As a business owner, the last thing you want to do is spend your capital creating a product that no one needs. This is why MVPs are very important for businesses. Through an MVP, a company can determine the viability of its business idea and products. But what is an MVP in business?
This post fully explores this concept from what it means exactly to the various types, its benefits/importance, and even tips on how to create one for your business.
You can think of this article as your ultimate guide to MVP in business.
Meaning of MVP in Business – What is an MVP in Business
MVP is an acronym for the phrase Minimum Viable Product.
A minimum viable product is the basic version of a company’s product that has the essential features that can be used to validate the product’s viability.
That is to say, it is a product in its basic form.
An MVP would typically have key features of the product that would meet the needs of the customers.
Subsequently, the company would get feedback about the MVP and then use this to further develop the product.
This business concept has been in use for a while, but it became popularized by Eric Ries.
According to Ries, a minimum viable product often uses the least effort and it allows those who created it to learn about the customers.
While Ries uses the term “least effort” in his definition of an MVP, it does not mean that the MVP would be so minimal that it would not be functional.
For anything to be considered an MVP, it must be viable too; it has to be useable and reliable.
It must also have an empathetic design; that is, it must consider its users’ needs.
Unless an MVP has all of these characteristics, it cannot serve as a yardstick to measure the viability of the product.
The Main Purpose of a Minimum Viable Product – What is an MVP in Business
When a company creates its minimum viable product, it would then launch it to establish the product idea and also get feedback about the product from the users.
So, the main purpose of an MVP is to help a company verify the viability of its product by letting users use it in its basic form.
When the company gets feedback about the product, it then adjusts the product accordingly.
In a nutshell, an MVP allows a company to enter the market, attract early users, and gather feedback that will be used to improve the product.
Importance of a Minimum Viable Product – What is an MVP in Business
Creating and launching an MVP is a very important step that almost every type of business must take.
But why is it so important?
A lot of companies come up and then end up crumbling to the ground within a year and something even months of operation.
There are a lot of things that contribute to this happening.
The thing about MVPs is that they can help a company predict some of the factors that may cause it to fail.
A minimum viable product is a fast way for a company to get into the market and find out how people see their product.
It gives a business valuable and often accurate insights into its product.
Instead of using a huge chunk of the business capital to create the products and launch them without being sure that the product will do well, a business owner can spend a lesser amount on creating an MVP.
They can then figure out the viability of the product.
If it is viable, the company can now make the product the way it ought to be and launch it finally.
If the product isn’t viable, then the company would have saved both money and time.
Advantages of an MVP – What is an MVP in Business
An MVP can help a business owner avoid several issues that can end up making their business unsuccessful in the long run.
As a business owner, you can be so passionate about the idea you came up with that you would fail to see it from a clearer perspective.
This can make you spend so much money and time making a product that no one is interested in.
However, an MVP will allow you to see your product from the eyes of its prospective users.
This is the major benefit of a minimum viable product.
But there are also other benefits you stand to gain by using an MVP.
Let’s look at some of these benefits below.
Help Businesses Attract Investors
When trying to convince investors to put their money into your business, you would need more than a great pitch.
You have to be able to convince them that your business is worth investing in.
And there is no better way to do this than to have an MVP.
Some investors typically only invest in businesses that have MVPs.
If you do not have an MVP, some investors may not even consider your proposal.
MVPs are typically already launched products.
This is why investors are often interested in them.
It makes it easier for them to evaluate a product’s potential.
Investors will typically consider the results they get from evaluating a company’s MVP to decide on whether or not to invest in the company.
Allows Businesses to Test the Functionality and Usability of their Products
Your product may sell out like wildfire but that does not mean it has passed the functionality and usability test.
A company can launch its product and market it so well that people would rush to get it.
But after using it, they may realize that the product isn’t as great as they thought.
They would then stop using the product; they would also not have any reason to buy the product again.
The company would then notice a decline in sales but would likely not know the reason behind it.
MVPs reduce the chances of this happening to a business.
When a business launches its MVP, it gets reviews about the product from its users.
This would help the company evaluate the usability of the product.
Not only do MVPs help businesses test their product usability but it also helps them improve it.
When a company gets complaints about its MVP usability, it can now use this information to make the product more functional and useable.
Helps Businesses Analyze and Forecast Demand
As someone who comes up with a product idea, you would be somewhat biased about the product.
You may think everyone would see the product the same way you do, and that everyone would need it.
But this is not always the case.
Sometimes, your seemingly wonderful product may not have a target market.
This is why every business needs to test its product before launching it.
With an MVP, you can check if your product has a market and how many people would be willing to buy it.
There may be other products already filling the gap that you hope your product will fill.
Your MVP will help you figure out the competition and whether or not you have a competitive edge.
From this, you can forecast demand so you can make an informed decision about how much you should invest in the business.
Aids Timely Product Launch
A business owner may feel good about their product but they may not feel confident about it.
They may doubt their product and hesitate to launch it.
They would then take a long time and also a lot of money trying to make the product perfect.
An MVP on the other hand reduces the time you take to launch the product.
Launching your product on time also means that you would get feedback soon and use the review to make the product better.
Helps Businesses Create Better Products
Launching an MVP will help you work on the features of your product.
You would find out the things users like about the product and also what they would rather you add to the product.
This would help you improve the product to best suit the needs of your target audience.
