Lean By Default
Lean by default is a mindset that you can use as a true north while making business decisions. But how do you go about being “lean?” A lean mindset doesn’t always mean being lean with money. It is also about being smart about your time, resources and decision making process. There are lean steps you can take to make starting a business less risky and financially intensive. These crucial points can be used throughout the entire life cycle of your business.
Build It Yourself or Buy It
As a business owner you will be faced with thousands of choices. Many of these business decisions require a build vs buy choice. For example, you need a website. You have a few options. You can build it yourself on a drag and drop platform such as Squarespace or you can hire a website developer. Building a starter website yourself will cost you nothing but your time. Hiring a web developer has an average cost of $10,000-$20,000 for a website. In this case, it may be smarter to build the Squarespace site first, and then graduate to a more robust platform built by a website developer when you start growing and are confident you have a viable business. When deciding whether to build vs buy, lay out the time and money involved in each task to make the best business decision while always keeping a lean mindset.
Wearing Too Many Hats
You need to find the right balance of being lean while saying yes to other opportunities that will save you time and money later on. For example, trying to wear too many hats can deplete you of your time and energy. You may be the marketing person, sales person, and bookkeeper. Learning how to balance your books may not be your best use of time and the margin of error can go up. Outsourcing some of these tasks such as bookkeeping and accounting saves you thousands of dollars and lots of headaches throughout the year and come tax time. Accountants know how to best form your company and write offs and tax breaks to take advantage of. Your time is your most valuable asset when you’re thinking lean. Hiring experts in some areas allows you to focus on the core value of what your business is providing to your customers.
Just Good Enough For Now
Perfectionism is the killer of growth. We see so many entrepreneurs build up barriers in their head and experience “failure to launch” because they couldn’t do “just good enough for now”. You know you want to get to your end goal with the perfect company in mind, but if you keep a continuous improvement mindset you’ll be able to build in intermediate steps to reach that goal.
When the founders of Boom Chicka Pop got their first purchase order from Trader Joe’s, they did not have the perfect recipe that would scale. The founders had a tight deadline and limited resources so they went with “just good enough for now”. The first batch of popcorn sent to Trader Joe’s ended up having caking problems but it still flew off the shelves. The purchaser from Trader Joe’s put in a second large order with the expectation that they fix the issue, which they did. If they had not filled that original purchase order because everything was not “perfect” they most likely would not have had another opportunity to get into Trader Joe’s which kickstarted their business. A handful of years later, they ended up selling their business for 250 million dollars.
Lean By Default Doesn’t Stop After the Startup Phase
Bingo! Customers are paying for your service and your business is growing. Now what? You are looking to grow. This is another critical time to keep a lean mindset because this is typically the time businesses make mistakes by getting too far ahead of their skis on spend.
Since you followed our advice and hired a bookkeeper from the beginning, you will know exactly where your money is going. At this point in the game you may need to hire someone to take over your marketing so you can focus on business strategy. Does it make more sense to hire an hourly contractor or full time employee? Now that you know your industry and customer well, it may also be a good time to go back and build a more robust website.
Don’t be afraid to kill projects that are not working and double down on what is working. Fail. Learn. Iterate. Grow. Repeat.