Posted on 20 April, 2018 | 5 min
Why do businesses start or fail? There are lots of answers, more often than not related to poor cash flow, failure to find a competitive advantage or too few sales. They all make it hard to survive, though having the wrong product makes it impossible.
A huge 42% of small-business failures come from having a product or service without a market¹, making it the second most common cause of business closure. The number-one reason is cash flow, which you could argue can be partly due to a poor-performing product.
That’s not to put startups off rolling out new wares. It’s exciting to expand your early-stage business and offer something new to your customers—it keeps your business relevant and fresh, while often bringing in new lines of revenue. But to reach that goal, you absolutely have to make sure there’s a market for your new product.
For that, you’ll need a minimum viable product (MVP)—your new product stripped down to the absolute basics.
An MVP will inform you of your product’s strengths, whether there’s demand for it, how to price it and allows you to forecast how successful it might be when launched at full scale. Alternatively, it might prove to be too costly to produce, too niche to sell to wider markets and too unprofitable, meaning you can abandon your idea having only spent minimal time and money on it.
Here are some simple steps to help get your MVP started ASAP.
1. Identify the problem
Before you spend another second thinking about your product, the first thing you’ll need to do is solve a proven customer pain point. What is missing out of people’s lives that they will pay to fill?
If you already have customers and are looking at launching a new product—or a new version of your current product—you have great resources at hand. Your customers want to tell you what they need, which is where tools like CRM software come in handy. You can collect customer feedback from your support or sales channels, and feed these into your product ideas.
For startups yet to… well, start up… your friends and family are a simple, basic and free way to get feedback on your idea. And, of course, social media apps will give you a wider reach for getting people’s thoughts.
Hopefully you find a problem you can fix. If your product idea doesn’t have that, it’s time to think of something else.
2. Run a simple competitor analysis
An easy way of seeing the basic, current market for your product is through competitor analysis. Not to worry—thanks to the internet, performing a simple analysis of competitors is easier than it sounds.
A good starting point is to search for your product idea online. Take the time to look at the results—what’s the competition like in terms of numbers, what are similar products priced at, and how similar are they to your idea? Importantly, how can you improve upon what’s already out there, from a quality or price perspective.
To gauge basic market response, you can head to your competitor’s social media profiles and take a snoop around. How many followers do they have, how long have they been going for, and are there any public comments or messages from customers that you can use to inform your product?
For a startup, scoping out your competition for an MVP doesn’t (and shouldn’t) have to cost the Earth; just a bit of time.
3. Sketch it out
Say you’re designing an eCommerce product through which people can buy novelty hats. Your next step will be sketching out your idea and the means in which people will navigate the platform. Here, you’ll find potholes along the expected customer journey that you can fill in before they become a more complex fix in the later stages.
Even for more physical products, it helps to have some basic concept sketches, sculptures or models—made out of literally anything—so you can learn some of its limitations early on. Changes at this stage cost nothing.
Most importantly, constantly look back to that customer problem you’re going to solve. Write it on sticky notes and post it everywhere so you never lose sight of it.
4. Build it
If you build it, they will come—probably the worst piece of advice to startup entrepreneurs. However, by this point, you’ll have a better idea about whether your product has legs or not. If it does, it’s time to prototype your MVP.
Similar to your sketches, and as the name suggests, your MVP should be bare bones. Don’t waste time or money on elements you don’t need, like design for your novelty hat website; just develop the core functionality needed to solve the customer problem, and leave the rest ‘til later.
5. Test it
There are two stages to the testing phase with an MVP—alpha testing and beta testing. Alpha testing is generally a friends and family test, where you release your basic product to a very small user group of people you’re familiar with. After a short amount of time, gather their feedback, make any improvements and move on to beta testing.
The beta stage is when you release your MVP to actual customers in the market. You’ll want to reach out to a small, focussed group of people to test your product in the real world. You might need incentives to do so, like freebies or vouchers. Make it worth their while and your users will tell you what you need to know.
6. Learn from it
There’s a reason Apple launches a new iPhone every year. Well, money—but it’s also important for the company to improve constantly on its older phones. Whether they do or not is a debate for another time.
So, importantly, you need to learn from your MVP and its testing stages. What did users tell you to improve for the full-scale roll out? Is it feasible and affordable to do so?
Alternatively, you may learn that the product simply isn’t going to work how you’d imagined it would, or that it won’t make you enough in revenue and profit to make it worthwhile. That’s the point of an MVP, and it’s important to know when to cut your losses while they’re still minimal and manageable.
7. Launch it (and keep learning)
Let’s say user testing of your MVP goes well. With all your boxes ticked, you’re ready for launch. Remember that you should never stop learning about your product. In reality, every day is another opportunity for more user testing.
Utilise your customer relationship management apps to keep track of issues, which you can fix in later versions. Your customers might also leave positive feedback, meaning you can always build upon the things people like—a winning business strategy if there ever was one.
Customers also vote with their money. Your sales apps will let you know how the product is performing through various channels and keep you on top of your profit margins. Should you need to make tweaks to your pricing strategy, focus on specific channels or encourage sales with a little marketing, you’ll have the business data to do so with confidence.