Does the lean startup method increase your odds of success?
There has been a lot of talk over the past few years on the lean startup method. Is this really the best way to build a business? Does it lead to more successful businesses?
Jen, the best answer might be...It depends on how you measure success. The process should lead to an improved start-up if applied correctly however, it may not increase the overall odds of success for the new product or service. There are too many factors outside of the lean environment that will determine the ultimate success of the venture.
Lean and mean fighting machine does bring about focus on what is important. Getting the product and or services ready for market via the "living on the fault line" method. Ugly, but good enough to garner market share early. However, the "Jedi" mind game may apply, depending upon which market segment you are targeting. Some markets may dictate the need for great resources on the front end, in order to increase the opportunity of any success in the long run. That is the start-up paradox. And the selection of the Senior Management team is paramount.
Are you lean to fat or lean to muscle and flexibility? The recipe for success in any business large or small is efficiency foremost and an ability to fund, by investment capital and sweat equity. Dollars should go where there is opportunity to create a meeting with lots more dollars so look at LEAN as a methodology to manage and invest wisely and profitability while leaving you opportunity and risk. No risk, no...well you know that one.
The Lean Start-up is just the latest methodology in starting a business. I would not say it leads to more or less success than the older business planning model. If done correctly and effectively it can enable a business to start with less resources than the traditional method of seeking out capital before getting started. However, 80% of small business still fail, lean start-up or not. Any planning, lean or otherwise, is preferable to no planning! No planning, or inability to execute a plan, are the two top reasons businesses fail.
I agree with the other answer, lean or fat doesn't matter, what matters is your properly preparing your Business Plan. Your Business Plan will make all the difference in the world as far as your future success of your business. In preparing your business plan you will be detailing all of the facts about your business, and the start-up Financial Statements will show the readers how you plan on succeeding. Remember, when you prepare your Cash Flow Statement you cannot run out of Cash in October of the first year. When you run out of cash your business fails, therefore you must make provisions to cover all of the expenses for the first year minimum. I have provided working templates for small businesses on my web site, as shown by clicking on the following link - http://budspracticalaccounting.com/resources/free-downloads/
RG Bud Phelps
I don't think there is one answer to this question. My feelings are that it depends on the type of business, the potential of the business and the goals of the person starting the business.
Most businesses fail when they run out of money because they were not able to generate sufficient profits before their start up capital ran out. The more lean you operate the better the chances are that the business will grow enough to support the business.
I think the real answer is more determined by the potential of the business. For some examples, if someone was working in IT and had a goal of having his own SEO business it might be wiser to start part time and keep his full time job until the business can support him and stand on its own.
If however someone has an idea that could grow into a multi million dollar business or more lean may not be the way to go. Sometimes opportunities have a window of success and if that window is missed someone else will fill the need. It might be far better to raise lots of capital and get the business off and running as fast as possible.
I have started a half dozen businesses. The two that have endured were both started leaner than anyone would consider lean only because I didn't have two nickles to rub together. I have always been a believer in lean and in avoiding debt. Once it is established it is nice to have a great business with no debt and if times get tough because you have no debt you can slide on through with little worry. The flip side of the coin is that I could speculate that had I not gone the route I did perhaps my business could have grown faster and bigger than it did but I don't regret the path I took. You need to find the right path for your business and either answer could be the right one.
Personally, I don't think the lean startup method increases your odds. It adds structure to a process.
I think what increases your odds are : Great team with execution capabilities, Great product market fit and adding value to the customer.
The Lean Start Up approach is systematic in its ability to drive the right decisions at the right time, based on 5 key principles. Does it work? Absolutely!! But does that increase your odds of success? It depends on how well you're able to apply the principles to your business. Not every startup that adopts the Lean Startup methodology for product development succeeds and not every startup that doesn't use it fail.
In my experience coaching Lean Startups, many fail at the Validate Learning step because they don't always know what to look for and how to measure what they've learned from their MVP and how to translate that into a business decisions. I've also come across startups that quite simply haven't done adequate demography research.
Following the different principles is one thing, but knowing the numbers tell you and then converting those to a business decision is an entirely different ball game. If you're able to marry critical thinking with the process-centric Lean Startup approach, I think you'll find yourself running a sustainable and successful business.
The answer is YES if you are inexperience and no other method. If you are experienced entrepreneur and learn about different approaches for a startup, you may decided otherwise. Because the answer lies that you are able to select the correct techniques in different situations and not just blindly stick with one method only.
The ultimate success approach is when you understand that there is no "best" in this world. Knowing every limitations allow you to adjust where necessary to grow company in the smoothest manner.