To maximize the chances of success for your start-up, go ‘lean’
Different sources ranging from Harvard Business School professors to various Forbes articles cite the failure rate of start-ups at an astounding 75% – 90%. Why does this happen? Why do ventures led by brilliant strategists and highly experienced professionals fail?
While inadequate or improperly managed funding is known to be a common reason for the failure of new businesses, as per a study by Fortune, 42% of failed startups also cite a ‘lack of a market need’ as the single biggest factor for the failing of their venture. From a bird’s eye view, doesn’t it seem strange for founders to take their eyes off the cashflow they need to manage? What could be causing entrepreneurs to get caught up in other business activities when it isn’t clear if their product works in the market? For several decades, new businesses have been following the same rigid path of first developing a detailed business plan, complete with financial forecasts, pitching to investors, recruiting extensively, and then starting to sell. While this certainly works in some cases, the probability that something goes wrong is much higher.
Fortunately, with widespread literature on entrepreneurship, innovation and strategy now available, and an increasingly transparent work culture, founders seem to be learning from their own as well as others’ mistakes. Founders and investors alike have begun to re-think the set-in-stone path in favor of more adaptive and responsive ways to build businesses.
Here’s where the lean start-up methodology comes in. It promotes observation and innovation, quick market testing, formation and discarding of hypotheses, and continuous iteration – all without losing focus.
As a founder, here’s how you can implement four key ‘lean start-up’ practices to maximize your chances for business success.
TESTING before you launch
Using MONEY conservatively and creatively
Being AGILE without losing focus
EXPERIMENTING and ITERATING till you get it right