When you first get that venture capital firm to sign on, you’re on cloud nine. Then, just as quickly, reality sets in. You have money—but how do you use it? How do you allocate the capital you have to create a successful business?
If your instinct is to start lean, then you’re on the right track. Lean methodologies like six sigma and Kanban are gaining momentum with startups all over the country, preparing them to be lean organizations as they grow. It’s important to strike the right balance, however: don’t compromise on the quality of your products or services, and always invest in the right people and tools to promote growth. Here are 7 tips to get you started on your journey to finding that balance.
1. Reconsider Your Office Space
Someday, you’ll have the bright, shiny office on the 25th floor, with huge windows and an open layout. For now? Think about how much you actually need a physical office space every day. Could you work effectively at home? Could your team? For small teams during the startup phase, it’s not always a hardship to work mostly remote. You can use a coworking space for meetings, and spend the rest of your day in sweatpants. Later on? Your lean days will help fund that cutting edge office.
2. Start with Generalists
When you’re making your first hiring decisions, it’s tempting to hire people who are experienced and specialized. That’s not the right formula for your first hires, however. Your new team will have to wear many hats when you’re starting out, so look for general skills and attitudes when interviewing candidates. Quick learners, people with high emotional intelligence, strong business ethics, and a dedication to your new business are great qualities for your startup team.
3. Throw in Some Equity
How do you attract the best talent when your cash flow can’t afford them? Consider offering equity as part of your compensation package. If you have a solid idea and an airtight business plan, top talent will see this offer as worth taking a pay cut. Just be sure not give all that equity away—you’re going to want it in the future as you build your business.
4. Set Up Tracking
Analytics and big data are the key to making smart, lean business decisions during your first few years. Make sure you’re tracking and testing everything—from your website bounce rate to the success of your advertising campaigns. This information will help you with goal-setting, choosing where to allocate resources, and which direction to take the business. Setting up simple tools, like Google Analytics, is a great place to start.
5. Consider Your Image
By following lean principles, you may feel compelled to rush into a product or website launch before it’s ready. While you don’t have to make sure everything is perfect before launch, it’s important to keep something in mind: you only get one launch. Consider your image in everything you release to the public. Is your website consistent with your brand’s values? Is your product going to wow the early adopters, kicking off word-of-mouth business? If not, work on the weaknesses before you make your move.
6. Focus on the Same Goals
Communication is key to eliminating waste within an organization. By using a communication method like Honshin Kanri, everyone in the company has access to a flow of information that helps keep the team on the same page. Shared organizational goals is key to a successful business, and everyone needs to be on board with shared goals and healthy communication. Establishing this information chain early will help startups grow into lean organizations.
7. Use Value Stream Mapping
Thinking about all the little parts that come together to bring goods or services to the customer can be overwhelming if it’s not put down on paper. Value Stream Mapping is a method that can identify where there is the most waste (and value) within this cycle, allowing businesses to make smart adjustments. Mapping should occur periodically, as new variables are added, and the opportunity for more waste is introduced.