Startups do not go out of business, they run out of money. Many successful companies completely bootstrap their business and do not take any VC or Angel investments. The biggest benefit of bootstrapping is that you have to be extremely diligent with your finances from day one. When you're not used to spending more than you have it teaches you vital lessons on not overspending on things that are not important for the bottom line for your business.
Do you need a Macbook Air when a Chromebook is half the cost? Do you need a fancy office lease or is a coworking space a much better investment? Do you need a nice new wardrobe when working in jeans and a t-shirt doesn't affect your work? If you work in design go for the Macbook Air. If you have a huge staff from day one go ahead and get an office space. If you meet with clients that expect you to be well dressed go ahead and invest in a nice wardrobe. Sometimes spending money on the more expensive options makes sense but for the most part operating as a lean startup, even if you have large financing behind you, is the best strategy for long-term success.
The first and most important lesson of the lean startup methodology is getting feedback from clients with an actual product. Develop a product that solves your client's problems and improve it based on feedback. This is called your minimum viable product (MVP). Once you have enough feedback and you are comfortable with the MVP your startup is ready to launch. Once you launch your startup keep the feedback loop going and do not be afraid to pivot if you get stuck. A majority of successful startups pivot at some point.
Another important lesson for lean startups in A/B testing, or split testing. This is a pretty simple theory but one that your startup should stick with no matter how well you're doing financially. In the early days testing two different methods is easy when you have no idea, just an educated guess on what's going to work. As you get feedback and results on what's working it's easy to just keep moving forward with your best option. This is when you can get complacent and fall into a trap. It can be tough split testing when you know what's producing results, it seems like you're wasting time and money split testing something new that doesn't work. But always keep split testing no matter how well your best option is doing. For example, if Facebook advertising is crushing every other PPC campaign you try it can be easy and seem wise to simply put all your time and resources into Facebook. The problem is that if Facebook becomes the next MySpace you have no idea what your second best option is or how to go about it. Destroying your marketing, sales and revenue overnight.
Similar articles & resources:
Share the article:
Same Pandemic, Different Reopening Plans
COVID-19 has affected every country in the world and some were affected more than others. The United States…