Prioritizing Cost Research

For the Lean Canvas, the expectation should be limited. We want to understand most of the key startup costs as well as a reasonable estimate of the likely operating costs. Order of magnitude is critical here. Imagine that your largest cost will be product design, exceeding £100,000. You should not be spending a lot of time, for example, figuring out whether printing business cards will cost you £15 or £20. Sometimes entrepreneurs get caught in details because they are either easy or well-defined and addressable. Saving 10% on your business cards will net about £2. Saving 5% on your product design costs will save £5000!

Prioritize your cost analysis work by the magnitude of the costs. Do not waste a lot of time trying to get exact costs for start-up or operational items that represent less than 5% of your overall cost structure. Do not get distracted specifying costs simply because those costs are either easy to find or easy to calculate. Focus on the big-ticket items.