KISS Canvas 9. Cost Structure

[This is a part of a series on the KISS Canvas]

What are the major cost centers of your business? When do you have to pay? Do you have any options to pay differently? What costs can kill you? All of this is covered in the Cost Structure section of the KISS Canvas.

Here is each sub-lesson:

  1. Intro
  2. Capital costs
  3. Fixed  & Variable costs
  4. Example: a family
  5. Summary

Check out more KISS Canvas Content.

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Entrepreneurs give me hope when I need it most

When I talk about politics I am filled with sadness and a sense of near powerlessness to make the world a better place.

But when I talk to entrepreneurs, I am filled with hope. Where most of us see problems, they imagine solutions… and solutions that scale.

Here are just some of the companies blowing me away, all local/VVM companies making the world a better place!

  • Immigration
    • www.prosperitycandle.com – Providing fulfilling careers and a first rung on the economic ladder for refugees here and in war torn nations.
  • Health
    • www.newenglandbreath.com – Helping diabetics understand and adapt to their condition through superior, painless blood-glucose testing.
    • ernestpharma.com – Freaking (my words, not theirs) killing tumors with genetically engineered bacteria. No it isn’t science fiction!
    • footcarebynurses.net – These traveling nurses make help the elderly stay on their feet and independent.
    • lumme-labs.com/ – Smoking cessation
  • Education
  • Inclusion
  • Environment
    • genoverde.com – Trees that grow much faster. Good for tree farmers. Great for the environment because trees are really good at sucking carbon dioxide out of the air!

I could go on for hours.

These people give me hope. That’s why I love helping them. They are creating a brighter future.

Sermon over. 🙂

Calling Bold Nonprofit Leaders

If you…

  • Lead a nonprofit and…
  • See the funding landscape shifting under you and…
  • Know that insanity is defined as doing the same things over and over again but expecting different results…

Then I’d like to invite you to participate in the next Innovation Accelerator. In partnership with local foundations and donors dedicated to increasing nonprofit sustainability, we train nonprofit leaders to develop sources of unrestricted, recurring, and sustainable revenue. Leaders develop new revenue-generating ideas, build business models, gather evidence proving their assumptions, are guided by funders along the way, and at graduation pitch to a panel of funders who want to fund pilot initiatives.

Join us for part 1 of the Accelerator, the IdeaJam. In just a half-day you develop a catalog of your organization’s super powers (AKA assets, skills, and connections) and their potential for unrestricted revenue. Sign up soon with the discount code “early77” and save 20%.

You can learn more about the Innovation Accelerator here.

What if you don’t have an idea?

All innovation starts with The Idea. But what if you don’t have an idea to start with? Or what if you have only an idea or two and are unsure if you have the right idea?

Let’s help you generate some of the right ideas :).

Step 1: Set the stage

  1. Put your mission on top of a whiteboard or spreadsheet. Please do the one-sentence version :).
  2. List out your assets. Some examples:
    1. Any spaces (classrooms, laboratories, dormitories, etc) that lie unused some of the time.
    2. The time that key employees have on their hands (due to working part-time, summers off, etc).
    3. Know-how your team has developed (excellent systems, processes, curriculum, etc.) to solve your own problems.
    4. Relationships with other people, organizations, government agencies, etc.
  3. List out any loud signals the market has given you lately, for instance:
    1. Long lines of people waiting to purchase/use something you, or someone similar, are currently offering.
    2. People signing up (or asking) for an offering that you haven’t even marketed yet!

It should look something like this…

IdeaJam-Part 1-Set the stage-mission assets market

Step 2: Set the criteria

Identify the top five-ish criteria you want to score your ideas on. Jump to a new whiteboard and make some columns. Column 1 is “the idea”. The other columns are the criteria. The first few criteria should be the three items we’ve already discussed: mission alignment, have-the-assets (AKA assets are ready-to-go), and evidence of market demand. Next, you’ll need a few additional criteria relevant to your specific needs. Some examples being: easy-to-do, short-term-revenue, long-term-revenue, profitability, meets-strategic-priority-X, etc. Last, add a TOTAL column to the right.

Next, decide if any (1-3) of the criteria should be weighted more heavily. Mark them with a star.

It should look something like this…

IdeaJam-Part 2-Criteria

Step 3: Ideate

Gather some smart mentors with a diverse range of experience, both inside and outside your organization. Walk them through your notes on your mission, assets, proof of market demand, and then your criteria.

