If your business is starting small and wants to test and refine their products as quickly as possible, you fall into the category of “lean start-up.” The term, coined and trademarked by entrepreneur and author Eric Reis, has become a Bible of sorts to many young entrepreneurs hoping to launch the next Groupon, Facebook or InstaGram. But the principles can apply to you no matter what your age or your market.
Running a lean start up encompasses a lot of basic principles, but chief among them is capital efficiency. Rather than spending a billion dollars doing market research on the coupon phenomenon, the founders of Groupon tested the idea out in their own office complex first.
According to Reis, being lean isn’t about being cheap. “It’s about being less wasteful and still doing things that are big.”
Even if you’re an established business, you can start bringing some of the lean start up principles into your business, so you’re more innovative, more appealing to customers, and more profitable.
Focus on reducing waste – The prime goal of Lean Thinking (which fuels the Lean Start-up model) is reducing waste wherever possible. By increasing the frequency of connecting with customers, testing new ideas, and launching products or service with a minimum of features, it’s possible the time, money and resources spent on a typical start-up can be greatly reduced.
One of the most basic ways start-ups are reducing their overhead these days is by utilizing a Virtual Office or Coworking facility. By reducing their short and long term obligation to rent and facility amenities, they are slowing their “burn rate” while tapping into the intellectual ideas and collaboration a community of entrepreneurs provides.
New ideas are the lifeblood of your business – It’s important to always generate ideas to work with. Lean start-ups look for ways to innovate what they are doing and not just improve upon it. If a spark of an idea means you need to rethink your entire target market, it might be just the idea that will take your sales from ho hum to skyrocketing. If it means abandoning an old project or creating a new product that competes with your existing products, it may be worth the risk.
Pull your customers in, don’t push them into buying – Starting with a proven customer need is the best way to innovate a solution that will be successful and profitable. The result is better products that speak directly to the needs of your market. Instead of trying to manipulate people into buying, find ways to create the exact solutions to specific problems.
Let your customers define your value. – If someone buys your product and never uses it, do you consider it a win or a loss? In the Lean methodology, it’s a loss and needs to be fixed. Resources were spent but the value wasn’t achieved. Letting customers define the value – and focusing on use rather than just the sale – makes it easy to create a body of raving fans who evangelize your product. Look for the reasons why the product was never used and make changes in future generations to fix those problems.
Continuously improve the system that creates your business – It’s not just about maximizing the results. Success with a lean start-up means that you’re focused on improving the system that gets those results. You’ll need to focus on the processes, steps and systems that get you the results for which you are looking.
With these lean start-up ideas, you can innovate your current business, or be set to tackle a new venture without the bloated budget associated with many start-ups.
5 Keys to a Successful Lean Start Up