Product entrepreneurs are full of enthusiasm and excitement to launch their products with all the features and functionalities they could possibly imagine. However, no amount of effort can make your product perfect. It will always have some missing links, functional flaws, or even if it’s ideal for most, a sizeable portion of the target audiences might still not want to use it. The reason could be many – there is no market demand, they already have a similar product, the product is too costly, and whatnot.
Instead of going with the full development of the new product, what product entrepreneurs can do is take smaller steps and go with MVP development. This has been a proven approach for startup unicorns like Facebook, Airbnb, Uber, Spotify, and many others in becoming the success story they are today.
A minimum viable product lets the entrepreneurs start small and sell the main offering without investing and risking all the resources in one go. They can excel at each version of the product by eliminating all the other unnecessary features and offering just the core proposition – solving the problem the product aims to solve.
Let’s read further to know the various other reasons why you should start with MVPs as a product entrepreneur.
MVPs Help Identify Core Value Proposition
Most businesses have different ideas revolving around their product until they meet a team of MVO experts who help them identify the core value proposition. When any entrepreneur undertakes the MVP development process, one of the first steps is to define the user flow and then prioritize the features accordingly.
While eliminating the added features that would just be nice-to-haves, an entrepreneur can find what their product’s main offering is. As MVP is about offering the simplest version of the product first, the development team’s first step, after complete market and customer research, is to identify the main feature or offering of the product.
MVPs Mitigate Risks
There are many risks involved in new product development, especially for entrepreneurs who put in all their funds, resources, and efforts into launching one.
What if people don’t like the product idea or there is no high market demand to get actual returns on the investment?
Moreover, adding too many features in the first go might confuse the target users, and they may end up overwhelmed, not using the product.
Let’s also count the risks involved if a full product fails – loss of funds, wastage of too much effort and years spent on development, increase in rework required, and much more.
With MVP development, you start small, so the risks are smaller. The money invested is less, work done is less, time spent on development is just a few months. So, even if there’s a chance that your MVP might fail, it won’t cause such a huge loss.
MVPs Help Launch Faster
Market demand is a key factor differentiating a successful product from a failed one. And the longer one takes to launch a product; the greater are the chances of getting outcompeted. However, complete product development can take several months, even years, if the ideas and technologies are too complex.
Product entrepreneurs can launch faster and offer something to their early adopters within weeks by going for MVP development. Building a minimum viable product takes a few weeks, depending on the type of idea and feature complexity. Most companies can build an MVP in two to six months. So, you have a product that can entice the users with the initial idea and even be developed further based on their feedback.
MVPs Reduce Development Costs
The second most common reason why so many startups fail is that they run out of money during the development process. Over 29% of startups ran out of cash, leading to startup failure, as per CBInsight research.
By taking smaller steps through an MVP, you can start getting revenues from your product within a year of development. You not just launch faster but also get the opportunity to test your monetization strategy. An MVP development saves costs in terms of the development process, faster release, initial input, mitigating risk, and much more.
Moreover, many startups run out of cash as they are unable to secure funding. An MVP helps you back up your startup pitch to investors and show them a working model of your idea to secure better funding faster.
MVPs Help Yield Better Insights
An MVP is built on the lean approach of build, measure, learn. And that’s what makes it so effective in product success. You are not just building the product in one go. You build a smaller apportion or the main feature of the product first. You get insights on how the product prototype is working with the customer, and you iterate or pivot.
There are several metrics that the product entrepreneurs can keep track of to measure the success of the MVP. It could be direct feedback, engagement rate, sign-ups, churn rate, net promoter score, average revenue per user, active users, etc. These insights can help you track the customer behavior and incorporate what you analyze into the next versions.
MVPs Help Build Iteratively
A tried and tested way to fail at startup products is to ignore the customer insights. Many entrepreneurs put their all into launching the full and final product. However, they do not realize that this is a risk that may take their business places or sink. Not only are the risks higher in launching a new product but also there is a lot at stake in case the complete product fails.
MVP helps you take the iterative approach in product development. This means that you build your product based on the feedback received from the customers. You build a smaller, simpler version of the product, learn from the feedback and keep building in an incremental manner to get the best product out there.
MVPs Help Test Market Demand
42% of startup products fail to make a mark in the market because there was no market need for it. Their product failed to solve any essential market problem or the problem wasn’t large enough to build a succeeding customer base. Despite including the best technology, expertise, and hiring developers from across the world, their products fail to deliver results.
Starting with MVPs allows product entrepreneurs to test the market demand with a smaller product before investing their all in it. The MVP is tested on beta testers like friends and family and even early adopters first before expanding. If it receives a positive response, entrepreneurs can go on to scale their product; if not, they can pivot.
MVPs Help Pivot In Case Of Failure
The coronavirus pandemic showed that businesses need to be agile and swift in pivoting the offering or the business model to meet the evolving customer demand. However, pivoting the complete product, in case it fails, can be draining, not just on the resources but also on the funds, developers, and time.
By taking an MVP approach, you have the ability to pivot the product’s core competencies based on the feedback received from the customers or their changing needs. It is easier to pivot a business when it is small rather than after you have invested all the funds, time, and developers’ efforts in the same.
You can easily introduce new features or functionalities, or technologies in the product in the next sprint or version release of the MVP to pivot in case the first version fails.
MVPs Help Strengthen Pitches
Most startups need funding from investors to build their startup app idea from the ideation phase to the fully-working product. However, approaching investors with nothing but an idea minimizes the chances of impressing them. An MVP can help you strengthen your pitch.
Approaching an investor with the product prototype can be an important element in your investor pitch. You can show the early outcomes of the prototype and showcase its demand in the market via the feedback and insights received.
MVPs Help Create Monetization Strategy
Pricing the product right isn’t an easy task. One needs to know if the way they are planning to monetize would work or not before launching the product. This is where an MVP helps. It helps you find the right monetization strategy without investing everything in one go.
You can know if the audience is willing to pay the price you are expecting for the product or not. It is imperative for product entrepreneurs to know if what the customers are willing to pay covers the cost of development and yields profits or not.
Moreover, MVP can help you experiment with different monetization strategies like – in-app purchases, premium plans, freemium versions, paid subscriptions, and much more. You can see on the different target audiences with different versions of the product to know if they can pay for the same or not.
Further, you can put a lower price on the MVP product in the beginning and increase it as you add more features or ask to upgrade plans to unlock more features. MVP offers product entrepreneurs a plethora of opportunities to check how to monetize their product and even price it right based on the response they receive.
Start With MVP To Succeed
No wonder so many successful startups have started with an MVP. Not only can they start with lesser investment but also launch the product faster to entice the customer early on. It ensures that the product entrepreneurs can launch the product idea into the market without any risks of getting outcompeted. Make sure to build the right team of developers, designers, and QA engineers to launch a quality prototype that is able to connect with the audience and offer them value. It lets you have an actual working product within months that can provide value to people and get insights from them.