How to Run Your Lean Startup Like a Boss
Look up ‘lean’ in the dictionary and you’ll find some surprising definitions. ‘Thin but healthy-looking; lacking fat; unproductive.’
Would you class your startup as thin or unproductive?
That’s not exactly what author and entrepreneur Eric Ries had in mind when he first proposed the lean startup methodology back in 2008. Rather, his vision for a lean startup “isn’t about being cheap [but is about] being less wasteful and still doing things that are big.”
Here, we’re going to dig a little deeper into the lean startup methodology and how it works, along with some useful tips on how to save money during the early stages of your startup without compromising on professionalism.
What is Lean Methodology?
Traditionally, the process of creating and launching a new business idea takes months, often years, of planning and fine-tuning before your product or service is released to the market.
During this time, you will undoubtedly invest a significant amount of your own time and savings, or that of an investor, in order to develop your product.
The problem is that many would-be entrepreneurs act on assumption; they think people want their product and they spend a lot of time quietly (and sometimes secretly) bringing it to a point where it can be released to market, without actually showing it to prospective customers.
As Ries notes, this isn’t always the best approach:
“When they fail to reach broad uptake from customers, it is often because they never spoke to prospective customers and determined whether or not the product was interesting. When customers ultimately communicate, through their indifference, that they don’t care about the idea, the startup fails.”
According to the SBA’s Frequently Asked Questions report (2018), approximately 20% of new businesses fail within a year (based on data from 2016-2017). Becoming a statistic is one thing, but when entrepreneurs pour their life savings into an idea that fails to take off, it can have serious long-term ramifications.
The lean startup process aims to reduce the risk associated with launching a startup by taking the business idea to market faster, even before it has been fully developed, in order to gain customer feedback and prevent the company from designing features or services that consumers simply don’t want.
The key is to ask yourself, “Should this product be built?” rather than “Can this product be built?”
By constantly testing and developing, you can make use of feedback to help tailor and fine-tune your product to the specific needs of your customers. That way, you’re much more likely to release a successful product and run a successful business.
What Does it have to do with Cost?
The lean methodology isn’t about building something cheaply. But, by adopting the lean startup process, you will in effect cut costs by reducing wasted resources — including time and money.
Rather than spending months building a product at cost and investing in a website and marketing campaign, only to release it and find that your product is off the mark, you can release it in stages to selected audiences and make improvements along the way, or even pivot completely. The fancy website and PR campaign comes later.
That said, the more money you can save along the way, the better. So with that in mind, here are a number of money-saving suggestions to help you stay ‘lean’, financially speaking, while working on your startup idea.
Choose your workplace wisely.
Don’t be tempted to splash the cash on a private office. Work from home or even better, consider a flexible coworking membership. Coworking spaces are collaborative by nature and they’re filled with entrepreneurial professionals just like you, so the chances are, the monthly cost of your membership will be offset by the connections and support you’ll find there. Running a startup can be a lonely business, but working from a coworking space is a cost-effective way to surround yourself with the right people and a helpful support network.
Another benefit of coworking is that you can sometimes use their business address for commercial mail. Alternatively, a virtual office provides a low-cost mailing address along with additional services such as mail forwarding, receptionist support, and on-site meeting rooms.
Good value doesn’t mean cheap.
Your time is valuable. Even when funds are tight, consider spending money on things that make your day easier. That way, you can focus less on day-to-day admin and distractions, and more on running your business.
Take your accounts as an example. It’s tempting to do it all yourself to save money, but how much time do you spend tracking receipts, expenses, invoices, and other bookkeeping processes? Could that time be put to better use? We’re willing to bet it can. There are plenty of smart online products on the market — Zoho, QuickBooks, FreeAgent, to name a few. They won’t cost the earth, but they could free up a huge amount of valuable time to re-invest back into your business.
Think Big while staying small.
In the eyes of your (future) customers, startups lack the sense of establishment and credibility that emanates from a larger business. There are certain things you can do to help your business look more established and therefore more trustworthy.
For instance, get real email addresses that contain your domain name. A business reply with a @yahoo, @gmail or @hotmail extension won’t do your startup any favors. While you’re at it, create multiple emails for different purposes, such as [email protected] and [email protected] And invest in smart, good quality business cards. There’s a huge choice of suppliers offering good quality cards at competitive prices, so there’s really no excuse for low-grade versions.
And a word about websites. While you shouldn’t spend thousands on a beautifully designed website in the early stages of your business, you must still ensure that your website looks good, does the job and works well. It’s often your customers’ first point of contact, and first impressions really do matter. There are more than enough good quality website builders on the market, many of which are low cost and easy to manage. Take a look at Wix, Site123, and Weebly.
Act the professional.
One of the hardest things new businesses face is building trust with potential customers. Remember that you are representative of your business — your credibility stretches across your brand, your products and services, and affects how your brand is seen by the public and your competitors. Whether it’s answering the phone, replying to an email or hosting a meeting, always think about how your business looks from the outside.
Ideally, use well-equipped meeting rooms to meet clients and investors, not a coffee shop. Meeting rooms can be hired by the hour or by the day in business centers all over the country, some costing just $10 – $15 for an hour. They’re furnished, well-equipped, and most have on-site receptionist staff to greet guests too.
Like we said, first impressions really do matter — and a poor one will cost your business. It might even cost you your reputation.
When it comes to running a startup, the lean methodology is a tried-and-tested way to get a product to market quickly and at less risk and cost to yourself than conventional methods. It ensures that you are continually learning from your customers and building a product that they actually need, and are prepared to pay for. After all, your customers are your best source of information, so it pays to listen to their feedback every step of the way.
Learn more about the lean startup methodology at theleanstartup.com and good luck! We hope you enjoyed this promoted piece as much as we did!