10.7: Summary
10.1 Launching the Imperfect Business: Lean Startup
There is no such thing as launching a perfect business. A startup requires time to clarify its identity, market, product, and business model through the build-measure-learn loop, which requires businesses to describe or build a prototype of a product, ask for feedback from potential and actual early customers, measure their responses, and learn from that feedback and make changes to improve the product to something customers want. Older companies usually have a more stable and developed set of strategies because they have been in business for a while, but even they have opportunities to innovate and grow. The lean startup method provides an opportunity for companies to approach management in a measurable and provable way. Customer feedback allows the companies to make iterations and pivots that are necessary to get back on the right track. Pitching to investors can yield better results when using the lean approach, because investors like to see experience-gained data. The lean startup method is a tested way for new and old companies to stay in business and operate, even when there is a lot of uncertainty.
10.2 Why Early Failure Can Lead to Success Later
Failure is common in business creation, especially in the early stages. Only a small percentage of ventures make it to the two-, five-, and ten-year mark. Common reasons for this include mistakes and missed opportunities in marketing, financing, management, and innovation. However, there are steps the owner can take, such as making sure they are targeting the right customer, ensuring proper finances are in place to operate and grow the business, creating contracts when sharing the business with stakeholders, and innovating when needed. Fear of failure is also a major contributor to business failure. Some suggestions to manage fear include adjusting expectations and asking for help.
10.3 The Challenging Truth about Business Ownership
Entrepreneurs operate in an extremely competitive landscape. This space has positives and negatives, including being autonomous, being able to expand one’s own ideas, and schedule flexibility. Serving people and employees well can be very satisfying as can the financial success of a strong profit. On the negative side, resolving constantly arising challenges, wearing many hats, dealing with challenges and issues, and having adequate time and cash flow can make entrepreneurship difficult. Women and minority entrepreneurs face additional challenges that can make the experience of being an entrepreneur much more difficult. These include lack of funding opportunities, lack of business education, not being taken seriously, lack of mentorship, and lack of resources. However, there are several organizations that provide the guidance and connections targeted to these groups.
10.4 Managing, Following, and Adjusting the Initial Plan
Having a lean plan is helpful in setting up expectations and measurements. This is a living document, so its creation and updating are a process. The process starts with building a short document that outlines the basics of product, market, and strategies, with a short schedule of tasks. After a trial run, where the prototype or actual product is tested with customers, the plan is reviewed and revised to incorporate the feedback.
10.5 Growth: Signs, Pains, and Cautions
A company goes through a lifecycle of birth, growth, maturity, decline, and death or rebirth. At each of these stages, there are opportunities and choices to make based on the owner’s personal and business goals. Business growth requires the owner to innovate through various means to survive and to thrive. These strategies are meant to increase sales, cut costs, or a little of both. Some of these strategies include making changes to the product, adding new products and markets, adding new channels, and acquiring other companies.