How to Build a Lean Business from Scratch

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Building a business takes time, resources and capital. As businesses are expanding at a rapid pace, company expenses are also rising at an unprecedented rate. Do you think you will be able to create something worthwhile with smaller resources and capital?

Lean business models are the answer

The term lean business should not be used interchangeably with small business. It is a term applied to companies that have learned how to trim the fat and work with the essentials. A lean startup believes in the core, maximizing every resource’s potential and productivity. These businesses get the maximum out of the minimum and have become one of the most sought-after models for startups.

Such companies are agiler than a large conglomerate or even a medium-sized public corporation. They make decisions more quickly and remain connected with their customers and stakeholders more closely as well.

How to develop a lean business model?

In order to grasp the approach of maximum output from the minimum input, you need to focus on your center. Companies focus on either of the two options- finance-driven or customer-driven. Decide which model will work for your business.

As a rule of thumb, opt for a customer-driven center if you are creating a product that will be demanded by a particular customer segment. For example- cakes are loved by people for centuries, and sponge cakes are the most popular of them all. They could be used in several recipes and can be enjoyed with a cup of tea as a standalone snack as well. However, baking a cake is not everyone’s cup of tea. So, you provide fresh, packaged sponge cakes to your customers on demand or through your retail network.

The finance-driven model is ideal for companies that are looking to disrupt their respective industries. If your company is capital intensive, innovates or changes the way your industry functions, you should opt for this model. For example- you are creating a new healthcare system, in partnership with 20 hospitals in your state, which provides affordable healthcare at half the price.  This model will change the face of the medical industry completely.

Automate whatever you can

Lean thinking involves the most optimum use of resources while eliminating or reducing waste. Check which business processes are causing the most waste. Do you think shoebox accounting is harming your business? Invest in accounting software that maintains all your receipts, helps in following standard accounting practices and manages taxes and payrolls at once. It will reduce the burden on your bookkeeper and avoid unpleasant surprises at the end of each month.

Other processes could be automated similarly. You can talk to your customers via bots that solve small problems and escalate more complex issues to the support staff.

This post only touches the basics of creating leaner, more agile and smart startups. If you can implement these strategies in your company, you could enjoy the fruits of the smartest business model of the 21st century. If you have questions or suggestions, write to me in the comments box below.

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