When talking about a startup business “lean” means not doing anything that does not produce value. Because resources (time and money) are scarce for a new business it is best to focus them only on activities that lead to learning what your customers want and then developing it to sell to them.

The lean startup methodology involves making assumptions at every stage of your business (idea, customer development, product development, marketing, and sales) and testing them to see if they work. If they do not work, then you try another idea (“pivot”) and test that. You continue to do so until you have an idea that works.

This process is very quantitative in that you rely on data to tell you what works and what does not.

Clearly defining your idea

The first thing you need to do is clearly define what your idea is so that you can test it. You should be able to describe it in two sentences. You might not be able to capture all the features in those sentences but you should be able to describe what your product is and what problem it solves.

Conduct customer research

Customer research is the first time you test your idea. By conducting interviews, surveys, and focus groups with potential customers you will learn whether you have a viable business idea which will result in a product that people will buy.

If the data from the customer research is not favorable, then you will want to go back and try a different idea (or a different version of your current idea) and the feedback you received will help you shape that. At this stage, you will have spent very little money so knowing now that your product will not be bought saves you a lot of time and money spent on development and marketing.

It is often painful to give up on an idea but this is one of the key points that separate a successful entrepreneur (one who looks at the data and accepts its conclusions) and a failed entrepreneur (one who ignored the data and went ahead anyway).

Build a minimum viable product (MVP)

Once you have an idea that has overwhelmingly positive feedback from customer research–and that people have said they will buy–you will start on product development by developing your minimum viable product (MVP). This is the first version of your product and will contain the smallest number of features necessary to solve your customer’s problem and get them to buy it.

This is the step where you get your most important feedback and that feedback comes in the form of dollars. People purchasing your product proves that your idea works!

At this point you might want to sell directly to your customers rather than through traditional sales channels. This allows you to create less inventory up front (spending less money to start getting revenue) as well as allows you to get instant feedback from your customers which is important for the next step.

Continually measure and improve

At every step of the process you should be recording data (learning to use Excel is an important skill for business owners) and studying what is working for you and what is not. If you find that you are selling a lot less of your MVP than you anticipated based on your customer research, then you will want to reexamine your assumptions and test different features to add.

Your MVP is the just one step towards a great product that you can build a successful business on. The feedback you receive and the data you collect will allow you to create better versions of your product which allows you to expand your market and grow revenue.