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Fremont: Small businesses and startups have to face many challenges, which range from minimal brand recognition, areas having limited marketing options, and small budgets. The lean startup method coined by Eric Ries, advocates the creation of rapid prototypes designed to test the market assumptions, and uses customer feedback to evolve them mush faster than the more traditional practices.
The lean startups are born out of three trends:
* Use of free and open source software
* Application of agile software development methods
* Ferocious customer-centric rapid iteration
Many startups are use capital efficiently and are generally frugal, but by taking advantage of open source, agile software, and iterative development, lean startups can operate with negligible waste. The first step in a lean transformation is learning to tell the difference between value-added activities and waste.
Lean startup method helps to systematically test a company's product ideas. Startups should launch their products quietly. Unless they figure out what the customer really wants. The lean startup process helps to reduce the waste by increasing the frequency of contact with the real customers, which helps to test and avoid incorrect market assumptions as early as possible. It also helps to improve the historical tactics devised by the entrepreneurs by reducing the work required to assess assumptions about the market--known as Minimum Viable Product.
The promise of lean startups is that, instead of building companies according to myths, companies can be guided according to facts, and the knowledge to use those facts as well. Many young internet businesses have embraced the lean startup principles of beginning small and getting products into the marketplace quickly in pursuit of paying customer. The rise of smaller, fleet-footed companies in the lean startup mold is bringing changes in the venture financing, with funds as high as $500,000 or so from the angel investors, instead of traditional venture capital firms (which are geared to invest millions at a time).
Only time will tell whether lean startup methods lead to higher returns for investors, till then lean startups have achieved lower development costs, faster time to market, and higher quality products in the year to come.
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