Helps Businesses Attract Customers
If your business is in a very competitive industry, attracting customers can be quite a task.
But this task can become relatively easy if you launch an MVP.
This is because customers typically like businesses that want to know their opinion.
They would be happy knowing the company is interested in what they think.
Types of Minimum Viable Product – What is an MVP in Business
There are several types of MVPs.
However, in this article, we’ll look at just 5 common types; concierge, landing page, wizard of Oz, Pre-order MVP, and explainer videos.
With concierge MVP, a business would manually solve the problem of their customers without launching a product.
For instance, let us say your product idea is an application that matches pet owners to people who take care of their pets when they are away.
Now, the sole purpose of an MVP is to test the feasibility of an idea.
With this MVP, you do not necessarily need to create your app to test the idea.
You can use people around you to do so.
You can match the pet parents you know to people around you who would want to watch their pets for a sum.
This way, you can figure out whether or not there’s a need for the app or not.
Concierge MVPs typically require a lot of dedication and time.
However, they would help you get the insight you need to validate and improve your product.
If you want to use a landing page MVP, all you would have to do is create a landing page and then describe your product on the page.
You would list out the benefits of the product and describe it in detail.
You would also put an option for people to buy the product.
A major benefit of this type of minimum viable product is that it can help you gather the email addresses of your potential customers.
This would help you communicate directly with them.
It will also help you evaluate user expectations and demand.
Wizard Of Oz
Wizard of Oz MVPs are just like concierge MVPs.
However, with this type of MVP, even though the owner of the product is doing everything manually, they would let the users believe that the product is doing everything all by itself.
Business owners use this type of MVP in cases where it is important for the users to think that the product is fully automated.
Pre-Order MVP – What is an MVP in Business
If you need investments for your business, then you would find this type of MVP more beneficial.
With this type of MVP, you would give your customers the chance to order your product before it launches.
You can then use the money you realize from this to develop your product.
So, you would be achieving three major things with the pre-order MVP.
You would evaluate the viability of the product, gauge demand, and also get financial assistance.
Explainer Videos – What is an MVP in Business
With an explainer video, you can describe the intricacies of your product.
You can show the users how the product works, what makes it special, and how it’ll cater to the user’s needs.
This type of MVP is particularly helpful for complex products.
Not only will it allow the business owner to introduce the product to users but it will also help them forecast demand and track the users’ interest in the product.
How to Make an MVP – What is an MVP in Business
An MVP typically has the main features of the product without other features that make it complicated.
So, when building an MVP, you need to focus on the basics and leave out anything that would consume resources and make everything unnecessarily complicated.
To do this, you can follow the steps below.
Conduct Market Research
Before you even invest your time, money, and other resources into building an MVP, you need to evaluate the market.
This is the first step you’d take to find out whether your product is needed or not.
What is the market gap you are looking to fill?
Evaluating the market will help you learn more about the customers’ needs, the market competition, and so on.
This would help you find out the areas where the other products in the market are lacking and how you can get a competitive edge over them.
Consider User Flow
To fully analyze your product, you have to consider it from your customer’s perspective.
If your MVP is not convenient for the users, you would end up with an unsuccessful product.
This is why you need to consider the users when building the MVP.
You need to map out the users’ journey to analyze how they would react to your product.
Consider how the user would feel from the moment they come in contact with your product down to the final step of their journey.
Considering user flow will help ensure you build your MVP while considering customer satisfaction.
Prioritize the MVP Features
Your MVP should typically contain only the essential features of the product.
This means that you would have to decide on what features are essential and those which aren’t.
To do this, you would need to consider the users’ needs and the core purpose of the product.
Considering these will help you draw up a list of important features.
You may still need to streamline the features a bit more.
In this case, consider the priority levels of the features you have and then discard those that are not quite important.
Once you have these features, you can then build your MVP.
Launch your MVP
After conducting your market research, considering the needs of the users, prioritizing the features, and then creating the MVP using the results you got from all the steps so far, it would be time to launch the MVP.
Your job is not over just because you have launched your MVP.
Remember that one of the reasons for creating and launching an MVP is to gather your customers’ opinions about your product.
So, this is what you have to do after launching the product.
The response you get from your customers will help you evaluate your product.
It will also help you figure out how to improve your product to fit your customers’ expectations.
Prototype Vs MVP – What is an MVP in Business
Some people tend to think of a prototype and an MVP as the same thing.
However, this is not the case.
Here’s the definition of a prototype – it is just a simple and fast way to validate a product’s basic ideas.
Prototypes are not usually useable.
They are just a means for business owners to see whether or not their ideas can be created.
An MVP on the other hand is useable and contains the basic features of the product.
A company cannot launch its prototype.
But they can launch its MVP for customers to use and then give them feedback that can be used to improve the product.
Conclusion on What is an MVP in Business
A minimum viable product is very important for a business.
It helps business owners test their product ideas to evaluate their viability.
If a company skips the MVP stage, it may not discover some potential challenges its product may face in the market.
This would make them spend money, time, and other resources creating a product that people may not be interested in.
Aside from helping companies test the viability of their products, MVPs are essential when it comes to business funding.
Some investors often require a company looking for investment to have at least a minimum viable product.
This would help the investor test the business’s potential and help them decide whether or not a business is worth investing in.
Thankfully, this article has shared the steps you have to take to build an MVP.