Category Archives: Starting Lean

How To Raise Money For A Small business?

In this post you’ll learn a few answers for the question: how to raise money for a small business?

When it comes to starting a business, one of the biggest constraints is money. We all know of the person and you might be one of them who believes that if by chance he won the lottery, that the money would be used to start a business. The problem is that such events are very rare. As mentioned on the post: what are your odds of winning the lottery? you have a almost 1 in 14 million shot in winning. So, lottery is definitely off the table for now. There are more down to earth ways of raising money for a business and below are a few of them.

How to raise money for a small business?

The keywords in small business is “small”, which implies that although it might cost you some money to start(money that you probably don’t have), it is not as much as it would be to start something like: let’s say, an airline. Since you probably don’t need a million dollar budget to start your small business, the strategies below can do the trick.

 

1.Save

This is probably the oldest strategy on the book. Whenever we want to buy anything we don’t have the money ready for we save. This is becoming less and less common as people tend to rely on more and more in credit cards, but it can certainly do the trick depending on your income and expenses. As the comedian Bill burr mentions on the Monday morning Podcast: on the pursuit of your dream you have to cut down your expenses and live with only what you really need. If you’re income is high enough and the money you need is not too big, saving alone for a few months to years can do the trick.

 

 

2. Credit card

The second solution for this money problem is the old credit card. If you have good credit and the money you need is not that big, your personal credit card can give you the option of starting your small business early. The problem is that most startups end within the first year of operation. Failure is a very likely scenario in business, and if you have a load of debt along with it, the loss is greater. It will not only be emotional but also financial. So, one good thing to do if you plan to use your credit card is to use it the as little as possible, which means getting the money from other sources.

You can also go to your bank and talk to an adviser. Bank institutions usually have some form of credit/funding to people who are planning to start a business. This is assuming that either your credit card alone and/or saving will take you a long time to be able to get the money you need(5 to 10 years+).

3.Competitions

This is by far one of the least thought of sources of money. If you prototype your idea cheaply, competitions on the same niche can be a good source of startup capital. It is all a matter of looking for competitions on the context your business idea, and subscribing for as many as you can. The advantage of doing this is that if you win you can use the prize money as capital for the business. You can also get connections with people who show interest to your idea(new investors and/or possible business partners),and all of that without having to incur any debt. The problem(probably the biggest one) is that if your idea can be easily replicated, there is always the chance that it might be stolen. So, do your best to get a patent as early as possible.

4. Friends and family

This is a valid option but probably the last I would go for. Although some of us might be friends with or related to people who can lend us thousands and thousands of dollars in a snap of a finger, the price to pay if the business goes sour can be too big. Some people might understand if you lose the $5 000 they borrowed you trying to start a business, but more often than not, the relationship always takes a hit when such things happen. If all goes well on the other hand, it can uplift it.

 

Summary

Try out each one of the tips above alone, and to minimize the cons of each make a mix and see what works for you 🙂

 

 

It is all about knowledge and experience;)

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Customer Empathy Map

In this post you’ll learn the answers for the questions: what is a customer empathy map? and where does it fit on the lean startup methodology?

 

Counted are the days in which the abilities of a person are directly linked to their intelligence. On the old days being book smart was one of those things that could pretty much guarantee you success and admiration of your social circle. As time went on, it became clear that intelligence on the most known sense of the word was not all. One classic example is of the person who isn’t necessarily the smartest in the room in terms of tangible disciplines, but somehow has the power over all, including the ones who are considered to be the smartest. This new and intangible form of intelligence gained and still is gaining more and more of the respect it deserves. It can take many names, and one of them is social intelligence.

Social intelligence could be reduced to the idea that the person who possesses it in abundance has a better time dealing with any kind of social interaction. On dating, getting new dates is not a problem. Friendships are as abundant as the abundance of that kind of intelligence, and somehow there is an understanding of what to do and how to behave on even the most complicated of the interactions. This form of intelligence, lies on the root of a very powerful tool in business : the costumer empathy map.

Customer empathy map

The costumer empathy map is in a few words a “map” that describes in a detailed manner the target costumer of a business. By filling out/answering the questions from this map, a greater insight to the minds of the target costumer is gained. Common questions in the empathy map are:

  • What does the costumer think and feel?
  • What does he hear?
  • What does he feel?
  • What does he say and do?
  • What are his pain points?
  • What are the gains from the product?

 

Costumer empathy map and the lean startup methodology

The lean startup methodology works on the assumption that with each release of a product/feature, some form of learning will happen. This learning is usually an insight to the inner workings of the mind of the target costumer. So if you filled the empathy map first, and went through the build->measure->learn cycle, the there are chances that one or more answers of the empathy map might have changed. This is an evidence that on each iteration you not only have a better understanding of what is the best product for the costumer, but you also understand him better.

