How lean startup can improve early retirement

Published September 7, 2016   Posted in How to Retire

Lean startup. Those of us involved with small businesses may be aware of a set of new-age principles that distill business ownership down to its most basic foundation. And with a little thought, we early retirees can apply these same principles to maximise our desire to quit the rat race.

Pinterest: Lean startup and early retirementThe Lean Startup method is a set of principles designed to get your business started and your product developed and in front of potential customers. Fast.

Many startups fail. And similarly, many career-driven professionals want out of corporate America. But, it doesn’t always happen. Things don’t go to plan. Like startups, many of us never seem to make any traction in our drive toward early retirement.

But, here’s an idea. More and more small businesses are enjoying success by using lean startup. Intuit, who prides itself on lean methodologies, might be the biggest example.

Let’s try to adopt lean principles to our goal of early retirement.

How lean startup can improve early retirement

The principles of lean startup are simple and described here:

  • Eliminate Uncertainty
  • Work Smarter Not Harder
  • Develop an MVP
  • Validated Learning

Eliminate Uncertainty – It is far too easy for startups to design products without knowing much about the market segment. In Lean, we test and confirm our assumptions. Will this product actually work? Will someone buy it? Who are my competitors?

Uncertainty kills early retirement. The lack of confidence and the unwillingness to try new things makes quitting early much more difficult than it needs to be. As with business, we will never be able to eliminate all uncertainty. But, our ability to try, even against all odds, improves our chances of success. Don’t go into this half-assed.

Understand exactly what you want. Take note of the things that you’re doing now that probably need to change. Also, don’t assume it will magically happen, because it won’t.

Work Smarter Not HarderWorking hard is for suckers. Working smart cuts through the bullshit of life. In a startup, smart work means developing only the features or services that your potential customers actually want, not those you think your customers want.

Working smart in our personal lives saves us time. We don’t put in more hours at work. Instead, we make the hours that we do work more productive. We pick and choose the things that make us happy and pursue them with bloody gusto. And, we stop spending money on crap. We ditch subscriptions to magazines that we never read. We eliminate cable or satellite TV. We don’t buy expensive cars.

We recognize what works for us and we do it. Believe it or not, early retirement involves very little hard work. It’s enabled by your mind, not your brawn.

Develop an MVP – The Minimum Viable Product is a startup’s bare minimum product or service, designed to elicit feedback from the community and, more directly, their customers. No frills. Only the basic features customers will use to generate feedback.

Testing early retirement enables us to make changes along the way. Try cutting cable television for a while. You might find that you get used to no cable and found a new passion, like reading, art or – hell, even taking more walks. Make incremental changes to your lifestyle during the accumulation phase to test how they work. Can they work better? Perhaps more can be cut out of your lifestyle than you had originally thought.

Then again, maybe less. But, we’ll never know until we begin to try.

Validated Learning – At times, it is tough to determine progress if you are a startup. Are we truly developing what the customer wants to see? Or, are we wasting precious time to slip in home-grown “nice to have” features that we may like, but the customer will never use?

How are the changes that we make to our lifestyle affecting our mood? Our happiness? Maybe we went a little overboard with this change, but we might be able to go further with that change? Be aware. Observe and learn from the changes you make, then adjust as necessary.

Only keep those changes that result in a positive difference to you and your family. Reject the ones that cause more problems, or try to tweak them so they work better. Learn. Always learn.

What do you think? Can adopting the principles of the lean startup help you to master early retirement?

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18 responses to “How lean startup can improve early retirement”

  1. Those are some good principles that certainly can be applied to early retirement. Eliminating uncertainty is especially key which we can all do by making sure we have plenty of cushion in our retirement accounts and are committed to maintaining flexibility if / when plans change.

    • Steve says:

      Thanks Green Swan. It’s tough to eliminate *ALL* uncertainty, but a little confidence goes a long way to keep uncertainties from crippling your lifestyle. Flexibility is key.

  2. LOL — My first thought when I saw this post title was “I can’t wait to escape all this work jargon!” The lean startup, being disruptive, fail fast — these are all phrases I can’t wait to never hear again after we leave our careers. 🙂 Mostly because most people just use the jargon but don’t actually do what’s behind them, like “work smarter, not harder.” For most people, that really will mean working MORE. (Find me a startup out there that’s successful where people don’t work a million hours. That’s not a thing.)

    But getting past my knee jerk reaction, I love the idea of applying all of these principles outside of work, in our own finances. Anything we can all do to minimize wasted effort is a good thing. 🙂

    • Steve says:

      I’m right there with you, ONL – I used to work for a CEO of a small company that used a lot of those terms. I think “Being disruptive” is my #1 hated term in business. Or, “influencer”…that’s another one. 🙂

  3. I hadn’t thought about the overlap between LEAN and retirement before, but I LOVE this – both as a financial coach and entrepreneur mentor. Will be sharing this with both communities for sure.

  4. An interesting take on the lean startup principals. I’m going to be skeptical though (no offense). There’s *always* a new management theory or book … every week it seems!

    I used to have a manager who managed using “by the book” principals like this. He’d pick up the latest management theory book, be totally convinced of its effectiveness, and then try to run his business that way for awhile.

    After about the 4th great management theory book, I got tired of it. 🙁

    Apologies for my skepticism.

  5. Daniel Winegarden says:

    Use the lean startup methodology professionally. There are some big uncertainties about retirement that are tough to predict much less control. What will future market returns be on the investment portfolio (assuming we can match the market)? On real estate? Will Social Security pay out as planned? What will inflation be? How expensive will health care and health insurance be? What will future tax income and property taxes do to us? How long will I and my spouse live?

    We’re relatively certain of our ability to adjust lifestyle to then available income — the bulk of the examples in the article. It’s the big things over which we have less control that require a “business model” to mitigate risk to enable early retirement.

    • Steve says:

      It’s true that there are certain things that we won’t have control over. Stuff happens in this world. The best that we can do – whether early retirees or not – is do our best to adjust to them the best we can. 🙂

  6. Lady Locust says:

    Great analogy! Any tool that helps one think about early retirement from a slightly different perspective is a good thing. The more angles we look at, the better picture we have of what it should look like, especially since we each have a different picture in mind.

  7. Eliminating uncertainty is a smart thing to do that’s often overlooked. Many times, people think of starting a business as “sexy” and they get wildly enamored with the idea of being their own boss that they overlook to protect their downsides that they might potentially have. It’s hard to do but able to be figured out, can’t overlook it!

    • Steve says:

      I agree, Finance Solver. We get caught up in “changing the world” that we can no longer see the forest for the trees. Stay practical, think logically and things tend to fall nicely into place. 🙂

  8. Mrs Groovy says:

    We’ve been exploring the MVP principle in the last few years leading into retirement. And we’ll be downsizing. One thing that’s important to me is that we don’t hover close to the bare minimum in lifestyle. I feel our days of getting a “real” job will be over and it gives me comfort to know we can cut more – if we have to.

    • Steve says:

      Good point, Mrs. Groovy. If you go into retirement already skimmed down to the bare minimum, you might find it tough to scrimp even more if required in the future. A little slack in your plan is always a wise choice!

  9. Bodhik says:

    The problem with most of the startups is they put a lot of hardwork and not smart work. Something we need to understand and understand it real quick. Thank you Steve for jotting down the points.

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