Starting Up Part 2: Conquering the Lean Startup Phase

By Ryan Ayers

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Nobody ever said that building a startup from scratch was going to be easy…or cheap. If you’re experiencing sticker shock when it comes to business expenses, rest assured that nearly all startups have to go through a “lean” phase to keep the business running before it takes off. Getting through the lean startup phase takes hard work, creativity and a little bit of risk. Trimming physical and personnel expenses might seem like the obvious first step in creating a lean and productive startup, but there are other ways you can make your company more efficient that are less obvious. Let’s take a look at some of the resources and strategies you can use to stay frugal and ready for anything.

 

1. Take Advantage of Open Source & Free Software

Sure, your business could pay for fancy software right off the bat and develop an expensive infrastructure but by doing so your rising your fixed cost expensive which is far from being lean. In a perfect world, you’d have everything integrated and set up just the way you like it. In reality, open source and other free software can be a good starting point for the lean phase of your startup, even if the tools aren’t quite perfect. Shyam Subramanyan has compiled a list of tools startups can use to get their ideas off the ground—cheaply.

 

2. Consider Outsourcing to Freelancers

Hiring employees is expensive, and initially, you will only want to bring a few truly exceptional and versatile people on board. However, you won’t always have every skill or enough time at your disposal and you may want to consider outsourcing some of the work to fill in the gaps. When hiring telecommuters, freelancers or consultants, you may be surprised by the low cost of their services. Keep in mind that when you start to outsource jobs, there are a plethora of inexperienced freelancers trying to make a quick dime. To funnel out the bad workers, you’ll need to set up a short questionnaire that asks them to provide information about their work experiences and services. In the end, freelancers will be cheaper compared to hiring a specialized employee for every task.

 

3. Find a “Growth Hacker”

Growth hacking is a popular term that is largely misunderstood. According to QuickSprout, the term actually refers to an innovative person who “hacks” growth of a company by solely focusing on growing the business and creating tech-based strategies to achieve that growth as fast a possible. These “hackers” often move on after a while to help another company achieve rapid growth, but during their time with a business, they can help a startup achieve significant results.

 

4. Develop Your Team

You’ve hired a team of superstars with the qualities we discussed in the first part of this series. But what if they don’t have all the skills you need? Proper management and ongoing skill development is key for growing your startup during the lean years. Employees who learn new skills can assist with more tasks and help make the company become more efficient. Entrepreneur suggests that these training sessions don’t have to be costly—employees can have platforms to share their own knowledge in addition to any formal training that might be necessary for the team’s development.

 

5. Measure & Readjust

Marketing relies on measurement to determine what is working and what isn’t. Experimenting and measuring are essential to maintaining a lean startup, because you won’t know where you are wasting money and resources without refining many different approaches.


6. Figure Out Your Essentials

Now that you’ve thought about all the creative ways to make your business leaner, consider the obvious: where would you normally cut costs? Can you live without a full time office space for the next year or can you use improve processes with a Kanban board or six sigma approach? Depending on your business and the people you hire, these are suggestions to think about and overall great cost-cutters. If you do have an office, where is there waste? Find the waste and trim it—every little bit helps.


A Wealth of Information

Want more tips on weathering the first few years of the startup phase? There are so many books and other resources available to entrepreneurs that go in-depth into strategies for saving money while growing your business. One of the most popular, The Lean Startup Methodology is a book by Eric Reis, and is the current authority on creating efficient, lean and fast-growing startups. The concept has inspired a wiki to provide templates and resources that can help businesses use the methodology and connect with the Lean Startup community. Remember—get creative and use whatever free resources you can to help your startup take flight!

 

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