The MVP Approach: A Guide to MVP Development for Startups
In the startup universe, product scaling has much to do with developing a Minimum Viable Product (MVP) – a product version with just enough features to satisfy early customers and test the market.
MVP development for startup has become a popular and effective tool to mitigate risk and achieve success. It helps them to leverage feedback, catalyze product growth, and maximize profit with relatively low investments. Below is a complete guide to MVP development for startups that gives you all the information on the MVP benefits, types, and tips on how to get ready for startup scaling with the help of a minimum viable product.
MVP Development for Startups and Its Role in Startup Scaling
A startup launch phase can be compared to a journey with an unknown destination. To reach your destination the fastest, you need to act smart and get a roadmap that outlines the steps for you to take.
The MVP development services for startups are aimed at creating a roadmap and breaking down the development process into manageable steps:
- Step 1: identifying the problem you are solving;
- Step 2: defining your target audience;
- Step 3: determining the core functionality that works to solve the problem;
- Step 4: testing your assumptions and getting feedback from users.
By following this roadmap, you can save time, money, and resources by focusing on the core features that users actually want and need. Additionally, this approach also allows for a swift market entry and provides a valuable opportunity for early user feedback, further directing your future product development efforts.
Why Do Startups Invest in MVP?
Plunge into any startup's journey, and you'll find an underlying theme – they all have to deal with the premium factor of available resources, particularly time and money. MVP development is the tactic devised by business analysts to counter these constraints skillfully.
The core goal of any MVP development for a startup is to validate overall idea viability. On top of that, you’ll be able to estimate the demand, the preliminary “value for money,” and the number of potential customers.
An MVP is not about developing 'minimum' features – rather, it is about a well-strategized development process to identify 'vital' features that solve a problem. Startups invest in MVP to test its business model and core features under real-market conditions before committing to building a complete product. It's the process of user testing, feedback, iteration, and continual improvement, without consuming needless resources.
The goal here is to enable basic functionality, enough to engage users and comprehend their interaction and feedback. It allows business analysis to confirm assumptions about the proposed solution and aids in efficient project management. MVPs help startups establish product viability without incurring excessive development costs. In other words, startups invest in MVPs to pressure-test their ideas on the live stage before taking the expensive leap of complete product development.
After all, the MVP in startup MVP development isn't about releasing unfinished products. It's about project management, learning, and adapting quickly to construct compelling, user-oriented solutions while keeping the MVP development cost in balance.
Benefits of the MVP Approach
Investing in startup MVP development unlocks numerous benefits. First, with real user feedback, you become more confident about your product efficiency. This prevents you from investing too much time and money into a product that may not succeed. The early feedback pouring in is a precious guide for the company to shape its complete product successfully. Moreover, with this iterative development, it offers a greater degree of flexibility to make appropriate changes following user feedback.
Also, the MVP development model enables the stripping down of a product to its core, essential feature set, which solves a specific problem for a target user group. It can substantially help cut down the project scope, thus leading to significantly lower MVP development cost. The MVP approach embraces the philosophy of 'Less is More', enshrining a 'simplicity-first' perspective – a major boon in our increasingly complex world.
Besides its central role in startup scaling, MVP product development can also help you stand out over competitors by demonstrating actual user interest, thus, garnering attention from potential investors.
MVP for Upscaling: Key Indicators of Startup Scalability
Scaling can be the outcome of a successful MVP iteration. If the feedback is positive and the startup can iterate on the MVP to improve the product, it can lead to a successful scaling process.
Although a successful MVP iteration can increase the likelihood of scaling, a minimum viable product is not the only determining factor.
The key indicators of startup scalability will be:
- Consistent and growing customer demand: If you can prove a strong and growing demand for your product or service, you're ready to scale. What’s also important is that you can understand your target market and have a clear idea of what drives customer demand.
- Successful business model: Your startup should have a transparent and sustainable model that can support growth. How will you tackle revenue streams, customer acquisition costs, and margins?
- Scalable infrastructure: As you grow, your infrastructure must be able to support that growth. That means having the right technology, processes, and people in place to handle the increased demand.
