In May 2019, business consulting company Startup Genome conducted a large-scale study on the global startup ecosystem. Among the most impressive findings is the fact that 1 startup out of 12 eventually grows into a successful business. Only one project manages to achieve its goals and gain a foothold on the market! Why is this happening?
Failures are caused by many reasons, but the two main ones are:
- The market doesn't need such a product;
- The owner has run out of money.
Yes, no matter how prosaic this may sound, but the two most obvious problems are the main reasons for startups' failure.
But, is there any way to avoid this worst-case scenario though? Create an MVP first.
What is an MVP?
MVP is an intermediate version between a prototype of your product and the finished product itself. The MVP has key functionality (sometimes, one crucial function) and basic design. Actually, this is a product that can be released and sold to users.
Why Should I Create an MVP?
Basically, you want to launch an MVP for two main reasons. It helps your company to start earning and gather feedback from the first users. Having analyzed the customer feedback on your MVP, you should introduce the necessary changes to the product and release its full version with more capabilities. This way, you meet the users’ needs and therefore, reap the benefits in the form of profit.
Is It a Mandatory Solution for Startups?
There are numerous reasons why creating an MVP is a great solution for your startup, but none of them implies that it is a must. So, the choice is always yours.
However, to help you make an informed decision, we have compiled a list of MVP’s benefits and described how this solution can drive the success of your business.
Testing Your Product's Potential on the Market
Generally, any startup aims to solve a particular problem that the given market faces. If your product fails to solve this problem, it is unlikely to survive in the future.
Only the user demand can provide you with an accurate answer on whether your product is a perfect solution or not. A prototype is not always enough to test the market's real need for your product. An MVP, in turn, will give you a clearer understanding of the customer demands.
Developing a full-fledged product is often pricey while designing an MVP is way cheaper. The average cost of an early product version is $5,000-$20,000.
And at the same time, it is already a working solution that can bring you profit. Needless to say that this approach is ideal for startups. In the case of failure, your losses will be minimized.
Getting Early Adopters
The second most important element for your startup success is users. By creating an efficient MVP, you can turn early users into fans who will stay with you until the release of a full-fledged product. Some of them will share their impressions with friends, which will have a viral effect. Word of mouth is a powerful marketing tool.
Collecting Useful Feedback
In addition to direct earnings and adopters' trust, the MVP's main goal is to collect customer reviews about your product. The first followers will give the earliest and the most important feedback on your product. No prototype is capable of this.
The received information needs to be analyzed and the changes must be implemented. Repeat this cycle until your product is excellent. This is a simple rule, but it works best. Obviously, you don’t want to invest a lot of time and money in the development and marketing of a full-fledged product, and then understand upon release that it does not meet the needs of the target audience.
Learn from the best
If we haven’t yet convinced you that investing in the MVP development is a good idea, it’s time to get inspired by the examples of industry giants.
- Uber’s MVP was an application with a simple design and a single function. It acted as a link between the driver and the passenger. The task was to deliver the car to the user as quickly and cheaply as possible. Still, there was a card payment option.
- Most likely, you know the history of Facebook, or at least, you have watched David Fincher's movie "Social Network". Originally, Facebook was a social networking site for Harvard students only. It gradually expanded across other universities, and eventually covered the whole world.
There are many examples of successful projects that once started as an MVP. Just google them.
Certainly, launching an MVP is not a panacea. Yes, it does carry a large number of benefits and advantages. However, it does not guarantee success, and there is nothing that could. Starting any business always comes with certain risks, but you should try minimizing these risks. MVP is one option to do so.