One of the most difficult questions to ask yourself when you are the proud owner of a startup is about the right time to close it, but given the risk involved with a startup and the philosophy behind lean, it is an important question to ask.
After all, the purpose of working with a lean startup coach is to get your business in the position to test a minimum viable product and see if there is a market demand for a particular product or service.
Knowing as soon as possible when an idea is unviable allows you to refine the idea or try again.
Of course, the opposite can also be the case; giving up on a business too soon and being part of a record number of closing businesses in the UK may be doing your product and idea a disservice. Often the difference between failure and success is minute.
Here are some factors to help you decide whether it is time to pull the plug on a risky venture.
Analyse Whether You Fill A Market Needs
The key to business success is simple; find a market that is currently left unfulfilled and provide a product that meets their needs.
For example, former startup unicorn Uber was the result of brainstorming how to fix the experience of trying to book a taxi, and that seed filled a need that has led to a billion-dollar business.
If you understand your industry, what needs are already catered for and what needs are left wanting, you can create an idea that has the chance to take off.
However, if you are struggling to earn revenue and a strong customer base that you can tailor your product to, it may be the case that the initial idea needs to be worked on or abandoned entirely.
Look At Every Aspect Of The Business
Depending on when you asked famed entrepreneur Thomas Edison, genius is either one or two per cent inspiration, with the rest being perspiration.
By this, he means that whilst having a brilliant idea is important, how you convert that dream and that idea into a product people can buy is vital to the success of any endeavour.
Check your target market thoroughly and ensure that your product is tailored to appeal to your target customer, and ensure you have a team with a diverse set of skills.
This does not just include innovation and research, but also sales, marketing and setting up product development and supply chains.
Decide Your Risk Tolerance
Ultimately, one of the biggest causes of failed startups is a lack of capital, which is a problem that lean aims to assist with by reducing the initial investment costs of getting an idea off of the ground.
As long as you can still afford to, you can keep going with your startup, but make sure you are investing money you can afford to lose.
This risk tolerance will differ depending on individual circumstances and the key to success is knowing where yours are.