Lean Startup Lessons for Small Businesses: Tested Assumptions

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When a small business tries to adapt its online marketing strategy, or to re-tool processes toward web commerce, owners may struggle with how to get started. There’s a lot to know, and finding answers can easily lead to “information overload.” Without a large marketing team or research and development department, what’s an owner to do?

The answer may lie in adopting a “lean start-up” mentality.

The familiar elements of starting a business are still part of the formula: businesses succeed by choosing product offerings wisely, streamlining operations, growing their reputations, finding customers and getting repeat business from loyal customers. The difference between a traditional business development model and a “lean start-up?”  All of these factors are subject to change, and the result, at the end, may be a different product, process, market, or client.

In his book The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, Eric Reis encourages owners to view everything as an experiment, and says that all assumptions must be tested, observed and refined. A “lean startup,” then, is an organization built to learn, and ready to adapt or change direction quickly.

Small businesses have an advantage over large ones, in their ability to experiment on a smaller scale, tweak their strategies to meet the customer needs, and continuously improve their business model in the face of change. There are three basic steps in this method, known as “tested assumptions:” build, measure and learn.

Let’s take the example of a company considering a move from a traditional cold calling sales method to a more modern e-mail marketing sales method. Before completely cutting the cord on cold calling, this small business owner needs to test a hypothesis that email marketing will work for selling a product. By taking a small batch of emails, and sending out an email campaign, the owner gauges response to the campaign (for example, whether a recipient opened the email, clicked on any links or visited his website).

buildmeasurelearnTo gather additional feedback, the owner might follow up with a personal phone call to ask if the email campaign hit the right nerve, or if the recipient has any suggestions about a product that would be a better fit to his or her needs and interests. These qualitative notes can help the business owner craft a better product, or tweak the value proposition for his product. With this tested assumption about the email campaign and product, the owner can test a larger batch, or repeat the process using a different campaign. This build-measure-learn cycle can be repeated, reaching closer and closer to the perfect product and sales process, until it leads to an easily scalable, highly tested solution.

For additional ideas on how to test assumptions and learn more about your product and market, read this article at Start Lean.

Ready to modernize your online marketing? Contact Jason and find out how the Picobarn team can help you build, measure and learn your way to more business in today’s online marketplace.

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