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Tips to operating a lean start-up

Accelerate SME

Corners will be cut at some point in every business, and rarely does everything go right in the first few years of a start-up. Entrepreneurs will be faced with a difficult decision: what part of the business can they give up? Certainly not human resources, as hiring the wrong people can doom the venture, no matter how strong the product. You can't cut corners on production, as any flaws can and will come back to haunt you. 

The first thing you should do is look at what's utterly necessary. Strictly speaking, all you need is a product and a way to sell it. However, even with that knowledge it's difficult to decide on what to cut out, especially if you're new to running a small business.

Different start-ups have different requirements, said Sara Farah, founder and director at White Almonds, a luxury wedding gift registry based in Dubai. "Some start-ups may have elements that are key for initial traction and growth of their concept, which may not necessarily apply to other start-ups, hence it's extremely difficult to set in stone a generalized list of rules of 'what not to [have]'."

But reflecting on her own entrepreneurial experience, Farah believes that understanding your goals and knowing your market are crucial to cutting initial start-up costs. 

1. Technology

For White Almonds, having an online presence is vital in order to reach its target market. However, Farah emphasizes that when it comes to technology, knowledge is important. "I am shocked when I see some of the costs quoted to entrepreneurs for a basic e-commerce site. It saddens me that young entrepreneurs are being taken advantage of purely because they may not know much about technology." 

She is a proponent of taking existing resources - for example online platforms - building on it, testing it, learning from it and then customizing it. "If it's an area you know nothing about, educate yourself and only then will you fully begin to understand the costs that should be spent on building a website."

2. Human resources

Starting a team is a huge challenge for many SMEs because it involves creating the foundation for a successful venture. So when it comes to building a start-up team, take your time and never skimp on the recruitment process because hiring and firing are costly undertakings, especially when every penny counts, Farah advises. 

She uses the skyscraper analogy - the stronger the underground foundations are, the stronger the structure stands, but at the same time, never ignore the flexibility needed to withstand strong winds. 

"When it comes to investing into your team, do not underestimate the importance of thinking ahead and understanding the strengths needed, which will enable you to grow at a steady and solid pace, but always leave room for flexibility," the entrepreneur explains. "Think very carefully and strategically about the core elements and skill sets your start-up needs. Also make sure you and your team members understand these skill sets will need to be malleable as there is lots of juggling or 'switching hats'. Hence it's important to invest into quality with synergy rather than quantity." 

Also by investing time on the right team, you will be able to develop work flow mechanics, which is key. "This is the most important and cost-effective element when creating your internal structure. Your internal team should never be dependable on certain key positions, what happens if someone suddenly leaves or gets sick? The flow and internal work chain should be seamless, and this can only be achieved if clear communication, organization and structure are put in place from day one," she adds. 

3. Office space

In the SME world, cash is king. So if renting an office space is not absolutely necessary to your start-up's initial operation, take advantage of it and use the money for more important areas of your business, said Farah.

Invest the cash instead into market research to know more about what your target audience want and need, which may be totally different to your own perception. "Use this budget towards getting closer to releasing a minimal viable product, even if it's not perfect in your eyes, because to be honest, a true entrepreneur will never have a perfect product. He or she will forever be inventing and growing, and what's perfect in your eyes today, once achieved, may not be perfect anymore, rather there will be ongoing further growth to reach continuous goals and never ending achievements." 

Entrepreneurship is a journey and everyone goes through it quite differently. It is important to tread it with caution, plan everything carefully and make sure every penny is accounted for to avoid a crash-and-burn scenario.

© Zawya BusinessPulse QATAR 2016


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