Month six of my year-long journey on the Lloyds Bank School for Social Entrepreneurs start-up programme. The creative environment at our monthly group learning sessions in Ipswich at the Eastern Enterprise Hub is always stimulating. Our last gathering got me thinking…
Starting a new enterprise is always a balance between getting going and doing your homework first. Clearly having a sound plan and a solid funding base before developing a business makes sense, but could the ‘lean start-up’ approach be a quicker route to financial viability?
When I was at primary school, my mother seemed to be driving around on very little petrol much of the time. If I pointed out the petrol gauge was in the red, she would simply speed up – “to get home before it runs out” she’d explain.
Yes, pressure – to get home, to meet a deadline, to get a business up and running – can lead to irrational behaviour. But maybe real entrepreneurship means just that – cutting corners and taking risks (with due regard for health and safety) and doing things differently – however irrational and ill-advised it may seem at the time.
Bedford-based social entrepreneur Lynn Serafinn uses the phrase ‘running on fumes’ in an excellent blog post on social enterprise start-ups in which she passionately argues against letting your heart rule your head when it comes to money. But maybe, just maybe, there are benefits to be had from taking my mum’s approach to overcoming a shortage of fuel for the journey? Four thoughts on this subject:
Motivation: We know that in a dangerous situation, our adrenalin kicks in to enable physical feats – jumping clean over a sofa to avoid a violent confrontation was one such achievement for an unfit friend of mine. More general discomfort can also encourage us to go further, faster. I know a couple who built a house in just less than a year while living in a garden shed that was little bigger than the double bed inside it. Their friends decided to do the same thing – but while living in a nice, comfortable warm house. They were struggling to get their house finished many years later.
Real market testing: In his much-praised 2011 book The Lean Start-up, Eric Ries suggests that it’s a good idea to put a product out into the marketplace before it’s fully developed. Getting a product developed for sale at ‘just beyond pro-type stage’ will get more genuine feedback from purchasers than will more theoretical market research. Also, Reis argues, by launching the unfinished article in which you’ve invested relatively less cash and care, you’re more likely to respond to criticisms positively and adapt your product – which is what innovation is all about.
Less padding, more purpose: Without the luxury of unlimited resources, the new enterprise is forced to hone in on essential spending (assuming you have some objective ways of defining ‘essential’) with a keen focus on purpose; what are we trying to achieve? I’m currently watching a national programme of activity evolve through two broad development routes – top-down (the deluxe model) and bottom-up (the lean machine approach). A few years from now I’ll be intrigued to see which route has been the more sustainable and, ultimately, more successful.
Attracting finance: Even when seeking start-up funding, it may be a good strategy to get your business out there before you have all your proverbial ducks in a row. A social lender recently told me “proof works” when pitching for finance. A shining business plan with figures to impress is just that – a plan and a promise – whereas hard evidence, of demand for new real products and services, counts for a lot.
What do you think – is ‘running on fumes’ the way to go fast, or go bust?
Lynn Serafinn’s blog post http://the7gracesofmarketing.com/2013/10/show-me-the-money-thoughts-on-social-enterprise-start-ups
The Lean Start Up by Eris Ries www.hive.co.uk/book/the-lean-startup-how-constant-innovation-creates-radically-successful-businesses/13291794
Funding your social enterprise with or without money www.theguardian.com/social-enterprise-network/2014/feb/10/how-to-guide-funding-your-social-enterprise