How Lean Startup Thinking Can Grow a Small Business
The “lean startup” philosophy is now broadly accepted as the gospel in startup circles, and even corporations like Intuit are embracing “lean startup” ideas. At the heart of lean thinking, is the idea of delivering the most value to your customers in the shortest amount of time, using the least resources possible.
The process involves iterating through the cycle of building your product or service; measuring the results/impact; and learning what works, what to change. These steps ultimately help create a better product and grow a small business much faster than a longer, more linear, more traditional approach.
What we often don’t see is how to apply “lean” thinking in a small business context. Given their limited resources, small businesses can particularly benefit from lean thinking to start a new business, expand their existing business or branch out into other areas. Here, we’ll introduce you to two concepts of lean thinking: “dry testing” and “minimum viable product”, which may be especially useful for small businesses.
Maybe you haven’t launched your business yet. Or you’ve built a company with a solid or budding reputation for doing XYZ and you want to see if you can also have success offering service or product Q. In addition to testing new ideas, using dry tests and/or minimal viable products (MVPs) will help you evolve new facets of your existing business efficiently. These methods allow businesses to learn if there’s market for a product or service without breaking the bank in the process.
Run a dry test
A dry test is a way to test receptivity of potential customers to a new product or service, without actually creating or launching it. Dry tests give you a sense of your potential (or existing) customer’s initial reactions to your new idea. This helps you understand whether or not your idea is viable without investing money into an actual service or product.
An example of this could be that you’re a staffing agency known for administrative staff placement, but you want to branch out into janitorial staff placement. You can build out a new website or flyer that offers these services, with a call to action to use the service. When potential customers sign up, you can a) try to deliver, or b) tell them you’re testing demand for the service, and that you’ll follow up when it’s available. A new flyer or promotion could be an example of a dry test for a marketing firm. If clients respond, they can decide to offer the service, if they don’t, they’ll learn from the lack of interest to modify their offering.
Put out a minimum viable product (or MVP)
Your MVP will allow you to get the maximum amount of feedback about the most basic version of your new product or service that customers are wiling to pay for, using the least amount of time and resources. You can test your product within existing channels or by offering the service or product through new channels. You may have multiple reasons for launching an MVP. You might be interested in testing out a new product, with existing customers, a new product with new customers, or an existing product with a new customer or application.
For example, a rough prototype could be an example of an MVP in a B2B manufacturing business context. A manufacturer in the commercial shipping industry may create a rough prototype as their MVP to try to break into supplying similar products to the defense industry. Or, a specialty chemical company in the agriculture industry may decide to test the potential to use a similar compound for application in the cosmetics industry. The idea is not to try to get it perfect on the first pass, but to create your best guess of what your new customer wants, and give them a chance to test it and give you feedback. That will ultimately be the shortest path to help you grow a small business.
Don’t be afraid to try new things
“Lean” thinking is more of a philosophy of openness to experimentation than it is a list of codified principles. When growing a small business, think about your ideal customers and what they may need. Of course, often times new customers come with new requirements. One of the things we hear a lot at BlueVine.com is that folks are afraid to take on potentially lucrative customers that demand more generous payment terms (net 30 or more). That’s where BlueVine can help.
When you’re growing your business, you need to water it with plenty of new business to learn what is working. And we believe that you shouldn’t suppress growth because of slow payment. When you’re pioneering new ventures, you have to think long term and big. BlueVine provides the tools to help you take on that big contract with quick access to working capital, enabling you to run your operations and grow.
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