When you’re launching a new product or service as part of your business, you want to know that there’s a place for it in the market. This means knowing there are customers who wish to purchase it and ensure no fundamental flaws could deter buyers.
A minimum viable product (MVP) is a great way to determine how your product might work in the real world. It’s an early-stage version of the product you intend to take to market, created to show how it might work. You can also use it to present to potential customers and investors to offer a visual demonstration of your idea.
An MVP doesn’t need to be a physical product. It can also apply to website, software and service concepts. When Airbnb first started, the creators rented out their own apartment to determine if people would be willing to pay to stay in a stranger’s house as an alternative to hotel accommodation. This is an example of an MVP.
Simply put, an MVP is a way of testing out your value proposition and seeing if there’s any potential in it. By creating one, you can gain helpful insight that can fuel your business plans and enable you to offer a successful product to the world.
Below, we have explored the role of the minimum viable product in more detail and outlined why it is so crucial in business.
Why should I have a minimum viable product?
There are many reasons to create an MVP for your business.
Firstly, it enables you to test out the assumptions you have about your products and services. Most entrepreneurs believe the idea they come up with has legs – if they didn’t, they wouldn’t pursue it as a business. However, this doesn’t necessarily mean it’s a winner.
Using your MVP, you can take your intended product out into the market and gain feedback. By showing it to friends, family, potential customers or other contacts, they can tell you their opinion, including whether they would be interested in buying such a product. This gives you a sense of the demand available before you commit and what target market it aligns with, if any.
An MVP is also a helpful tool for investor meetings. It enables you to present a visual representation of your product rather than explain it, providing more impact and standing you out in the investor’s mind. This is also another opportunity to get feedback.
As well as testing the potential demand for your business, your MVP can help you identify any flaws that need to be addressed before you start selling your final product. By gathering customer feedback, you can determine what people do and don’t like about the product. From an operational standpoint, you find out what changes you need to make to your product, which may not necessarily match your initial idea.
By receiving this insight at an early point, you give yourself time to refine the product. This will help you align it better with customer needs and iron out any kinks that may become apparent during the feedback process. With this, you improve your chances of success and speed up your breakeven point compared to if you were to go to market with a product that is not quite right.
The feedback gained should be incorporated into your business plan as a form of market validation, showcasing the demand you have already identified and providing real-life testimonials on how your business helps people. This will assist you to win over investors and secure funding for launch.
How do I create a minimum viable product?
Start by deciding what problem you will solve
When considering the product or service you want to make, you need to ask what problem you want to solve. This will help you align anything you create with that specific target market – namely, the people facing the problem.
By determining the problem, it will become much easier to find a solution. First, ask yourself what the aim is of the product and what challenges it poses to consumers. From there, identify the simplest way to solve that issue, from a customer’s eyes, and how this might translate into a product or service that you can offer.
Include the crucial features
A minimum viable product may not look like your final product. Instead, it’s a basic version of what you intend to eventually create, so you don’t need to include everything. Instead, focus on the most significant features, as these will be the ones you want to get feedback on.
Let’s say you were building a car. The most important thing that car needs to do is drive easily and safely on the road. If it has a great radio or heated seats, that might be a bonus – but it’s not why someone would buy the car. If you were creating an MVP, you might then include features like the steering, engine and safety, and leave out the radio and heated seats until later.
Take this same approach to your MVP by including the elements that will actively solve the problem you are pursuing. This will help you get feedback on those features only rather than getting lost in the added extras.
Don’t worry too much about the detail
On top of focusing only on the crucial features, try not to get caught up in the detail of your product. The MVP doesn’t need to be made up of the same materials or specifications as your final product unless integral to its functionality. Remember, the emphasis is on ‘basic’.
You will develop your product or service as you go. When you do, it will be time to worry about factors like cost-efficiency, ease of production, scalability and so on. Don’t spend too much time contemplating these when creating your MVP, as your product could change due to feedback. This will also help you to keep down the costs associated with building your MVP down.
Gather feedback
Once your MVP is built, it’s time to gain feedback. Start by recruiting test users for your product. Ideally, these should replicate your target customers so you get an accurate view of how your product aligns with their needs.
Next, think about how you will obtain the feedback. Examples include focus groups, surveys, usability tests and informal interviews.
Once you have feedback sessions, collate your data in a way that’s easy to analyse.
Look at the data
Armed with your data, you need to decide how to react. Look for reoccurring themes that emerge in the feedback, as these should signal the most significant issues that have arisen with your MVP. However, every comment should be considered, even if it’s only made once.
Contemplate what amendments you will make to your product based on the feedback and how the changes will make it more suitable for your target customers.
You may include this data in your business plans to investors when you get to that point. This will help you showcase your product and service choices and how they have been made in full consideration of the consumer.
Conclusion
A minimum viable product is beneficial for any entrepreneur who wants to test their assumptions about the product or service they intend to provide.
Using it to collect valuable feedback, you can refine your proposition and focus on targeting it more closely to customers’ needs. This should enable you to achieve more sales and profit, improving your chances of success as a business.
If you need help launching a business, including understanding the role of a minimum viable product and other requirements you need to meet, we can help.
Our advisors have helped numerous SMEs to launch effectively, including preparing them to raise finance and creating business plans and pitch decks. We can help you to do the same.