Starting up a new enterprise is fancy, exciting and a big rage amongst many today. But what comes along with this fascinating world of startup is a huge risk of failure. According to a recent research more than 75% of startups across the world fail.
Traditionally we have seen businesses putting a lot of efforts around building a business plan, pitching the same to the investors, making a perfect product, going out and building a dynamic team and finally selling the product. The question here is if this approach to the business is still the right one. The cost of missing the target or failing is huge.
The lean startup method developed a few years ago encourage startups to build their businesses on the basis of experimental theories of doing business. Lean startup is based on 3 simple and quick steps as displayed in the image below: Build – Measure – Learn. It’s important to note that this is a cycle and not a one-time activity.
Startups can minimize their stake in case of failure by being ‘lean’ in their approach. When building the product, startups should consider building only the minimum viable product popularly known as MVP. The product should be built to deliver the most important or the core benefit for its consumer. Getting caught up in making a perfect product with all the features could pose to be a big potential risk.
The next step after building the MVP is to go out of the building and test with the target audience. This enables the entrepreneur to get real time true feedback from the target markets. Doing a deep dive in validating the product need and identifying whether customers are ready to pay for an ideal product or not is a critical measure for the startup. Many times entrepreneurs use the method of observational study by simply observing the way customers are reacting – are they able to identify with the product? Is the navigation simple enough? – These are some of the important questions they look into.
Moving from this ‘measure’ stage the entrepreneur derives the most important aspect of ‘learning’. Based on the feedback and research he would do a ‘pivot’ in the product and start building it again to suit the market and this is a continuous cycle till the time he arrives at a suitable product – market fit and it also continues after that.
Thereby, lean startup is a great way to minimize the risk of failure and investing in something that is actually required by the customers.