What you need to know about making sound investments that are ethically sound.
Are you looking for a business model canvas template? At the Ākina Foundation, we recommend that people use the Social Lean Canvas to develop their social enterprise idea. The social lean canvas provides a structure that allows you to break your idea down into its key parts and evaluate where the risks and assumptions are. It’s important to identify the risks and assumptions as they are the things that are most likely to get in the way of your venture succeeding. The more you can reduce risk before launch, the better your chances are of building a social enterprise that will survive.
Business model canvas template: Here's What a Social Lean Canvas Looks Like
The Social Lean Canvas is adapted from Ash Maurya’s Lean Canvas (www.leancanvas.com) which is in turn adapted from Alex Osterwalder’s Business Model Canvas (www.businessmodelgeneration.com) and is licensed under the Creative Commons Attribution-Share Alike 3.0 Un-ported License.
Before you get started on your own canvas you can see an example of a finished Social Lean Canvas for TOMS Shoes here.
Creating Your Own Social Lean Canvas
There is a specific order that you use to create your social lean canvas. As you work through your own canvas we will use an example. In our example, our purpose is to create meaningful employment opportunities for young people so they can feel good about their future. We have the idea that we might do this through a cafe that provides training opportunities, but we need to look at how that would work in practice.
The first step in building a Social Lean Canvas is to start with the customer, because every business model needs customers to survive.
The customer box needs to include all the key people we need to move to make our business work. Not all customers need to be paying us, but at least one segment does. Groups who might end up in this box include customers, funders and end-users.
In our example we might have three key customers:
- Hungry/thirsty people who work near our cafe and want to spend their money in a way that makes a difference (cafe customers)
- Young people who want to improve their lives by getting training and a job
- A government department that has a vested interest in reducing unemployment among youth
Next we jump to the opposite side of the canvas and look at the problem box. Customers and problems come in pairs.
If a customer doesn’t have a problem we think we are solving, then we need to rethink their role in our business model. We also phrase our customer’s problems in their own words, which helps us understand where they are coming from.
The other reason we do this is because it is important that this is actually a problem the customer faces. If our customer doesn’t think they have a problem then it’s going to be challenging to convince them that they do.
In our example each customer has the following problems:
- Cafe Customers – I need a coffee and I don’t want to buy it from a generic chain store.
- Young people – I feel like I don’t have a future because no one will give me a job.
- Government – Unemployed young people cost us a lot of money. We’d like more of them to be employed.
After looking at our customer’s problems we need to think about how we entice them to engage with us. We do this by crafting a unique value proposition (UVP).
The UVP is the benefit you offering to your customers, not the features. For example, a movie theatre might have the biggest speakers in town, but you don’t go to that theatre because of the exact size of the speakers. You go because you want to feel it when the alien spaceship crashes to earth.
Each customer will have a matching value proposition because they each have individual problems you are solving for them. Often the UVP will be a reframing of the problem expressed by the customer.
For our cafe we might have the following UVPs:
- Cafe Customers – Unique coffee that makes you feel good and the world a better place.
- Young people – A place that gives you a chance and a future.
- Government – An opportunity to change the lives of young people and better spend tax dollars.
Once we’ve done the UVP we can propose a solution. This solution is the business we think we are going to create. We need to keep the solution reasonably high-level and clear. We also need to remember to hold our solution lightly. As we work through our canvas we may find that we need to change our solution based on what we learn.
In our example:
Our solution is a cafe that employs people with no work experience who are struggling to get into the workforce. We are going to provide them with training on the job, and then help them get a job in hospitality so we can continue to train new people.
Each social enterprise needs an unfair advantage. This advantage is the thing that will make you successful where others have failed.
Your unique advantage might be a world expert on your subject matter, a celebrity, or a patent.
Knowing you unique advantage is vital because it will be a key part of getting other people on board with your vision. It will also be the thing that makes your venture different from all the others out there.
As you establish and grow your venture you’re going to need to measure some key factors. Knowing how you are going on these key factors will help you assess whether you are going in the right direction.
When choosing key metrics make sure you choose metrics that actual tell you something, rather than just ones that make you feel good. You shouldn’t only be measuring new customers, but also how many customers you are retaining over time.
You will also want to have some measures that indicate how well you are achieving your impact. For example, you might want to count how many people you are training, or helping, or what changes occur in your end user’s lives.
In the channels box you will list the routes you use to market and sell to your customers. This might include online, face to face, or via distributors.
Different channels have different impacts on your business model. For example, a business that just sells through its own website will have very different cost structures and personnel needs compared to a business that sells door to door.
With a clear idea of what our solution is, we can start to look at how the business works financially. There are two key areas that affect the finance of a business; how much money comes in and how much money goes out. We break these into two different boxes, costs and financial sustainability (revenue).
In the costs box, you need to think about what the set-up costs will be and what the ongoing costs will be. In the financial sustainability box we put down all the sources of income we will have.
It’s best if you can put actual numbers in these boxes. The numbers don’t have to be exactly right, but if you put in a rough approximation you can start to work out how viable your business looks. Err on the side of caution and assume that your costs will be higher than you think and your income will be lower than you think.
For our cafe we might have to spend $250,000 on fit-out and equipment before we even start. If it’s not going to be possible to find that much money we might have to think about an alternative solution that still fulfills our purpose. Also, if we know that we can only sell a coffee for $3 in our town, but it’s going to cost us $4 in training and ingredients then we would need to be sure that the government training grant would cover the difference.
Finally, we look at our impact. In this box, we need to write a summary of what changes because of the social enterprise we have created. For our cafe we can say “Young people have successfully completed training that has led to them getting long-term employment. As a result of that employment, they reduce the burden in welfare and health costs and live happier, longer lives.
If you want to learn more about impact then read our article on impact models.
Where to From Here?
Now that we’ve written down our business model on the social lean canvas we need to identify the risks and assumptions. In order to do that we use the lean start-up method.