The Traditional Approach
We’ll set the stage. You’re an entrepreneur looking to start up a business. You’ve got a new idea for an innovative product, something you’re fairly certain will sell. You need to create a business. You don’t have tons of capital. You’ve been down this road before. The last time you did this you read the “how to start up a business” guide, and you received extensive start up advice. Last time you spent lots of time and money developing a finished product for the last start up company you created. Unfortunately, when you launched your business your product didn’t sell. Fortunately for you, there’s a new, different recipe for success.
A New Approach
Entrepreneur, I’d like to introduce you to your new best friend, the lean startup model. The term, lean startup, coined by Eric Reis, the founder of the popular entrepreneurship blog “Startup Lessons Learned,” describes a quasi-scientific method of developing a start up business with the focus on delivering a desired product to customers quicker and, in most cases, cheaper. Quicker? Cheaper? Now that we’ve got your attention, we’ll give you the key to developing a sustainable business, something every entrepreneur strives for.
Why the Lean Startup Approach Might be Right for Your Business
The traditional start up business relied on a detailed business plan, developed financial targets, and a finished product, which required a ton of time and a ton of money. All of this occurred prior to opening up shop. The newer, lean startup model relies on creating a low-cost version of your product, or a minimum viable product (MVP) that you use to experiment and test out with your customers. The products are shown to and used by your target market, and you receive customer feedback and reaction to your product. You then modify the product accordingly and launch 2.0 to your customer. This enables you to create a product that is geared specifically to satisfy your customer, a goal every business owner attempts to achieve. The happier your customer is with your product the better it sells. This approach has been employed by a number of largely successful businesses.
One important characteristic of the new model is flexibility- the ability to adapt. Try this, try that. Did it work? Great, how can we make it better? Did it fail? Oh well, where did we go wrong? Creating a process to analyze your customers’ reaction to your product is important, but even more important is your business’ ability to adapt to these reactions.
You must be able to shape your product and, ultimately, your business to meet your customers’ needs. Learn the customer-centric approach: your needs should come second to your customers’ needs. Learn to let your customers’ voice lead the way for your product development.
As a start up entrepreneur, you probably already know that start ups, more often than not, fail. Don’t get discouraged. Instead, treat a failure as empirical data. This data provides you with information about where you went wrong, and what improvements you can make to achieve success next time. If you’re going to fail, better to fail fast. At the very least, employing this new lean startup model means you won’t have wasted years of development, and thousands or even millions of dollars on a failed start up business this time. Throw out your old “how to start up a business” guide and give the lean startup model a try.
Issues to Address if Considering the Lean Startup Model
One of the major hurdles to overcome under this model is successful branding of your business if your prototype product, or MVP, fails to create the market buzz you were hoping for. It’s extremely difficult to brand a business that hasn’t produced any product or service that customers want. In addition to branding, it’s often hard to receive quality customer feedback. This is especially true when you are producing a product that is only minimally viable, a notion that doesn’t translate well in many markets, e.g. no one is going to buy a minimally viable child’s car seat.
Another drawback to the lean startup model is having to let go of your vision, to a certain extent, in order to allow your business and its products adapt to customer reaction. As entrepreneurs, we often have a hard time of letting go of our vision. Specifically, we often have a hard time replacing our idea with another’s idea, whether or not it may be better for the business. There’s a constant push and pull between your vision as the entrepreneur and the reactions (or vision) of your customer base. It’s this push and pull that can be tough to overcome for some startup business owners. The inability to adapt may be the difference between sustainable success and failure.
Additional tip: Reduce your expenses by taking advantage of the resources, including free software, currently available for startup businesses. There are a plethora of time-saving, cost-minimizing software programs that cater specifically to entrepreneurs and startup businesses. Explore your options. Test out different software and find which one works best for your particular business. You’ll be amazed by the creative ways these programs can help you grow your business. Stay tuned for our take on how you can reduce your business’ overhead expenses by employing (free) innovative software.