As we’ve encountered ourselves, starting a business is hard. And fantastic. And time-consuming. And sometimes frustrating. Today, we will look at a specific business approach, that enables you, as an entrepreneur, to get your product in customers’ hands quicker and obtain instant feedback.
The Lean Startup
Let’s be honest. How often have you tested the demand for your product or services before you starting selling? Many startups begin with an idea for a product or service they think people want. They spend months of fine-tuning their product, without ever testing if people actually want and need it, for example by showing them a prototype. When the startup actually tries to bring their product to the market, they find out there is no- or not enough demand, with failure as a consequence.
At Equidam, we’re adapting the Lean Startup approach, or at least we try as much as possible. In this blogpost, we will tell you more about this methodology and why every entrepreneur should apply this to his or her own business.
The Lean Startup is a business model based on a ongoing learning process. It basically says that instead of perfecting your product for ages, you bring it to the market faster to get immediate feedback from customers. You apply a ‘just do it’ approach, while staying organized and test your vision continuously. The Lean Startup works according to the build-measure-learn approach, which you can see in the picture below (source: http://theleanstartup.com/principles).
A key term in this methodology is MVP- Minimum Viable Product. This is the basic version of your final product. It lacks the final adjustments, but has the core features it needs to be used by early adopters. By introducing your MVP to the market, early adopters can already try it out and give feedback, which you can take into account when further developing your product.
This business approach, developed by Eric Ries- who wrote the book The Lean Startup, and Steve Blank, is in essential focused on technology and online businesses, but can be applied to a much wider range of industries. It is still a young methodology as it was only introduced in 2011, but has become a well-known term in the startup scene. Some think lean referred to cheap, but that is not the core of the idea.
Why it works- at least, for us. And we think it will work for you too.
Quick feedback. You receive immediate feedback from the market. Rather than asking target customers if they would be willing to buy your product, you can actually test demand. As you actively engage your customers, you are more likely to receive quick feedback that you can use to to learn and improve. Moreover, the valuable group of early-adopters you create can help you spreading the word among the early majority.
Less risk. You’re putting yourself in a risky position by spending lots of time and money in finalizing your product, as you are not sure whether it will get picked up by the market. By getting your audience familiar with your product in an earlier stage, you face less risk if there turns out to be little interest for your product as you’ve not spent all your time and money on it.
Flexibility. The Lean Startup allows you to stay flexible. After introducing just your MVP, you can easily adjust your product according to your customers’ preferences and feedback.
“Should it be built?” instead of “Can it be built?”
A valuable insight the Lean Startup provides is that you should rather focus on whether your product should be built instead of can be built. The two questions look very similar at first sight, but there is a crucial difference between the two. In the first, your customers think it should be built while in the latter, you think it should be built. Ask yourself this question before you start, and be honest to yourself.
Of course, there also have been some critics on this approach. One could say there are too little success stories of startups adapting this methodology. Moreover, this approach would encourage focusing on features instead of whole products, which makes these products harder to love. We think the Lean Startup is a valuable way to get your product in the market, but look at it from perspective. Don’t get stuck in the MVP-phase, as the transformation from early-adopters to early-majority is often a difficult and time-consuming process- many businesses won’t make it to the early majority.
Equidam helps small businesses attaching a value to their startup, regardless in what stage of development they’re in. So, even if you are developing your MVP, we can help you! Unlike other valuation services, we don’t only consider your financial information, but we also look at the experience you have as a founder, the industry your company is in and your team. By using both qualitative and financial methods, we are perfectly suited for small businesses. Get started with Equidam!