Making an MVP as the first mandatory step when launching a new idea has long been the de facto standard. This article will examine why making MVP is essential to future success.
Do you need an MVP? You decide, but the statistics are relentless
Comprehensive testing of a new business idea by creating an MVP is not an imperative requirement. However, the percentage of successful and failed startups is clearly correlated with the number of new projects conducting preliminary market research and those who decided to break into the club of millionaires immediately.
What are the benefits of applying to MVP development services for startups, and why skipping this stage can lead to the collapse of a promising idea and even bankruptcy?
The production of an MVP and a comprehensive, objective feedback study allows you to understand how much this product or service is in demand in the market and whether your business model is correct. Sometimes it turns out that what seemed relevant to you as an author is not attractive to the consumer. However, you can create a genuinely unique startup by making timely adjustments before you have spent the initial capital.
In particular, the well-known application WhatsApp initially emerged as an address book with interactive notes. The idea behind this offer was that when you were about to call someone, you immediately saw their status: “in a meeting,” “ready to chat, “resting,” etc. Based on this, you could decide whether to disturb the person now or whether to postpone your call. However, testing at the MVP level showed that this product is not of interest to a wide range of consumers in its proposed quality. But they need a new messenger. After receiving user feedback, the authors promptly revised the business model and strategy for promoting their product. The result is known to everybody: Facebook (or now, Meta) acquired WhatsApp for almost $22 billion.
At the same time, the authors of startups that failed to succeed cite the lack of demand for their product or service in the market (thirty-five percent of respondents) and the wrong business model (nineteen percent) as the main reasons for their collapse.
Thus, building and testing an MVP extensively allows you to solve several tasks that are vital to the success of your business:
- Offer users a product that is entirely focused on their needs;
- Determine the target audience and, if necessary, adjust your ideas about it;
- Develop a suitable business model;
- Take into account the mistakes of competitors and unsuccessful predecessors, and offer a product devoid of their shortcomings.
Let’s look at each of these positions in more detail
- As the WhatsApp messenger example makes clear, startup creators’ ideas about their future consumers’ needs can be very different from reality. Imagine the fate of this project if its authors immediately put all the resources they have into their application in its original form!..
Thus, creating an MVP turns out to be a reliable way to avoid unnecessary expenses and understand how the main features of your product are attractive to users.
- Offering your MVP to your target audience, you get an idea of how conveniently the main functions are implemented. Collecting users’ comments gives you an invaluable opportunity to organize the controls of your product (or way of delivering a service) to attract as many users as possible, even before the release is launched. Moreover, you avoid a situation where a good idea can be rejected outright due to an inconvenient interface or a too-tortuous user path to the final goal.
- During the MVP testing process, you check your ideas about the target audience of your future product and make the necessary adjustments. In addition, you get the opportunity to study the solvency of your prospective consumers, their willingness to part with the amount in which you evaluate the right to use your product, and the payment method. Thus, you can most likely imagine the rate of return on investment, the moment of going to zero and moving to profit, etc. In other words, you get the tools you need to create a realistic business plan. Do not forget that the lack of funding is the first reason for the collapse of many undertakings. Thirty-eight percent of the surveyed authors of failed startups think so.
- People do not like to part with money – this is a well-known truth. It is especially relevant if, instead of your paid application, they can use its free counterpart or a solution that involves a more flexible royalties’ system. The way that allows you to get as many customers as possible on acceptable terms for them and simultaneously make money is called a successful business model. For example, the author of the cloud service Dropbox followed the long-known path of network marketing, offering its users an increase in initially not-too-capacious storage for each user they attracted.
Today, there are an immeasurable number of ways to monetize a startup. Not all of them come down to intrusive advertising or trading users’ data. Testing the viability of your idea of a way to make a profit during the MVP break-in stage is a great way to avoid financial ruin after a full launch of the project.
- Studying the strengths and weaknesses of your competitors is a prerequisite for any successful business project. For the market analysis, it is equally important to understand how in demand, in principle, your offer is. Lack of order is the second most common reason many startups fail, cited by 35 percent of those surveyed. Since one of the essential qualities of an MVP is the lowest possible price of its manufacture, you can, without risking your last money and getting into loans, find out whether it makes sense to enter the market with your offer. Or maybe you just overestimated your product’s attractiveness or didn’t consider the presence of strong competitors? One way or another, by spending a reasonable amount on preliminary research, you will avoid the danger of much more significant and, at the same time, senseless spending. MVP allows you to gain invaluable experience at an affordable price.
Creating an MVP requires a deep understanding of your goals and objectives, and the preliminary formulation of questions you need to get answered before you risk your money. However, if you have done the proper preparatory work and managed to provide reliable feedback, the benefits you will receive from such research will far outweigh all your resource costs.