Should you spend months or years doing product or market research, finalizing your design and eliminating every glitch?
COLUMN: Target your market to gain customers
COLUMN: 'Lean startup' is cutting-edge buzzword
No, not if you follow the lean start-up method Eric Ries advocates in his best-selling book, The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. (Crown Business, 2011, $26).
The lean start-up has been a hot trend in entrepreneurial circles for a few years. But is it right for most small businesses?
In a nutshell, the lean start-up approach advocates launching a product or service as quickly as possible, seeing how real customers use the product then continually revising.
Ries calls it "build-measure-learn." Or as Marissa Mayer, when she was head of product development at Google (she's now Yahoo! chief executive), explained to me as Google's mantra: "experiment, expedite, iterate."
The key tenets of a lean start-up include these:
• Create a minimally viable product. You don't need to go to market with a fully developed product or service.
Indeed, it's not even advisable. Build only to a level that enables you to go out and get your first customers.
• Test and measure. Continually learn from customers.
Analyze exactly how they are dealing with your product or service.
• Pivot. Be able to swivel away from your original vision to adapt to new realities but stay grounded in what you've learned.
The lean start-up approach has been particularly popular in the technology world, especially for mobile apps and cloud-based software.
It is well suited to an industry with lots of competition and quickly changing technology. Users also have a relatively high tolerance for glitches.
But! is a Version 1.0 approach appropriate for most small businesses, especially when you're not in the technology sector?
Small businesses often have fewer monetary and human resources than tech start-ups, which might have investors. So they have a greater need to start making sales, satisfying and retaining customers.
Yet small businesses rarely enjoy the luxury of having customers patient enough with minimally viable products to stick around.
Ries uses the example of Craigslist as a company that put out a "low-quality" product yet still succeeded. However, Ries overlooks that Craigslist offers users an unbeatable proposition: They can run classified ads for free instead of having to pay for ads in their local newspaper.
On the other hand, your small business needs to make money.
If you're launching a new day-care center, your customers, who are parents, won't stick around until you figure out how to take care of their children adequately. If you run a restaurant, customers won't return if they have had a bad meal.
Your minimally viable product still has to be fairly maximum. That means you must plan and attend to details.
But Ries has a point. Many small businesses just need to get moving.
You don't have to do everything perfectly right out of the gate. And you definitely need to learn from your customers and improving continually.
Here's the lean-start-up advice I've been giving to entrepreneurs for years:
• Go out and make a sale. Even before you have your product or service — and certainly before its perfected — test the waters.
How do real customers respond? What do they care about?
• Do something, which often is better than nothing. Some small businesses wait years before undertaking a critical business task — launching a website, exhibiting at a trade show, developing another channel — until they can do it perfectly or find the perfect time.
Just do it.
• Know that money is time. Spend slowly and only ! on items ! that bring you income.
That buys you more time to get it right.
• Keep adapting. Once launched, you need to take care of business to keep the money coming in.
Nevertheless, your other job is to be improving continually and listening to customers. Otherwise, you'll die.
• Have more than one great idea. If the market tells you your first idea isn't working, change it.
In my own business, we, too, suffer from feeling that we must be perfect.
So we're trying to take more of a lean start-up approach to new product development and get used to living in a Version 1.0 world.
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Rhonda Abrams is president of The Planning Shop and publisher of books for entrepreneurs. Her most recent book is Entrepreneurship: A Real-World Approach. Register for Rhonda's free newsletter at PlanningShop.com. Twitter: @RhondaAbrams. Facebook: facebook.com/RhondaAbramsSmallBusiness.Copyright Rhonda Abrams 2013.
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