12 Jan 2023
You’ve considered turning your idea into a startup, but what comes next?
Before you can drum up customers or clients, you’ll need something to show them - you’ll need a Minimum Viable Product!
A Minimum Viable Product does what it says on the tin - this is a product or service that offers at least a minimum level of operation so that you can test it with your market, or pitch it to investors.
If you’re thinking of starting up a digital business like a FinTech or an online service like a streaming platform, then this testing process is crucial to the longevity of your business - an MVP can be the step needed to secure funding and test your idea without running into common problems that every startup faces.
It’s a popular method to launch a business, Uber, Dropbox and Slack have all used it in their early stages.
The Wikipedia definition of an MVP is “the product with the highest return on investment versus risk”. The term was popularized in Eric Ries’ book ‘The Lean Startup’, the Lean Startup Methodology focuses on ‘validated learning’ and honing in on what your customer truly wants, rather than building features that nobody uses.
By using an MVP, you are reducing costs and risks by testing whether your idea is actually going to work.
Why Is an MVP a Good Idea?
The main benefit of an MVP is to properly understand the demand for your idea. Due to the nature of this process, ideas often change. The agile nature of this methodology means that you will minimise the costs and energy spent trying to find the product fit that works.
The Telegraph reports that 60% of UK startups fail within the first three years of trading, with the common pitfalls being documented in a survey by CBInsights - they surveyed 111 startups and analysed their reasons for failure (some selected multiple reasons):
38% of the startup businesses ran out of cash or failed to raise new capital.
35% failed because there was no market need.
20% failed because they were out-competed.
19% failed because they had a flawed business model.
18% failed due to regulatory/legal challenges.
15% failed due to pricing/cost issues.
14% failed because they didn’t have the right team.
10% failed because they mistimed their product launch.
8% failed because of a poor product.
7% failed because of disharmony amongst the team and investors.
6% failed because of a pivot gone bad.
5% failed because the team burnt out or lacked passion.
What’s interesting about this data is that 73% of failed startups cited financing issues and lack of market need as key reasons for their failure.
This is where an MVP is most useful, going through the process of testing your product or service against the market will let you confidently progress with an idea that sells, with sufficient customer data you will know if there is demand for what you are creating.
An MVP also helps to minimise costs by following a lean methodology - you only build what you need to acquire customer data, pivots are expected and accounted for, and you are left with a clickable prototype that will help you pitch for new capital.
When it comes to competition in the market, flawed business models, and regulatory challenges you can mitigate those risks by operating a successful MVP process. With the extensive learning phase of building a Minimum Viable Product, you will have sufficient data regarding competitors. By the time your clickable prototype is delivered, a solid go-to-market business plan will be in place which includes navigating obstacles like regulation.
At MVP Solutions we have undertaken a series of MVPs and transitioned business ideas to realities, avoiding the pitfalls mentioned earlier. One of the key services we can offer founders is the holistic market research and product development needed to actually deliver something that won’t fall at the hurdles startups commonly face.
18% of businesses failing because of regulatory/legal challenges is something that can be mitigated with the appropriate allocation of funding and resources.
More commonly seen with FinTech startups, a significant amount of research has to be done regarding navigating regulation - if you add this to the long list of founder responsibilities, it’s easy to see why allocating resources to the ‘learning’ phase of a startup is so essential.
In the next article from MVP Solutions, we’ll be looking at examples of successful MVPs and the challenges they faced - as well as the steps they took after the MVP was completed.
How Long Will It Take To Build an MVP?
Most MVPs can be built in three to four months, although it depends on the industry you are building in.
The complexity of a MedTech platform could take longer, with some data suggesting around 9 months being the average time.
It also depends on who builds your MVP; agencies, freelancers and internal teams will all have varying levels of experience.
How Much Will It Cost To Build an MVP?
The average cost of an MVP is generally cited as being between $15,000 and $50,000. Complexity affects the price as well as who you use to build the MVP.
What Products or Services Can You Use an MVP For?
Any business that is going to offer something digitally can use an MVP. When your business requires a developer to build something before you can start earning or marketing, it’s likely that building a Minimum Viable Product would be a useful method to start with.
To summarise, if you are looking to start a new business and you want to minimise costs and avoid common pitfalls, a Minimum Viable Product is going to be useful. Learning about what your customers will buy, and defining your product fit are essential steps to building and progressing with a go-to-market business plan.
If you have any more questions about MVPs, you can talk to an expert at MVP Solutions - we’ve helped multiple businesses navigate this process and we’re happy to speak to you regarding your project scope.