for the business to stay smart in the market. Conversely, the lean canvas carries out an assessment of whether a business entity enjoys an unfair advantage over the others and focuses on how to on it so as to allow for better grounding. The application of the business model canvas fosters the candid understanding, discussion, creativity and constructive analysis. The lean canvas application, on the other hand, is on a simple problem and solution approach that enables the entrepreneur to develop or advance on a step-by-step basis. Although both offer analytical approaches that are vital in the prosperity and success of the business, both have varied criticisms. The business plan fails to take into account the business model management and performance measurement both of which are vital in allowing the continued business success. On the other hand, the lean canvas fails to offer an expected approach in a situation where the solution that is given to the initial problem becomes difficult or unrealistic to attain on the ground. When and why an entrepreneur should use the business plan or lean canvas The lean canvas is a helpful tool that help the entrepreneurs design businesses. It is an ideal tool since it enables the entrepreneur to define quickly a business without necessarily having to outline a full business plan. The lean canvas utilizes a one-page business model that facilitates and helps the early stage startup that will enable the entrepreneur to identify quickly and overcome challenges. It identifies a target market, defines a unique business value proposition, tests the assumptions put forward by the entrepreneur and ultimately arrives at their first iteration. The lean canvas is vital in helping the entrepreneurs to gain clarity about their business ideas that will translate into an approach that is well defined to their markets and potential end users and investors. For the entrepreneurs who are in the business discovery sessions, the canvas model will be able to blend well with their agile and lean approach to business. An entrepreneur will use a lean canvas model when he or she wants to get prompt answers from the customers since it provides the fastest way of learning by that is talking to the customers. Where the entrepreneur wishes to clarify a problem, the model will provide a survey of the potential users so as to validate whether the problem to be addressed exists. The model also validates a solution to a problem by asking the potential users their thinking on how the concept solves the problem. If the entrepreneur would like to set the price for his or her products, the canvas model will provide a basis for the early testing of the pricing to be paid by the consumer during the start up. The lean canvas model will also benefit the entrepreneur during the measuring of the product fit by creating a consumer feedback that is used when the will help in the understanding of the product viability. Additionally, the model will help the entrepreneur make feedback easy to get ready to make sales. Examples based on FBMP The problem that faces the First Book Market Place is the attempt to solve the issue of the lack of new books that are unavailable for purchase due to the low income. The business plan is geared towards the provision of enough books especially to the disadvantaged children. The customer segments are the children from the low-income areas who are the main customer from preschool, literacy, and after-school programs. The solution is to offer the books at an affordable price level and to avail the books in unlimited quantities. The books also need to be of high quality, relevance to the children, and of broad selection. The revenue streams, cost structure, channels and the unique value proposition will also be presented on the canvas model. The revenue stream was to attain a profit of 0.45 dollars with the purchases paid through electronic or through credit cards. Consequently, the cost structure involved 0.75 dollars which covered the costs, generated profir and keep their products readily available to the clients. Other costs includes the salaries which ranges from 70 to 100 per cent annually and administrative cost that covers 11 per cent of total sales. Dudin, M. The Innovative Business Model Canvas in the System Of Effective Budgeting. Social Science 11.7 (2015): Web. Read More