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Use ‘lean’ Business Planning to Super-charge Your Start-up
The Lean Start-up is a revolutionary way of planning and launching your start-up. Get these principles right, and you’ll super-charge your chances of success.
When you think of a start-up, what’s the first thing that comes to mind? Is it a fast, flexible and above-all agile company, or long hours spent alone in your study while you wrestle through writing your 50-page business plan?
Don’t get us wrong, the business plan is important, (and we have a template that can help you get it right here) but there’s a much better way to create it while you build a start-up that will succeed.
It’s called the Lean Methodology, and the lean start-up shifts the focus away from spending hours, weeks or even months perfecting your business model, and looks at your market and customers instead.
This revolutionary approach won’t just save you time, it will make a massive difference to what your start-up looks like and why people will choose to buy from you instead of your competitors.
A new approach to business development
The Lean Methodology means you’re moving swiftly to figure out what you’re going to build and how you’re going to build it with as few resources as possible. It’s a start-up methodology advocated by Eric Reis in his book The Lean Startup.
Think of it as a tool to continuously test your vision. The methodology aims to shorten product development cycles and quickly discover if a proposed business model is viable; this is achieved through experimentation, iterative product releases, and applied learning.
The fundamental assumption is that when a start-up invests time into ‘iteratively’ building products or services to meet the needs of early customers, it can reduce risk and avoid spending a lot of money on upfront project development. Iterations are small but continuous tweaks that you make to your business and product or service offerings. Another great thing about following lean start-up tips? Because you’re in the market early, you’ll ultimately avoid product failure, or taking a more fully-developed (and therefore expensive) product to market that no-one will pay for.
How to implement lean principles in your start-up
Begin with an assumption/hypothesis
- A core component of Lean Startup methodology is your hypothesis, including the problem that needs to be solved and the product or service you are proposing to solve it.
- Core to Lean Thinking is the question of how to maximise customer value while minimising waste. Simply, Lean means creating more value for customers with fewer resources – fewer people and fewer costs, as well as less time to make products and services.
- Validated learning - the unit of progress for Lean Startup is a method for demonstrating progress that reduces the time required for development. Once you embrace validated learning, the time to development can shrink substantially.
- Validate your ideas faster by using Lean experimentation. Instead of spending months on the product, you can test it continuously and adapt your product and plans incrementally, day-by-day, week-by-week.
- Developing a minimum viable product (MVP) begins with the process of learning as quickly as possible. Eric Ries defines MVP as follows: “The minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.”
- The build-measure-learn feedback loop is a core component of Lean Startup methodology. The first step is figuring out the problem that needs to be solved and then developing a minimum viable product (MVP) to begin the process of testing and learning so that you can start improving your MVP.
Iterating and pivoting
- To improve product-market fit, iterate and pivot after each round of testing. Lean is all about learning and iterating quickly, so you want to use what you have learnt after every round of testing and feedback with the goal of improving the product-market fit each time.
Keeping it lean from idea to launch
Step 1: Ideation
What it is: Forming your ideas or concept.
How it works: Developing an idea into a start-up begins with the process of ideation. Do research and collect lots of ideas that offer several viable solutions for the problem you have identified.
Do this: Hold a brainstorming session where people with different skills and backgrounds can generate a free-flowing list of ideas. You can then shortlist those you believe to be most promising.
Step 2: Lean business planning
What it is:
A lean business plan is essentially about planning less and growing faster.
How it works:
Every aspiring entrepreneur should pay significant attention to laying the proper groundwork before launch. Your business plan will be one of the most important documents for your start-up.
Include the following in your planning:
- A discussion of the product or service you are offering;
- Why it’s useful and what need it will fulfil;
- Who your target market is and where to find them;
- Who your competitors are;
- How you plan to differentiate and market the business
Talk to real people who are in the sector you want to go into. Talk to people who might be your customers and get their views and opinions and keep testing your ideas.
Step 3: To launch and beyond
What it is:
Lean Startup keeps you focused on the customer experience, which helps you build a product or service that people want – and more importantly will pay for.
How it works:
A business plan is essentially a document written at your desk that makes assumptions about your start-up. Only after building and launching the product – and selling it – will you get substantial feedback from customers.
Lean Startup flips this – now you’re getting this essential feedback as you’re developing your business model and product, instead of later.
As you learn more about the features and benefits your customers really want, pivot what you’re doing using customers’ input to revise your assumptions, make adjustments and redesign your offerings. Adapt to new information and make decisions based on market-based evidence.