Studies have shown that more than 70% of new startups fail and while there are a number of reasons that contribute to these failures.
According to CBInsights, there are 20 major reasons, why startups fail and out of these 70% failed startups, a large majority faces more than one of these problems.
These include no market need, running out of cash, wrong team, cost issues, being outcompeted, poor marketing, ignoring customers and many more. In 2011, a startup founded by Eric Ries, The Lean Startup changed the history of startups by introducing a concept named minimum viable product.
What is minimum viable product (MVP)?
A minimum viable product is a product that is equipped with enough features to not only attract but capture the attention of early-adopter customers in order to validate the product idea early in the product development cycle.
In the software startup industry, a minimum viable product helps product development teams receive end-user feedback quickly to be able to iterate and make the product better.
How to set up a minimum viable product?
If you are reading this, chances are that you are already developing a product, the only thing that needs to be done is transform your product into minimum viable product in the early stages of development.
By following these steps, you can set up your product to become a minimum viable product and reap the countless benefits of it.
Framing the problem
The first step in setting up an MVP is by identifying and framing the problem. This helps overcome a number of issues that lead to the failure of the market.
For example: framing the problem ensures that there is an actual need for your product in the market. So in order to frame the problem, what you need to do is describe the ideal situation as compared to the current situation that your users are living in and how the users are being impacted by this gap.
Once you have done that, you have created a demand for your product, even if it does not exist in real life.
Identify your users
The next step is to identify your users. Once you have framed your problem, you have to do an analysis of what group of people are being impacted by the problem.
That is only the first step in identifying your user. After that you have to classify your users into different demographics based on their education, age and region etc.
Understand your users
After you are done identifying your user, it is important to fully understand their dynamics. You have to be fully aware of what your customer needs and how your product is going to meet the needs of your customer.
Validate the problem
Validating your problem is the next important step and is necessary in order to fixate on a solution.
Some of the questions that you need to ask yourself include;
Does your user have any existing solution to the problem?
Does the problem have a significant impact on the users?
Is the user using any workarounds?
How would the solution improve their lives?
Is the user willing to pay for the solution?
Ideate on potential solutions
The next step is evaluating all possible solutions to the problem and weighing the pros and cons of each of those solutions in order to find out the ideal solution.
Define your product
The final step in the development of a minimum viable product is defining the product. The product should be based on the best possible solution that suits the needs of your user and makes their life easier, so much so that they are willing to spend a sizeable amount of money in acquiring that solution.
Benefits of minimum viable product
A minimum viable product has a number of benefits especially for young startups. Not only does it allow the product development teams to launch an early version of their product amongst their key stakeholders but they also get a lot of crucial feedback from the people who are ultimately going to be their end users.
This helps them improve their product in a way that gives them competitive advantage over any competition that might be in the market. On top of all that, a minimum viable product gives the investors and entrepreneurs an additional guarantee that the product is real. Minimum viable product works like a seed for the future plant that the investors and entrepreneurs are investing in.
This not only increases the trust of the stakeholders in the product, but also minimizes risk for them, which makes them confident to invest more in the startup and thus increases the cash flow for the company.