12 Tips for Starting Up Lean

The secrets of a lean start-upThe Lean Start-Up methodology is a principled approach to the development and distribution of new products and businesses.

It was first proposed in 2011 by Eric Ries and encompasses bypassing unnecessary expenses and meeting the needs of early customers in order to bypass market risks. For many it harks back to the more traditional method of starting a business on a tight budget, gaining feedback from customers as you go and minimising your risks. As a Lean Startup method it refines and formalises the process for more contemporary tech startup enterprises.

12 Tips for Starting Up Lean

Here are our top tips to ensure a successful business start-up at minimum cost!

1. Work from home

Not every business requires an office lease. To save on tax dollars as well as travel and property costs, consider leaving your base of operations at home as a low-cost alternative for as long as possible. Make the most use out of your home rent or mortgage while you can before taking on a second rental cost.

If you feel you need a more social space, consider a co-working facility which will allow you to mingle with like-minded entrepreneurs. This type of space can be great for developing ideas, growing networks, breaking through any isolationist issues and expanding circles of influence.

Another alternative is making use of pop up spaces with cheap rents and often in interesting areas of town. While some have very short leases, others can have much longer periods. Maybe you only need to use the additional space for short periods of time for specific reasons? Maybe you can collaborate with another complimentary business with a pop up space? Think creatively about the spaces you work out of and you'll get to test out different areas and responses they get from customers.

2. Buy surplus/barter

Save money by purchasing equipment and office supplies second hand or in bulk. Rarely does any startup know exactly what equipment will be needed in the medium to long term, so starting with the basics that can see you through the initial stages can make a positive difference.

Likewise, consider bartering your product or service if you are unsure that you will have enough cash for a business expense. Not only will this serve as effective advertisement of your business but may save you a sizeable amount of money.

3. Don’t hire employees until necessary

Be prepared to take on many of the responsibilities until you feel that you cannot possibly manage all of your necessary tasks on your own.

Consider taking on interns for work experience or even asking friends and family to help out to lower labour costs as a starting place. Once you're ready for some more formal labour look to flexible working solutions with companies like Workible who have a contemporary approach to finding staff for different types of businesses at various stages of growth.

4. Market budget-consciously

Have a solid game plan for your business and market accordingly. Outline your preferred direction and eliminate frivolous costs as you go.

Utilise tactics such as developing your niche and walking away from the wrong customers; retire products and services that aren’t generating a profit and use referrals and reviews wisely to market your business.

5. Safeguard your assets

Consider establishing a limited liability company if you believe you are likely to suffer debt in the first few years of your start-up.

This will ensure that even if the company goes bankrupt, your personal assets will remain safe and untouched. While there can seem like a competition between some startups about how much risk they took on personally and for the partner and children, it isn't a smart thing to lose the family house. Risking the investment property is one thing, the family home is another. Limiting the personal risk and assets will not only help save marriages but will also mean you have a more stable base to try again.

6. Learn to negotiate

It is important to master the art of negotiation when first starting out, allowing you to build effective relationships with your customers and potential suppliers.

Doing so effectively can save a new business a lot of money. Be careful not to do so unnecessarily and know the difference between fair and unfair offers when they appear.

It will also help with staff, retaining great staff is vitally important for any growing business, as well as avoiding any litigation from unhappy ex staff.

7. Start with a minimum viable product

A major mistake made when starting out is honing the specifications of your intended product or service until you believe it is complete and only then releasing it to the public. The challenge with aiming for perfection is figuring out who is actually defining what is perfect? A product or service is not perfect if the customer doesn't get from it what they want. The perfect product or service is one that sells like hot cakes. Ask yourself is it all about you and your definition of perfect or is it all about the customer and their definition of perfect?

The goal here is instead to offer the product at an early stage and tweak certain aspects based on what sells and customer feedback. The intention therefore is to learn what works rather than growing your business quickly.

Another interesting element of testing and tweaking a product early on with customers and gaining feedback is the possibility of new and fresh ideas coming through that can lead in another profitable direction. These outside influences can trigger some amazing new ideas and let opportunity turn up. Testing and being sincerely open to feedback can be really rewarding in the most unexpected ways.

8. Use your personal connections

It is much less risky to utilise the help of people you know rather than complete strangers.

You have the benefit of knowing whether a person will integrate successfully into your business network and a prior personal and/or professional connection will make it easier for you to assign tasks to them accordingly.

This may mean growing your circle of influence and getting out there networking. Getting started with this in the years before your startup can make the world of difference, including helping in forming the basis of ideas for new businesses. 

Collaborating with like minded entrepreneurs can create opportunities in terms of supporters, customers, databases, marketing, work spaces, team members, the list is endless. Be smart about growing your circles of influence, your connections and nurture the relationships.

9. Remain agile

Use customer feedback and trim waste wherever possible to ensure the most effective business plan for your entrepreneurship.

Continue this process of reworking your business and redeploying your product or service as needed until you are sure that what you are offering is working and will sell. This process is known as agile development.

The agility of initially small players is what concerns big business. It is where the opportunity and growth is, and be also be where a lot of value in the business can come from. Again, it is about putting the customer first, seeking to understand the customer's journey and needs for what you've got to offer. Listening and adapting makes all the difference.

10. Price on value, not cost

When starting out many entrepreneurs are tempted to price their product on the costs incurred in order to gain their investment back. A smarter tactic is to survey your customer base and figure out the value they place on your product and how much they would pay for it and then price accordingly.

The goal is to offer the best valued product on the market, rather than simply the cheapest you can afford. 

While all of us would love to have the product or service that customers would be happy to pay a premium for and provide us with a large profit, reality often bites with the margins being far tighter than we originally anticipated. But with constant testing and feedback it is possible that an alternative product, or version of the product can be created that is wanted by customers and has healthier margins for a growing business.

11. Learn to grow

Make sure that you do not become complacent after figuring out your niche and finding the prospective clients. It is far more important to keep a customer rather than simply locating a new one so consider introducing loyalty programs, newsletters and other continued customer rewards to maintain interest in your product.

Building the relationship with existing customers so they become the treasured brand advocates is far more profitable than finding a new once off customer. Business growth is not just in the numbers of the customers but also in their actual value, if you can keep growth in both categories you'll be far more appealing to investors.

This more than anything else will ensure the continued growth of your start-up.

12. Communicate

The most effective advertising is now commonly occurring via social media. Therefore, you must harness this resource and become an effective communicator and networker.

It is not enough to simply offer one channel for customer feedback and general information on your business, you have to set aside time for social media networking and be vigilant about using it. You need to stay ahead with new types of social media platforms, particularly where you customers are hanging out.

If you have different categories of customers then you may find they hang out on different social media sites so you'll need a presence there and learn how to be effective in that space. As we all know, the strategies for making Twitter work vary to Facebook and this is true for all the platforms.

Working with Methodology

Working with a methodology lets you have a defined path and offers guidance on making a myriad of decisions.

The Lean Start-Up methodology has been a hit for small businesses worldwide ever since it was introduced. These tips to start up lean should give your business the help it needs to get off the ground without breaking the bank.



Meet Irina Andreev

Meet Irina Andreev

Irina is a student of Communications and International Studies from the University of Technology in Sydney.

She is fluent in three languages and has a passion for writing, travel, history, science fiction and video games. After she finishes her degree, Irina aspires to continue traveling the world and work in media and publishing.

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