Try to answer the empathy map questions yourself, and notice that somewhere in the process you are likely to answer the questions in a biased manner. One of the reasons why this might happen is that we its easy to think we know the costumer in a deep way, but the truth is that often we don’t. To get more accurate answers for the questions a good practice is interview the target costumer itself.

 

 

It is all about knowledge and experience;)

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Product Market Fit Definition

In this post you’ll learn the answers for the questions: What is the product market fit definition? and where does it fit on the lean startup picture.

 

The lean startup methodology as mentioned on the previous posts, motivates entrepreneurs to build products and through the interpretation of the results after the launch, better understand the target costumer and thus improving the product on the following iteration. Apart from a better understanding of the costumer’s needs and desires, the teachings of the lean startup methodology bring the product closer a phenomena called: product market fit.

 

Product market fit definition

A product market fit is in simple words the alignment of the features of a product/the product itself with the true needs of the market that consumes it. In the world of romance, it would be that perfect partner that nearly all humans look for since the moment they started finding other people attractive. A product in this stage is not the result of guesses of what the costumers want and need. The product fits the needs and wants of the costumer.

The lean startup and product market fit

One of the things that sits right on the root of the lean startup methodology is the idea of build->measure->learn iterations. It’s true power is that when this “algorithm” becomes an infinite cycle, on each iteration the product gets closer and closer to the product market fit idea. This is assuming that whatever is learned in one iteration is implemented on the next.

 

The closer a product gets to what costumers really want/need the more appealing it will be, since there are still many businesses that operate on the idea that they already know everything there is to know about the costumer but don’t.

 

 

 

 

It is all about knowledge and experience;)

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Lessons Learned In Business

Life is probably the best teacher anyone can have. No matter how stubborn you are, or how strong are your convictions, if you happen to be crossing an important lesson of life, you will, sooner or later learn it. A drug addict sooner or later always ends up having that glimpse of clarity showing him that “no, what you’re doing is not cool”. Sometimes the ultimate teaching method of life is death itself. The person is just so difficult to teach that only the most extreme of the measures can get the point across. Just like in life, there are also lessons to be learned in the business world. You’ll certainly find some of them in textbooks, but a big chunk of them can only be learned through experience.

Lessons learned in business

The business world just like life also has its “own” methods to make people learn its lessons. In life the ultimate measure is death. In the business world the ultimate measure is the death of the business. All those businesses that had to be closed or sold at a price less than what it was once worth, are examples of businesses that failed to learn/implement crucial aspects of the business world.

There are actually many, many lessons to be learned in the business world(just like anywhere else). Each if applied to a business have the potential to make it grow. One of the most powerful ones is about the learning phase itself from the lean startup methodology.

The learning phase of the lean startup methodology

After building and measuring, the third phase is learning. The learning doesn’t come from textbooks or advisers, but through the application of the scientific method when measuring the results of whatever was built. The learning if it actually occurs, gives to the business a new piece of insight that can help it betters build products for and serve the costumer. This insight can be a competitive advantage for the business and if powerful enough make it dominate an entire market, becoming a monopoly. When the business fails to learn from the results of its previous launch it becomes more purpose to make the same mistakes in the future.

One mistake can be forgivable, but a series of them can prove deadly to the business, specially in highly competitive markets.
It is through the lessons learned on the field that a business can grow.

 

 

 

 

 

 

It is all about knowledge and experience;)

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The Scientific Method In Business

The scientific method is a very powerful tool used by scientists around the world in the attempt to better understand the universe around us. Humans have been making questions about it for a very long time. For each question, some people come up with their own explanations of what might be at play in the background. This is what they believe to be the truth. This famous methodology has the power to separate the valid explanations from the invalid. Putting it in simple words, the scientist comes up with a hypothesis about whatever he’s studying. For the ones who don’t know, the hypothesis is nothing but a possible explanation for why/how something works/is. To validate this possible explanation about the world, one has to come with tests, that not only show that the hypothesis might be true but also tests for the predictions of that hypothesis as well as tests to disprove it. The last one is probably the most important of all. If after the tests the hypothesis is proven wrong, then it is discarded and a new one comes to replace it. If its proven right on the other hand, we build up our knowledge on it. It becomes one of many of the pillars of our common wisdom.

 

The scientific method in business

The scientific method is a tool to use in the search for the truth. If our assumptions fail the tests we move on and look for better explanations. For this reason it is also a good tool to use in business.

Looking deeper at the lean startup methodology, you can see the scientific method embedded on it. We assume that a certain feature will double the number of sales for a produt. We build it and release it to the market. If it does increase the number of sales we keep it. Assuming no other feature was added at the same time or any other factor was in play in the sudden growth of sales. On the opposite scenario, we simply make new hypothesis about the costumer’s tastes and habits and we go back to building and testing.

At the beginning of the lean startup methodology we build, and there we aim at a minimum viable product. On the middle we test it, in order to know if the product has the impact we envisioned. This can be done through the implementation of the scientific method. The third phase is learning from our experiments and that happens to be the topic of the next post :).

