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Building a Lean Startup from Scratch in Three Simple Steps

By gswardman October 19, 2020

75% of all startups end up in failure. If you intend to build a SaaS MVP, you are going to face challenges and setbacks.

A lean startup is a scientific approach that startups use to either introduce a new product for an already existing company or introduce a new company. The lean startup advocates developing products that consumers have already tested and proved that they desire, rather than developing the product and hope that it piques consumer interest.

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The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation

Eric Ries, an American Entrepreneur, further developed 'The Lean Startup' methodology after Steve Blank, who founded the startup movement. Blank also created the customer development model. The methodology is explained at length in Ries' best-seller, "The Lean Startup: How today’s Entrepreneurs Use Continuous Innovation.

The Lean Startup PDF copies are available on Amazon in epub, Mobi, and Kindle. The book is also available in hard cover and paperback, and available on Google books.

The Lean concept is not new but originated in post-World War 2 when a Toyota shop floor Engineer installed the Toyota Production System (TPS) and later Lean Manufacturing.

The Lean startup method values experimentation more than planning in detail. A five-year business plan built around a hypothesis is a waste of time, and customers' reactions are of the utmost importance.

Instead of a business plan, a lean startup uses a business model premised on a hypothesis that can quickly be tested. In product development cycles, there is a need for sufficient data and a customer segment that allows customers to give feedback.

Vanity Metrics and Engine of Growth

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You need to be wary of what Ries calls the vanity metrics, which are not actionable metrics. In the case of a SaaS MVP, actionable metrics include engagements, revenues, and profits, while the number of registered users, raw page views, and downloads are vanity metrics-they does not change anything.

Engines of growth concept are another Eric Ries product. These engines are the metrics that help your startup create growth based on the customers’ use of your product or service. Innovations accounting is a brilliant method of metric progress evaluation and allows you to predict success.

When the customers do not give the expected results in your first product, the startup can quickly adjust to minimize losses and start developing products that the consumers want. In summary, a lean startup approach is all about continuous innovation in a build measure learn feedback loop.

A successful lean startup needs to follow these steps:

1. Find a Business Concept.

The big question of our time is not. Can it be built? But Should it be built? This places us in an unusual historical moment: our future prosperity depends on the quality of our collective imaginations."

― Eric Ries, The Lean Startup.

When choosing the next big business concept to execute using the Lean Startup approach, it is crucial to think about whether your product sufficiently solves the customer's problem enough for them to want to buy your product. For your SaaS MVP to gain traction, customers must be seeking for a solution to a problem.

2. Execute the Idea

As you consider building your own minimum viable product, let this simple rule suffice: remove any feature, process, or effort that does not contribute directly to the learning you seek.""

― Eric Ries, The Lean Startup

Next, build your minimum viable project (MVP). The MVP is a version of the final product you want to build. This version allows your team to collect data about your customers-to-be and their subsequent feedback on the product, also called validated learning. You can take a Kickstarter approach, which suggests you start selling the product long before it is complete to create brand awareness and raise cash for your Lean startup.

3. Idea Validation

Startups exist not just to make stuff, make money, or even serve customers. They exist to learn how to build a sustainable business. This learning can be validated scientifically by running frequent experiments that allow entrepreneurs to test each element of their vision."

― Eric Ries, The Lean Startup

Product validation is critical in the creation of a successful Lean Startup. Test your SaaS MVP with real people in the market, mostly early adopters. This is to see if your concept is viable and gather data that you can analyze and decide whether to continue with product development, tweak it, or consider pivoting your business strategy.

Conclusion

Most startups fail in their early stages. If you do not want to be a statistic and become one of the few successful startups, you need to follow the Lean startup method. Finding out what your potential customers want before you embark on full production saves you a lot of time and money.

The best businesses approach is to build products based on what they think customers want rather than what they want. Successful businesses innovate, stay a step ahead, and learn how to build a high- quality MVP that stands out from the rest.