How to Start a Lean Startup
If you have a business idea, then you must be wondering how to start your company. You probably heard of the lean startup already. It’s something that many decide to use as a method for starting a business.
Running a startup is always a risky business and the success depends on many factors. After all, you simply can’t expect that everything will run smoothly and should be prepared for some setback. Just because you believe you have a unique idea, product or service, it doesn’t mean you’ll be successful.
The normal way of starting a business always included similar path: business plan or project plan, investors, create a team, develop a product and sell it aggressively. However, today, many suggest validating the idea before developing it. This means that you will be developing products that you know consumers want and don’t assume it.
This approach is called a lean startup methodology (in case, you need to know more about lean project management) and is one of the most valued ways to build not only a business from scratch but also for introducing new products.
Lean startup and how it works
Lean startup is an effective way to use the resources for developing businesses, services or products. It will give you an opportunity to manage the potential downfalls and mitigate risks. Additionally, it helps you to find the best approach to your idea and create a scalable model to use for your company.
“The lean startup method teaches you how to drive a startup: how to steer when to turn, and when to persevere and grow a business with maximum acceleration,” said Eric Ries in his book The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. Eric Reis was actually the one who made the lean startup famous back in 2011 based on the research of his professor.
Startups work with limited budgets and that means that they have to be careful how they use it and on what. Before they start the process of spending their resources on developing their ideas, they have to validate them. Moreover, this is an important part of lean startup methodology which uses validated learning to come to the decision.
Basically, the lean startup will help you avoid creating something that no one wants by providing you data necessary to make the right decisions. If we compare it to the old-fashioned way of doing business, we can call it instinctual compared to lean startup which is based on data.
On how to use it
Although all this above makes it sound simple, the truth is that lean startup can be quite challenging.
Define your target consumers
Start by finding your target consumers since they will define your brand and be the first people to buy it. If you make them satisfied with the product, they will recommend it and help you promote it. More importantly, they will give you the initial financial boost you need, as well as help you develop the best possible product for their profile of consumers.
Over time, you may be able to improve the product and gain other consumers as well. But you can’t do that unless you have that initial spark to start it all in motion.
Learn about the market
For example, if you are a clothes manufacturer, you want to reach as many consumers as you can. This usually means that you will try to produce your clothes in a wide range of sizes to attract as many as you can. Although this is a nice thing to do, it is quite risky and can cause undesired expenses in the end.
That is why you have to examine the market before you start and observe the demand for the similar products to yours. As a startup, you don’t have the luxury to produce more than you can financially take without going into debt. This may be somewhat disappointing but will help you successfully maneuver the start and create possibilities to grow.
Know what is important and what is not
You will face a lot of things that require your reaction, but knowing what is important and what is not will save you time and resources. Bear in mind that you have a lot of work ahead of you and thus you can’t spend the same amount of efforts on every decision you need to make.
For example, probably the hardest part for you is to know when to say “no” to certain ideas even though they sound great. There is no place for maybes, you have to focus on the things that are realistic, and you will benefit from. Knowing when to save the energy and money is crucial for a startup and you should invest them only in those activities that are beneficial for your business.
Advantages and disadvantages of the lean startup
Advantages of the lean startup are various and can depend on the type of business. Due to the learning and research approach, it is useful for creating a successful SEO. Namely, SEO and the lean startup method both need to know the target customers in order to work. Once you find out the demographics, you can use them to create your marketing strategy around it and boost the sales.
Another plus side is that you will mature as a company by applying the lean startup methodology. Specifically, the lean startup requires organized management with a team that is open to learning new things and adapting to the market demands. The moment you all agreed to stop assuming that something will work and started researching if it will, you passed the test of being able to work effectively as an organization.
Other advantages are that you won’t waste away the money on unnecessary ideas. It’s flexible so you can easily adapt to the better way of performing tasks and you will know that your customers want it.
The disadvantage is that you can change your product too much so that you lose your customers trust since they would believe something is wrong with it. You have to be careful with the customer’s feedback and not take everything they say as important. Otherwise, you will spend too much money on improving something that will ultimately fail.
Additionally, the development process may seem chaotic and that can be confusing at times. Usually, the employee training is skipped or done quickly. The amount of work can be overwhelming since there is a lot do in a short time. This can create frustration and exhaustion among employees that can affect productivity.
Lean startup methodology is not a miracle, but it will help you learn more about the customers and market. This is a good thing for those who don’t have much experience. Instead of bleeding money, you will be able to plan your budget according to the research results. It may not be a perfect method, but it’s safer for those who have limited capital and not much space to recover from mistakes.