Apr 16, 2013 By Dana Oshiro

You Too Can Be a Lean Startup

in Small Business

Every so often, I'll catch myself using words like "lean startup", "iterate" and "A/B testing" and cringe. It's true that Eric Ries' Lean Startup has become a must-read for early-stage technology entrepreneurs, but that's no reason to start peppering our speech with tech buzzwords.

Let's face it, a Lean Startup in rural Ohio is probably just a savvy small business.

While Ries' concepts may seem like Silicon Valley jargon, they're actually grounded in good old fashioned common sense. Below are a few ways small businesses are already benefiting from Lean Startup lessons on risk management.

1. Minimum Viable Product (MVP): Ries describes shipping minimum viable product as a way to test customer demand and avoid unneccesary waste. The idea here is to show early prototypes to trusted and potential customers before actually spending all your capital on developing a full-fledged product line. While Ries' technique is applied primarily to web-based businesses, the principles are the same for those dealing in brick and mortar. For example, a restaurant owner might do a private new menu tasting before deciding to spend the bulk of her monthly budget on new ingredients and inventory.

2. A/B Testing: A/B Testing or multivariate testing refers to when companies create 2 different messages on a single product or service. The idea is that the responses to each message are tallied and the winning message is then developed into a more permanent effort. If you're a small business, this might mean that you send slightly different emails to two different groups of customers. The message with the higher open rate might then be considered in a print ad or website copy.

3. The Quick Pivot: The idea of the "quick pivot" is to avoid throwing good money after a poorly executed or even bad idea. In Lean Startups, Ries might say a company "pivoted" to better optimize for profit. In a small business, we'd simply say they "wised up" and figured out their business model. For example, the owner of a golf shop might find that his online resales make more money than his physical business. By pivoting away from physical sales and moving to e-commerce, the pro shop owner is able to avoid costly overhead while still maintain profit.

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