Pivot your way to business success
I recently took part in a panel event held by Santander for the benefit of their customers and a question was raised – “If you do all the right things will a good business idea work out?” The answer was that it’s difficult to say as a lot can happen on a new business journey, however, if you do the right things then you have the best chance of success and if it doesn’t then be sure to pivot.
This question reminded me of another great business book ‘The Lean Startup’ by Eric Reis in which if you follow his advice on your business idea, you may eventually come to a point where the information you are presented with suggests your plan isn’t working and you may need a change in direction. A lot like Theresa May using the latest information available to her to make the change to switch from a five year term to declaring an early election.
So what are the keys to a successful start up?
Create a Minimum Viable Product (MVP)
It is important that any business idea is tested to ensure there are actually customers willing to buy your product, this is where the MVP comes in, too many entrepreneurs spend an excessive amount of time and money developing the business model without actually checking to see if it works.
A MVP should be a basic product that enables an entrepreneur to dip their toes in the market in order to start gaining valuable information. This should provide enough information to justify investing more time and money to developing the idea further.
When the founders of Dropbox came up with their idea of synchronised document storage they knew that creating a viable product would cost too much to build without the proof that their was demand for the product so they came up with the idea to release a video demonstrating their idea; within 24 hours the video went viral and 75,000 people registered their interest, demonstrating demand for the product without spending a large amount of money.
Build, Measure, Learn
Once you have your MVP it is important that you use it to gain as much information as possible, a great way to do this is to build one new feature/product, measure its success or failure, and learn from the results and then repeat the process again and again until you get a product that achieves the maximum return on investment.
New products/features either add value or they are a cost. A good way to find out is to use A/B testing, sometimes known as split testing. Whenever you want to try a new feature/product try run the old and new together to see which gets the better result, if it’s the new one then great keep it and move on to the next.
Even though you originally thought your business idea was great if you have gone through the above process you may find out that there is not sufficient demand for your product, but at least you will know sooner rather than later and will hopefully still have resources to make a “Pivot”, a change in direction. When Groupon started out it was a website for activism and fund raising before ending up as a daily deals platform we know today worth Billions.
If you would like to discuss your new business idea and see how ‘The Lean Startup’ could benefit your business please do get in touch.