Next, have a free-ranging discussion walking through your various assets & market demand evidence to come up with new business ideas. Give each idea its own row.

IdeaJam-Part 3-Ideate

Part 4: Score

Give each person 10 sticky dots (votes) and instruct them to distribute the dots along column 2 (Mission Alignment). You’ll notice some ideas score much higher than others.

3.1

Repeat for each of the remaining columns.

When you get to the TOTAL column, add up all the dots for an idea. If a column has a star, count those dots double.

3.3

Step 5:  Review

Look at the scores. If you have it in a spreadsheet, sort it. You’ll most likely find a clear rank-ordering and one or two winners.

And now you have a long list of ideas, a rough sorting, and a clear methodology as to WHY :).

 

If you would like to go through a process like this with fantastic mentors, an experienced facilitator, and have a blast doing it, sign up for one of the Lean Innovation Institute’s upcoming IdeaJams.

Hat tip to the great Stephen Brand, who taught me how to do this much better!

 

Time to revisit royalty financing?

Royalty financing is a relatively new concept that offers an alternative to regular debt financing (loans and trade credit) and equity financing (venture capital and stock sales). In a royalty financing arrangement, a business receives a specific amount of money from an investor or group of investors. The money might be put toward launching a new product or expanding the company’s marketing efforts. In exchange, the investor receives a percentage of the company’s future revenues over a certain period of time, up to a specific amount.

-Source: Inc Magazine article

Some other interesting aspects of Royalty Financing – It doesn’t require the sale of the company. This means:

  • Entrepreneurs retain control
  • Investors start generating returns without needing a sale
  • The company is more likely to stay in the region it was born in (vs being merged & moved to the acquiring entity)

This flavor of capital is less risky than equity, but riskier than debt. As such, it may be an attractive option for angel groups outside of major tech hubs (such as my own) to explore.  In fact, we’re now actively looking to try out a few royalty deals. Stay tuned to see what we learn 🙂

Validating sales, marketing, and customer service hypotheses

When my students are working their way through a Lean Startup/Launchpad-style curriculum, the most important thing is to conduct great interviews. New folks smartly lean on a number of interview script templates (here are the ones my students use) to help them avoid many first-timer mistakes! However, the scripts I ran into tended to focus on customer pain & product validation – which is critical. However, I had a hard time finding scripts to help my students validate hypotheses around sales, marketing, and customer service (AKA Get/Keep/Grow in Lean Launchpad language).

So my fellow mentor Rick Plaut and I put this Get/Keep/Grow script together. Please feel free to share, use, and/or suggest improvements.

Introduction to the KISS Canvas

[This is part of a series on the KISS Canvas]

The KISS (Keep It Super Simple) Canvas (inspired by Alex Osterwalder’s Business Model Canvas) is a 1-page (or 4×3 foot poster) to help you quickly document (and then test) the key hypothesis behind your business model.

If you like to read, keep scrolling. For video lovers, click below!

OK, let’s dive in. It looks like this…

KISS Canvas-Easy2Read

The KISS canvas tells a story in the way entrepreneurs should pitch, with the most important elements first (on the left).

  • The Customer – Who do you serve?
    • Segments – Who are all the groups of people you will serve? Buyers, users, referrers, etc.
    • Pains – What problems do they have? Which are most important?
  • Value Proposition – What do you offer?
    • Features – How will you solve your customers problems?
    • Benefits – What promises are you making to your customers?
    • Competitive Advantages – Who are your competitors and how are you better at solving your customers’ Pains?
  • Marketing & Sales – What kind of relationships will you have with customers?
    • Get – How will you find and acquire customers?
    • Keep – How will you prove you kept your promises?
    • Grow – What new promises might you make?
  • Financial
    • Value Model – What value do customers provide you in return for your product?
    • Cost Structure –  What are the costs associated with running your venture?
  • Beard of Learning – When you disprove a hypothesis, move it to the bottom. If you’re using sticky notes they will eventually form chains and completely cover the bottom of your canvas. It kind of looks like your canvas grew a beard. Each sticky in that beard represents a hypothesis the student thought was true… and found out it was not! Thus the name my students gave it, the “Beard of Learning” :).

This Canvas is by no means a complete map but I have found it is the foundation of everything else that is to follow. To get a better feel…

Check out more KISS Canvas Content.