The ABS tells us that almost one in every three Australian businesses shut their doors within their first 3 years of operation. Understanding the Lean Startup method can tip the scales in your favour, through a cycle of build-measure-learn.
What is the Lean Startup Method?
The Lean Startup Method is as simple as Build – Measure – Learn. It involves a number of steps which turn ideas into services (build), work out how your customers respond to that service or product (measure), then using that feedback, decide whether to launch or go back to the drawing board – without throwing away too much time, money and effort (learn). That feedback loop can be repeated until a sustainable business is built.
There have been a multitude of companies offering different products and services which have used Lean Startup principles. Google, Facebook, GE, Toyota, Intuit, Dropbox and Slack, have all grown their businesses or launched a product or service using the Lean Startup method. The focus of Lean startup is not so much on detailed planning, but more on testing your idea (and re-testing and re-testing as required).
It doesn’t have to be complicated or tech-related. It’s just build – measure – learn. Repeat. Let us walk you through this method in a series of steps.
1) Create a Vision
This is an overarching description of your construction service. It is not a big fancy business plan or step-by-step guide in executing your business model. Your vision is a framework which can be used to explain the advantages of your business idea to others, elements of which will be tested and validated through your feedback loop. An example of this is graphic design platform, Canva. Australian entrepreneurs, Melanie Perkins and Cliff Obrecht set out to create a simple, collaborative, online platform, where anyone could create what they needed. It has a enticing free version and paid subscription option, and is very simple to use. Canva was recently valued at over US$40 billion and users have so far created more than 7 billion designs.
2) Identify Critical Assumptions
Writing out your vision can help you find any critical assumptions or gaps in your processes. It’s easy to overlook assumptions because they seem obvious to you, but not identifying and testing these expectations and beliefs, especially those you feel add value, can lead to a very different customer experience to the one you were hoping to provide. Walking through how a first-time customer would experience your company, could help this process. The more accurately you can identify your critical assumptions, the less risk your business will face, reducing your risk of wasting your time or money.
3) Build Minimum-Viable Product (MVP) to Test Critical Assumptions
This is the ‘build’ part of the loop. Pick one of the identified assumptions and find a way to test it, using an early version of your product or service. An MVP is a bare-bones version of your final product or service which should have enough features to attract customers to test it, without having invested too much time or dollars in making it perfect. This could mean using contractors before employing staff, hiring equipment and tools before buying your own tools etc.
4) Release MVP & Measure Behaviour
Once your MVP is created, it’s time to release it to market as quickly as possible so that you can learn what works for your customers and what doesn’t – before committing a larger budget and committing any serious capital. Go out and do a few jobs – you may distinguish yourself in the market by having a digital onboarding tool, or a fancy way of keeping your customers up to speed with progress (than the daunting daily phone calls!). Either way – get out there and try out your service, ensuring you collect as much feedback as possible.
5) Pivot or Persevere
This is where you learn whether you have a potential winner on your hands, or if the idea needs more work. But just because things don’t turn out as planned, doesn’t mean that you’ve wasted your time. Communication platform, Slack, is the perfect example of this. The MVP was originally created as an intra-office tool for a gaming startup company around an online multiplayer game. The game didn’t last long, but after the messaging tool went through rounds of customer feedback and tweaks, Slack was improved. The communication app has over 8 million subscribers and the brand is now worth over $10 billion. By consistently asking yourself “Which of my efforts are value-adding and which are unnecessary or wasteful?” your product or service can be refined. Find empirical data (for example from Facebook metrics or number of clicks on a video explaining your service), rather than relying on market research, focus groups or pure guesswork.
For all of these success stories, there are countless other ideas that have failed. The lesson here is while the Lean Startup Method is no guarantee of automatic success, it gives you a chance to test out the market with your idea and can save you a lot of time, money and effort in the long run.
If you would like to get more advice about how to best start up your trade or construction business, contact the team at Consultya on 0428 20 40 50 or firstname.lastname@example.org.