- Strong team: Scaling a startup requires thorough market research and a strong team to handle the increased workload and demands. You should have a team aligned with your goals and with the skills and expertise able to take your startup to the next level.
Risks & Challenges of Scaling Too Early
Although scaling is crucial for the success of a startup, it can also be risky and challenging. If a startup scales too early, it may not have the resources, infrastructure, or customer base to support the increased demand for its products or services. This can lead to operational inefficiencies, poor customer experiences, and, ultimately, failure.
Some of the common risks and challenges associated with scaling too early include:
- Poor product-market fit: If a startup scales too early without an MVP, it may not have fully tested and validated its target market fit. This can lead to a lack of interest or demand for its products or services, resulting in failure.
- Lack of resources: Scaling requires sufficient resources like startup funding, infrastructure, and talent. If you scale too early, you may not have the resources in place to support that growth.
- Inefficient processes: If your processes aren't streamlined and efficient, scaling can exacerbate those inefficiencies. This can lead to decreased productivity and quality.
- Overspending: Scaling too early can lead to overspending and cash flow problems, especially if you're not generating enough revenue to support that growth.
- Losing focus: Scaling can be a distraction from the core mission of your startup. If you're not careful, you can lose focus on what made your startup successful in the first place.
Startup MVP development: Main Types
Not all minimum viable products are created equal, so as a startup owner, you’re challenged to choose the right type of MVP in software development process to fit your market. These are four types of MVP development for startup to consider:
This type involves manually performing tasks that would later be automated in the final product. It was named after the popular American cartoon character of the 60s, Fred Flintstone. As much as he imitated the movement of the car, in the same way, tech startups imitate the functions of the application.
A very successful example of the Flintstone minimum viable product model effectiveness is Zappos online store. In the 00s, American Nick Swinmern launched a marketplace with just photos of shoes and no underlying system to process actual orders. To make a purchase, users called Swinmern directly, and he bought the footwear. The actual “online store” did not exist at the starting point. Nevertheless, the idea was successful, and the value of Zappos was estimated at $2 billion. (Back in the ’00s, it was a smashing success. Plus, the store is still operational in 2023)
This type of MVP project development involves testing several different features of a product or service simultaneously rather than focusing on a single core feature. This approach can help startups identify the most valuable features to customers and prioritize their development accordingly.
A successful example of “Scattered MVP” is the American Groupon marketplace that collects sales offers from various stores and connects customers with merchant partners. As an minimum viable product, it was nothing more than a WordPress blog where web developer Andrew Mason posted sales announcements. Mason created coupons by hand in PDF format and emailed them to customers.
This type of MVP development for startup involves providing high-touch, personalized service to customers in order to test demand for a product or service before investing in the technology or infrastructure to automate it. For example, a startup offering a subscription meal delivery service might manually prepare and deliver meals to a small group of customers to test the business concepts before building out a larger operation.
This business model is popular with startups that offer services. In this case, users (at the MVP stage and for a limited group of people) must be assisted manually. If the project succeeds, the tasks the person performed are assigned to the computer.
A successful example is OpenTable. Though this example originated in the late 90s, the actual website (and services) are still operational. Chuck Templeton realized he could make money helping people book restaurant tables. At first, he (same as Nick from a previous example) did it over the phone. He launched the OpenTable website after having valid proof for the idea. This allowed Templeton to know their audience better and create the best-fitted product for them.
MVP With one Feature
This type of MVP development for startups focuses on a single core feature of a product or service, intending to test its viability before investing in further development. This approach allows startups to gather customer feedback and refine their product or service before scaling up.
One of the remarkable examples of a “One-feature-MVP” is the worldwide famous Swedish startup Spotify. Spotify users can “broadcast” (aka “Stream”) music in live mode, which is more than enough for users now and then. In 2022, the app was valued at $21 billion, generated $12.94 billion in revenue, and had over 50 billion active users.
By 2023, the application's functionality has grown into a digital streaming juggernaut with social media integration, personal playlists, and such “extras” as podcasts and audiobooks.
Why MVP is Critical for Scaling Your Startup
MVP stands for the “lean startup methodology” concept aimed to improve business productivity. A startup develops a business strategy and highlights the most important activities worth spending tangible and intangible resources (time, money, and employees' effort) on.
