3 Secrets to the Lean Start-up
Let's face it. This hyper-consumption society we're living in is breaking us down. We are voracious spenders, workers, and technology users, often with destructive effects on our health, relationships, quality of life...and yes, our businesses. We entrepreneurs may recognize this in the back of our minds, yet most of us still struggle to shift out of the waste paradigm.
This is why I challenge start-ups to muscle up from the outset and establish the boundaries, habits, and business practices that allow them to embrace the oh-so-important "waste not, want not" adage. Mastering this simple (but not so easy) rule is a key way that a start-up can outperform the majority of its peers that will go out of business within five years. Think of it as the "lean start-up" rule for these lean years.
Looking back on my journey as a small-business owner, I realize the best way to slay the hyper-consumption dragon is to start out by thinking about what you want, and then work backwards to figure out how not wasting will help you get those things faster. If you wait until later when you're more set in your ways, it becomes extremely difficult (although not impossible!) to distinguish the "nice to haves" from the "must haves."
Let's assume that your goal, for example, is to create a profitable business by year three. This means making hard choices to curb frivolous spending, and being mindful when it comes to saving--whether that be cash or time! To get your creative juices flowing, here are three examples of ways to rein in spending:
1. Reward customers and team with exuberance, not extravagance.
"It's the thought that counts" actually holds true, plus, is often more affordable! Rather than spend a lot on a generic department store gift, why not gift something more personal from a handmade marketplace such as Etsy? And if you do choose a more usual gift category, find an unusual provider, like Urban Meadows, a nonprofit florist in Chicago that assists people with mental illness in their recovery journey.
2. Market on a budget.
Be thoughtful when distributing or sampling your goods. Invest in marketing and promotion as appropriate; just think carefully about exactly how you do it. I find that when small businesses are starting out, they sometimes go gangbusters with expensive, glossy materials that while beautiful, are unnecessary. You can be frugal without being cheap. For instance, when you participate in your next trade show or big conference, I suggest not bothering to keep up with the big boys, even if you have the budget. It can feel a little uncomfortable to "only" have some attractive pop-up banners and company literature, especially if you're juxtaposed with the shiny sports drink company whose booth has a disco ball, water feature, and go go dancers! However, if your staff enthusiastically engages booth visitors and follows up properly, you may see a similar return on investment--even though you stuck to the basics. Take it from me, and many other entrepreneurs who have learned this lesson through hard knocks...buzz and sales are not the same thing!
3. Negotiate--and make friends.
This one sounds simple, but sometimes newbies don't actually do it. If you feel something is overpriced or that you can live without it (whatever the item may be), express your reservations and push back on price. Then if it doesn't meet your deal criteria, be willing to walk away, especially if you can't directly tie the item or service at hand to your "want." On the flipside, don't nickel-and-dime folks when they offer you fair prices, and whenever possible, look to do repeat business and recommend vendors who have looked out for you. Establishing a win-win relationship means that they are almost certain to continue honoring their fair prices and saving you money down the line.
Any small business can benefit from not spending its hard earned cash (or time!) on things that really aren't necessary. But those just starting out have a unique opportunity to truly reap the benefits of the literal and figurative compound interest that "waste not, want, not" offers.
What sorts of smart ways has your business found to save money lately? Let us know in the comments.