As an entrepreneur, you are well aware of the dark side of doing business, where no matter how hard you try, sometimes failure is inevitable. To deal with this, entrepreneurs are now adopting the lean startup method. In this article, you will get an in-depth understanding of lean startups and how to build your own business using this method.
According to reports, about 90% of startups face failure, and among these, 20% of startups fail in the first year, 34% of the established startups shut down within two years, and a little over 50% of startups make it to the fifth year. Only 25% of these startups are successful in touching the 15 years mark. This is why we see some of the most promising startups fail within a few years of doing business.
Although the startup failure rate is high, as an entrepreneur, you can take measures and adopt methods to keep your startup from failing. One such method is the lean startup method. The lean startup approach has changed the way entrepreneurs launch their businesses and products.
What is the lean startup methodology?
The lean startup methodology offers you a scientific approach to manage startups. It introduces the new product to customers much faster than regular startups.
The lean startup method guides entrepreneurs on how to operate the startup, when to make changes, and when to implement growth strategies. This offers a principled approach to the new product development process.
How to build a lean startup?
Here are the 3 simple steps to build a lean startup:
Step 1: Find a business idea
This step is crucial. When choosing a business idea for a lean startup, you need to be sure that your customers will like what you offer. You need to check the future prosperity of the product.
To come up with a business idea, you need to pay attention to the problems that people face in everyday life. You then need to identify the problem that you want to solve and build your business idea around solving this problem.
Step 2: Execute the business idea
Once you choose your business idea, the next step is to build your minimum viable product or MVP. An MVP is the most basic version of your product that you launch in the market to encourage trials among your potential customers and get their feedback.
This also creates a market for your product before your final launch. The primary objective of the lean startup method is to build the product, test it, and get feedback before launching the final product.
Step 3: Validate the business idea
The most important step while building a lean startup is product validation. To validate your product, you need to execute your business idea practically.
You need to test your MVP and see the response of your potential customers in the marketplace by seeking feedback.
You can use the customer feedback data to decide the following:
- Whether you should continue to build your product.
- Whether you should make changes to your product.
- Whether you should make alterations in your business strategy.
If your MVP results are positive, you can continue to build your product using the existing strategy. In case of negative results, you need to improve your product strategy.
The final product is launched in the market only after sufficient feedback has been received on the MVP and the final product is designed to fulfill customer expectations.
In this manner, a lean startup avoids major failures and losses by consistently testing and validating the business idea and strategy.
How to build a lean startup team?
1. Start with a small team
In his book, The Lean Startup, Eric Ries explains that you need to start small when it comes to innovation groups. A small team provides many benefits such as:
- The bond is usually faster in small groups that leads to better communication in the team.
- Experiments can happen faster with a small business team, as there are fewer decision-makers.
- The accountability level is also high because the members are aware of each other’s work.
2. Prepare a cross-functional team
Since the team is small, all members must have a proper skill set. The team should bring a diversity of skills and must be able to represent different departments.
3. Don’t depend on the same people
If you rely on the same employees to contribute every time, there will be a collaboration overload. This can, in turn, hamper work satisfaction and productivity.
As prescribed by researchers, a simple solution to avoid collaboration overload is by canceling unnecessary meetings. The team members should also have the freedom to recommend a capable person as their replacement.
4. Train employees to be team smart
Companies need to focus on team training for individual employees to focus on professional development. This will ensure that every employee excels in a team. An external coach must be appointed to conduct a learning program for the team.
5. Create a pro-risk environment
It is important to have bold ideas to find innovative solutions and create breakthrough products. Your lean team must learn to accept both risk and failure through psychological insights and tools.
Building a lean startup is the best choice for entrepreneurs who want to start their business with a low budget and introduce their products quickly in the market.
In its essence, a lean startup shortens the product development cycle. It also ensures that entrepreneurs are building their products to meet their customer needs by way of experimenting and validated learning.
“The Lean Startup is a new way of looking at the development of innovative new products that emphasizes fast iteration and customer insight, a huge vision, and great ambition, all at the same time.” – Eric Ries, The Lean Startup.