Launching a new business operation comes with a lot of risks. One of the ways to contain those risks is to utilize a strategy known as a lean startup. At its core, this approach is all about making the best possible use of resources while avoiding the trappings and top-heavy processes found in more conventional ideas about owning and operating a business. The lean startup includes three main areas to consider. Understanding how each one works makes it easier to grasp why this approach increases the chances for success.
The Minimum Viable Product
The first phase focuses on making sure there is a demand for the central product that the new business will offer. Rather than going through a complicated marketing process, the goal is to determine the minimum viable product that will generate interest among consumers.
This is done by getting a product in front of the market quickly and assessing the reaction. In some cases, the product will be an immediate hit and there is no need to make any changes or enhancements. At other times, feedback obtained directly from customers makes it possible to quickly tweak the product and bring it in line with consumer expectations. With either approach, the results can be seen in a matter of weeks rather than months or years.
Order Fulfillment and Delivery
Having a product that consumers will buy is not good enough. There must also be a seamless method for receiving orders and arranging the delivery. In the spirit of lean operations, this means accomplishing both of those tasks with a minimum of effort.
Online sales methods means making it easy for a client to reach a website, place an order, pay for the product, and receive a confirmation immediately. Adding a feature allowing consumers to create accounts and track the status of their orders will further encourage them to come back when they want to order more products.
Providing delivery options that meet the needs of the consumers will also make it possible to keep operational costs lower. Many lean operations provide two options for delivery, based on the size and weight of the product. If it can be sent by post, that is often one option. The other will be through a courier service.
With a startup, the business owner may choose to enter into a working agreement with a facility known as a fulfillment house. This is simply a partner who takes on the process of accepting orders, collecting payments, and shipping the goods to consumers. In return for this effort, the partner keeps a certain percentage of the total order. Using a fulfillment house eliminates the need to hire a shipping team to handle the orders, and also simplifies the record keeping in terms of the Receivables for the new operation.
Like any business operation, using a lean model for the startup must allow for ongoing communication with customers. The comments and satisfaction ratings of those customers continue to aid in the development of additional products and ensure they do meet customer expectations. This sort of symbiotic relationship means the owner always has an idea of where to direct the resources of the business without having to invest in costly and time consuming surveys and industry assessments. It also means consumers always know where to turn when they need certain types of products.
There is no reason why the startup cannot continue to utilize the basics of lean production for an extended length of time. There are examples of companies that began with this model and still use the same approach after more than a decade. Before deciding where to allocate resources, take the time to check out the benefits of a lean startup. Doing so will mean less debt and just as much potential to become a successful enterprise.