The road to entrepreneurial success is often laden with puzzles, traps and obstacles, and the most difficult ones are those which our biases can prevent us from even seeing. One such example is the trap of confusing the vision of your ideal, fully formed business – fabulously serving your customers and drawing in excess revenues – and how your business may need to, or will, look at startup.
Tools have been developed and articulated to combat this, and one, that in my experience working with small businesses is very useful in a truly wide range of contexts, is the Minimum Viable Product or MVP. Developed by Eric Ries in a technology context, I feel this concept can have applicability and value for all new businesses.
By creating a minimum viable product you not only greatly strengthen your market research, but you may also generate some early revenue that can go a long way to helping when you hit the growth stage.
Defining M(inimum) V(iable) P(roduct)
Defining the language used in entrepreneurship is sometimes a challenge in itself! It can often be hard to find unanimously agreed-upon definitions for many terms, including Minimum Viable Product. In the widest context, here is what I have in mind as I write this piece:
Minimum – determine the simplest set of or the smallest number of features you can possibly offer while still serving your company’s mission. Possibly only one feature. For example, if you envision a restaurant with a full menu, can you still be working toward your mission by offering a single item at a market on the weekends? If you are planning an event, can you create a webpage that explains your concept and asks people to sign up for news of a ticket release? What is the most reduced version of what you ideally intend to offer in full operation?
Viable – It must hold some appeal to at least some of your presumed target market, and must still attract attention. You should be able to deliver something (a webpage, for example) to your customers that speaks to your goal. And perhaps, more importantly, it should be something around which you can collect information about your customer (at least, whether customers like your product). If you are planning a bookkeeping business, is it viable to offer free coffee at a trade show? That might be more of a marketing strategy, than a viable product. But if you’re offering to explain a common tax deduction? Then you might have something viable in relation to your business.
Product – Simply, something of at least some tangible value to the customer. It’s important to note that this could be a service or a good that you either produce or resell. For example, a webpage that provides information. Or baking pies for the farmer’s market. Or busking downtown with your guitar.
When you put it all together, what you should have is a product that will (attempt to) elicit customer feedback, and possibly generate some revenue. The ultimate value of the MVP is the learning and information collection opportunity that it provides.
It’s important not to get wrapped up in the specifics of definitions. Is what you’ve done exactly going to meet everyone’s definition of an MVP? No. But will what you’ve done allow you to learn from the feedback you gather and reorient your product/service to your target market? It’s the second question that matters.
Connecting to your mission
Think about the core of your business. What is the essence of your solution to the problem you’ve identified, or the essence of the value you propose? It is probably easy for you to imagine your full-fledged business and all the myriad benefits it will deliver for your customers, but challenge yourself: what, essentially, is it I am trying to provide? Answer that without describing your product/service, and then imagine the least complicated way you can provide that to at least some degree.
Your MVP is a way to show the validity of the problem you’re solving or the benefit you’re creating and demonstrates that your mission is meaningful. If your mission is valid, you can deliver several versions of a business that will all serve it, why not start with the simplest?
What an MVP can do for your business
The most crucial benefit you will derive from an MVP is information. You will be able to get a stronger sense of whether your idea has true market appeal, without a huge investment of time and (in some cases) money. You may get a clearer picture of how your product development may go. In our restaurant example, perhaps you discover that demand for your particular dish is high enough that you could explore packaging it as a grocery item, rather than investing in a single location to serve the item made to order.
You may learn whether you’ve misidentified your target market. Perhaps it’s not your product that needs to change, but who you think is your most likely customer. An MVP that allows you to collect information about your customer might show you trends you hadn’t anticipated.
Another side effect is that it allows you to demonstrate real operations if/when you seek financing for the ideal business you envision. Rather than first forming a detailed plan for your ideal business, determining how much it will cost to establish and then seeking financing from banks, grants, investors etc… an MVP forces you to think about how to begin creating and even leveraging your customer relationships and some revenue before extra financing is necessary. A lender will find more appeal in lending to a business that has been generating revenues for a year or more during the development phase, than in a business that hasn’t even started yet and wants to go all in all at once. It shows you are a prudent planner, and proof that some people will give you money for what you’re planning.
A commonly offered example is the aforementioned website ‘landing page’ that provides some information and may give potential customers the opportunity to be the first with access to the future, more developed product. This could go for a tech firm or any other business. By doing this you can start to gauge how the market will react to your business. Extremely important information to have before investing more.
Your MVP blurs together your market research and business operation. It is a strategic way to do both at the same time, and thereby increases your likelihood for success. Done right, a Minimum Viable Product can become the Most Valuable Player in your business plan!