Lean Start-Up

Preventing Financial Losses in SMEs and Start-Ups

Inspired by the high efficiency of large lean companies, small- to medium-sized enterprises, including start-up companies, have been adopting Lean Six Sigma management principles in order to develop high value processes with minimal waste right from the start. This allows companies that have very limited resources in the early stages of growth to prevent major future losses, develop high efficiency, and accelerate the commercialization of their innovations.

Eliminate Waste Before it is Created

The major advantage of implementing Lean Six Sigma in start-ups is that ineffective business practices can be detected right from inception and the right solutions can be developed to eliminate them, before they end up accruing costs. Lean Six Sigma implementation can further prevent financial losses through agile product testing and revision cycles based on a ‘customer development’ approach that involves rapid development and feedback on a Minimally Viable Product. By eliminating wasteful operations or features and determining further value-add improvements early in the product development cycle through interaction with the customer, this approach can provide companies with significant savings by securing market demand before investing major resources.

Avoid Failures Before They Occur

In the case of stablished companies, processes are well known and can be laid out by Lean Six Sigma tools such as a process map, a value stream map or a SIPOC (suppliers, inputs, process, outputs, and customers) diagram. These tools can be also used by start-ups to increase efficiency; however, for new companies, the FMEA (Failure Mode & Effect Analysis) tool will be most useful at an early stage. FMEA is a powerful method for preventing significant financial losses by analyzing the process that the company plans to implement, or has recently implemented. This can be critical for the success of start-ups that lack the experience and data of running a process for several years.

Create Value and Maintain Quality

Establishing a Lean Six Sigma company structure that emphasizes the role of the end user early in the development process can help companies in the early stages of growth to gain a significant market share by ensuring that there is demand for their products or services. Furthermore, it allows companies to establish product specifications in the early stages of product or process development for maintaining ongoing quality standards that meet customer quality expectations. In addition, Lean Six Sigma implementation enables small companies to quantify their business approach and efficiency improvement results to meet investor/shareholder expectations and secure financing, allowing the business to grow and make further investments in innovation.

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