 

To learn more about the scientific method read: Scientific method
-Wikipedia

 

 

 

 

It is all about knowledge and experience;)

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What Is The Product Development Phase About?

In this post you’ll learn the answers for the questions: what is the product development phase about? and where does it stand on the lean startup methodology?

 

A startup is somewhere between the realization of a dream and just the mere dreaming about the dream. It is in a way the materialization of the vision of one or more people. The founders are not wondering how wold it be to put their ideas into practice anymore. They are now facing the problems that affect similar businesses in the industry and their commitment to the vision starts to be put to test. In order for this startup to exist and grow into something bigger, products must be developed and launched to the market. So, it’s no wonder that the product development phase should be studied and engendered in the way that best fits the goals/needs of the company.

 

What is the product development phase about?

The main goal of the product development phase/building phase is to build/develop a product. The way this is done, depends on the methodology the business is using. We tend to think of it to be the phase in which the vision of the founders is turned into something concrete that will in the end be sold to the market and make millions of dollars. With this approach the intention is to build the most close to “perfect” version of the product.

By using the lean startup methodology on the other hand, the goal is to build a minimum viable product. A version of the product stripped out of any unnecessary features and launch it as early as possible to the market. After it is proved that the market actually wants the product, new features are added. Each feature is introduced to the product, and with each release the reviews are studied in the same way a scientist tests a hypothesis. If the reviews are good the new feature is kept and if not removed.

 

The approach is not of trying to build the greatest product ever all at once. The approach is of a scientist trying to understand how the world works step by step. The world here is replaced by the costumer.

 

 

 

It is all about knowledge and experience;)

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The Lean Startup Book Review

The lean startup methodology as mentioned on the post What is a lean startup? is good for the ones who would like to start a new business but don’t have millions of dollars laying at the bank. Know that some products will be expensive to launch even if stripped out of any unnecessary features. If you’re trying to build an airplane factory for example, there is a pretty good chance that you’ll need a very, very large budget. It might be difficult to apply some of the principles of the lean startup methodology in some businesses, but for a good number it can certainly have some positive effects. So, if you’re not familiar with the lean start up method, a good read is certainly the book: The lean startup by Eric Ries.

 

 

The lean startup book review

The content is explained in an easy to understand manner. It certainly is a good for business newbies since there is no complicated jargon involved. There are lots to learn from each chapter, and although reading all of it is the best thing to do, reading any of them alone already bring lots of value.

 

Summary

The overall idea or at least one of the core ideas of the book is that iteration since day one is probably a better way than attempting to build that one “perfect” product that will overnight, conquer an entire market and be a source of riches to its founders. By focusing on developing and launching a minimum viable product and from there continuously testing every new idea for the product in the same way a scientist tests his hypothesis’s, loads of money can be saved as well as emotional pain.
So, the big take out is test, test, test. Since it’s only through testing our assumptions that we can learn and even learn new and valuable insights.

 

It is all about knowledge and experience;)

What Is A Lean Startup?

In this post you’ll learn the answers for the questions: what is a lean startup? and what are a few advantages of it?

 

The world we live in has evolved in such a way that something that used to be a scary beast of 8 heads for many,like starting a business, became something that now at least every other person considers when they are alone with themselves. Starting a business didn’t become any less than what is used to be in the past. The only different thing is that now we have many resources from which to learn the deeper secrets of the business world. All of it with just a click of a button. There is also the fact that any person today who wants to start a business can have access to money borrowed from the bank/ investors as long as the idea behind it is compelling enough, the business plan well-formed and a good credit score. Sometimes the first one is enough. We are also in such an amazing place in time that sometimes there is almost no need to look for millions of dollars from investors to start a business. Sometimes you can start the business “lean style”.

 

What is a lean startup?

In a few words, a lean startup is a startup whose focus is to build a minimum viable product, and through the feedback gained from the first costumers(maybe early adopters of the product) improve the product in a way that better fits the costumer’s needs. The old idea that only a perfect product with all the possible features should be released to the market is thrown away. Here it’s OK to launch OK products with missing features.

As mentioned on the book The lean startup, a startup should focus on three things:

  1. Building
  2. Measuring
  3. Learning

The product is built with only the essential features needed to do what it’s supposed to do and then it is released to the market. The feedback from the first costumers is then measured, and from these measurements new insights are gained. The entire process is repeated over and over again, and on each iteration, the insights gained from the previous iteration are included on the building phase of the new.

 

The lean startup methodology has at least 3 advantages:

  1. Less time is spent on the building phase and because of that less resources(money, people, etc) are required.
  2. The product is tested before massive amounts of money are spent on building a “perfect” product that maybe nobody wants.
  3. Hidden insights/understandings about the costumer needs are uncovered on the learning phase without spending loads of resources.

 

 

Summary

One more reason to choose the lean startup methodology is that if you don’t have lots of money on the bank to spend, this methodology will give you the power to start small.
 

 

It is all about knowledge and experience;)

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