photo credit: alice_c

The concept of lean startups is gaining prominence in today’s economic scenario. The term lean startup stems from the term ‘lean thinking’ which means spending money wisely by identifying differences between value-added activities and waste.

Many startup owners commit the blunder of spending extravagantly as soon as they receive some funding. An advice here; even if a startup gets all money in the world, it won’t help unless you have a product or revenue model.

Funding shouldn’t be mismanaged; there is an ‘implied contract’ of getting the company to an agreed level in the hope of increasing the value of the business. The stakeholders in an early venture should also benefit for their contribution.

So, waste less on luxury items and develop a practical approach for creating and managing a startup that excels in low-cost experimentation, rapid iteration, and true customer insight.For a detailed insight, visit:
http://www.readwriteweb.com/readwritestart/2010/01/when-your-funding-is-your-wors.php

"In early-stage companies, you will regret such spending when you hit the bumps in the road where you wish you had that cash. Inevitably, you will hit such bumps. Plan accordingly."

Make sure you have a revenue model since the beginning and remember – ‘money should only be spent if it provides return’.

A new idea is often the basis for starting up a business. Many entrepreneurs spot a gap in the market and start businesses that provide a product or service that fills it. Though having an idea is important but entrepreneurs get so involved in their ideas that they lose focus and objectivity. Here is where researching your business idea becomes important.

It is important to research the viability of your idea before launching a startup. Thorough assessment and market research at an early stage will help you to establish whether there is a market for your product or service.

The research plan should clearly spell out the objectives of your research. Research can be conducted by gathering information from the web, periodicals, federal and state agencies, industry associations, and so on. You can categorize the research by following the 4C’s – Company, Customer, Competitor and Collaborators.

A detailed article on the same is written by Karen E. Spaeder in Entrepreneur.com:
http://www.entrepreneur.com/startingabusiness/businessideas/evaluatingyouridea/article70518.html

Shenker, president of the ONswitch LLC, a full-service marketing firm in Westchester, New York. "Rather than taking the time to thoroughly plan and research, they sometimes plow ahead with execution, only to spend valuable dollars on unfocused or untargeted activities."

A common mistake many startups make is that they don’t conduct strict research to check the feasibility of their ideas.  Research is of vital importance to startups if they want to be successful.

Gone are the days when human resource was just considered to be back end work. Today human resource at a startup is considered as more of a business partner, advisor and mentor to the management. If a startup has to reach the peak of success, it is possible only through out of box and innovative thinking and through a well placed human resource and best practices.

But a problem many startups fail to realize is the one highlighted by ‘The Peter Principle’. It means that employees, who are a part of the hierarchical organization, are eventually promoted to the highest level of competence, after which further promotion raises them to incompetence. The employee’s incompetence is not necessarily exposed as a result of the higher-ranking position being more difficult – simply, that job is different from the job in which the employee previous excelled, and requires different work skills, which the employee may not possess. This is exactly the reason why most employees in a startup fail to deliver excellent results.

The move to incompetence in most startup occurs when ‘technical people’ try to step into management or executive roles, for which they have no aptitude, training or interest. And needless to mention but many technologists have tried to run startups and failed for this reason.

Some ways of solving the problem are, concentrating more on communication skills of employees, mentoring or training or probably keeping a check on the spectrum of responsibilities the employees have. The keys to avoiding ‘the Peter Principle’ are further explained in the article below:
http://blog.startupprofessionals.com/2009/12/peter-principle-thrives-within-startups.html

Recognize and deal immediately with the occurrences of Peter Principle because a good HR team is an asset to any startup, as mentioned earlier. 

The Peter Principle is something that we all have to deal with, in our own career, and with other team members. In a small startup, everyone has to carry a maximum load for survival, and everyone sees the non-performers. If you are the last to see the problem, or the last to react, maybe it’s time to look in the mirror.

When you’re starting up, you usually have a great idea or rather to say that you have a great idea and that is why you are starting up. This great idea of today will be the “killer product” for tomorrow and will turn out be an absolute blockbuster, or at least that is what you believe. Here is where the “Stealth” mentality comes in. You obviously want to protect your idea from the competitors and you think that being secretive is the key to success for your start up.

All is well except for the price that you will have to pay in the longer run for being locked up in your basement, talking to yourself for that ground breaking product you are working on. Products and services are made successful by adoption and adoption only happens after testing and feedback and iterations. Startups suffering the “stealth syndrome” lose out on great industry connections, PR opportunities, feedback from potential customers, and affluent investors.

What eventually makes a difference between success and failure of your startup isn’t your idea but your capability to create and dominate the market.

Truer words were never spoken before; ‘stealth’ startups need to open to reality. Vivek Wadhwa of UC Berkeley explains why: http://www.techcrunch.com/2009/12/19/stealth-startupsget-over-yourselves-nobody-cares-about-your-secrets/

Learning what a customer needs is an iterative process.  You try something, get feedback.  Both you and your customer learn more and you try again. You keep doing this until you have something which is so compelling that the customer will pay money to have it—that’s when you know you have a killer product. But you can’t get feedback if you’re in stealth. You only have yourself to talk to.

Hope this information was informative and useful