Guest Post by Ryan Burch
The sad fact of business is that startups will often fail; the US Small Business Administration has said in the past that 50% of all small business startups are destined to fail within their first 5 years. However, according to Eric Ries, entrepreneur and author of The Lean Startup, many of these business failures could have been prevented.
His modern and effective Lean Startup approach to business has rapidly gained global cult status, changing everything from product launches to the way in which companies are actually built, and the best part? It’s aimed at every business, from Fortune 500 companies to one-man-band startups. So, what advice can small business entrepreneurs take from Ries’ startup approach?
Don’t Waste Time on Elaborate Business Plans
The Lean Startup method is based on a system of constant evolution and development so there isn’t any need to create an elaborate business plan. In order to succeed in business you need to use the build-measure-learn method; any idea or product must first be built and then marketed in order to receive feedback. That feedback then allows you to develop your idea accordingly.
The build-measure-learn loop is fundamental to a Lean Startup as it provides entrepreneurs the information and ability to stick to business paths that work and pivot away from paths that aren’t viable. Ries says “pivoting is fundamental to the (business) process. If you look at successful startups most of them started out with the exact right business model, idea, or strategy. Most of the time, the idea is downright crazy. But there’s just a kernel of truth buried inside it” – not matter how crazy the original idea, an entrepreneur can then pivot to develop that idea. Ries describes a pivot as “a change of strategy without a change of vision.”
A/B Testing is one form of feedback measurement that Ries advocates, marketing one product in two ways to determine which method provokes the best response from potential customers. This multivariate testing can be as simple as sending two different emails out to two sets of customers or as elaborate as creating two separate websites.
After measurement entrepreneurs can then learn from the feedback they receive, leading them to quickly pivot where necessary to avoid losing money or failing through a bad business idea or method that doesn’t appeal to their target customer.
Minimum Viable Product (MVP)
In order to create a product or idea that will actually sell you need to know your customer inside out. The problem with most businesses is that founders often assume that they know what their customer wants. In order to discover whether you are offering a product that will be accepted by your target customer you must give them a basic version (an MVP) and allow them to pass judgement.
Creating and developing an MVP is a key component of the Lean Startup method as it allows you to quickly market a product for testing. Your MVP should be a product that has been created and has the features necessary to begin marketing it to potential customers in order to gain feedback. It doesn’t need to be elaborate, early versions of products or even marketing details and information are adequate, it’s the feedback from these early prototypes that are invaluable to your startup. The goal with your MVP is to get it created and out to potential customers as quickly as possible, work with urgency.
Find a Mentor
Mentors are helpful at all stages of business development and it’s in your best interests to let them completely tear you apart. It’s all too easy to be bogged down by the details when launching a startup business but a good mentor will help you to stay focused on the important details. Not only will a great mentor pick up on issues you may have missed they will ask the questions you might not have thought of, after all, they’ve been there!
Ask your mentor to be as brutal as possible; the earlier you discover a potential idea may not work the sooner you can adjust and the better it’ll be for your business.
The Lean Startup method can be long-winded at times but it’s essential that you don’t take shortcuts. Stick to the process and don’t ignore feedback from customers about your product if they force you to take a step backwards or make major changes, the changes will be worth it in the long run.
The lesson here? If you want your business to be a true winner, you’ll need to be a lean, mean, startup machine! Ries’ believes failure is a virtue and his advice comes from the ashes of his previous failed businesses, so he is well placed to offer advice on how to avoid a crash and burn effect when launching a startup.
Have you failed in business and then succeeded using a Lean Startup method? We’d love to hear about your experiences in business.
Ryan Burch a proud member of the team at High Speed Training Ltd, one of Europe’s leading e-learning providers. We actually formed in 2007 as a specialist consultancy in food hygiene but have since grown our offering considerably and now have over 42 high quality online learning products, created in partnership with a specialist company in each relevant field. You can view the full range of career courses here.