Zappos, Spotify, and OpenTable are examples of successful cases of MVP development for startups, which grew into cool full-fledged products. All of them invested in MVP for the next 6 reasons:
Increased Chances to Outperform the Competitors
When launching a new product on the market, timing is important. Other entrepreneurs may carry the same startup idea as you, so there will always be a chance someone will release the same product before you. The startup released at first will always be perceived as a pioneer and author of a unique concept.
The MVP development for startup allows entrepreneurs to get real answers to questions like “Will my product be useful?” or “Does it meet my customer needs?” Even the first iteration with basic functions ends up in real feedback from users with suggestions to add or remove functionalities for their convenience.
Developing a full-fledged product can take months, even years, and can be very expensive. On the other hand, an MVP can be developed in a matter of weeks or even days and at a fraction of the cost. This way, MVP development services allow startups to test their ideas without burning through their entire budget and resources.
Better Understanding of the Market
An MVP software development helps startups to better understand the market they are trying to enter. By testing their concept with real users, startups can learn about their audience, needs, and pain points. This knowledge can then be used to improve the product and make it more appealing to users. Additionally, startups can learn more about their competitors and their market positioning.
Early Customer Acquisition
Launching an MVP can help startups acquire early customers willing to try out a new product or service. These early adopters can provide valuable feedback and help spread the word about the product through word-of-mouth.
Reduced Risk of Failure
Instead of investing significant time and resources into a full-fledged product that may not be well-received, startups can test the waters with an MVP software development and make improvements based on real feedback. This approach can help startups reduce the risk of failure and avoid costly mistakes.
The Startup Did Not Grow. Is the Startup Dead?
Not all products scale. This is normal. You can finish if you understand that the audience didn’t like the product and didn’t shoot. Then, see what didn’t work, analyze the reviews again, and modify it to suit the mass consumer.
There is also a second way. You can leave the project as a business that will bring little money and work for a narrow audience. Instead, you will only invest in something that has shown itself well in the mass segment and simultaneously receive a constant income. This will be useful later for implementing another, more daring and successful idea.
Predicting how a startup will develop and whether it will grow and bloom into a corporation is rather difficult. Therefore, it is all the more important to work on synchronizing processes and cascading goals and carefully prepare for scaling at all company levels already at the launch stage.
Startup Growth vs Startup Scaling
At this point, you also should NOT confuse growth and scaling as the same concept. While the two terms are often used interchangeably, they have distinct meanings and implications for your business.
Growth refers to increased revenue or customer base, often achieved through sales and marketing efforts. This growth can be linear, meaning it happens in a steady and predictable way over time.
For example, a startup might grow by acquiring new customers one at a time through word-of-mouth referrals, advertising campaigns, or other marketing efforts.
Scaling, on the other hand, refers to the ability of a startup to grow exponentially without a corresponding increase in resources or costs. In other words, scaling is about achieving more with less. It's a way of leveraging technology, systems, and processes to increase output while minimizing input.
Scaling is often associated with high-growth startups that experience rapid growth and can quickly adapt to meet increasing demand.
Understanding the difference between growth and scaling is important because it impacts how you approach your business at all stages.
Ready, Set, GO! How to Prepare for Scaling?
Startup scaling is a critical evolutionary stage in the life of a startup, so you should prepare for it progressively. A plan ensures your business can handle the increased demand and growth.
The next checklist can help you prepare for scaling in its best way:
- You conducted a market research and have a business model, an MVP, or a working prototype in the market.
- You have an established development team and an understanding of how the entity will grow and what team members might be needed later. Also, you have resources to hire these people;
- You calculated the unit economics of the project and tested the main marketing channels;
- You confirmed at least basic conversions;
- You have a margin for scaling within 20-30%. A national media campaign, for example, cannot be stopped or even slowed down. If, in its midst, you find a lack of operational resources, servers, and support capacities, the site will go down. The product's reputation will be damaged.
- You secured the support of stakeholders and investors, if any. You are on the same wavelength. The action plan is drawn up and agreed upon with all participants;
- You have “a Plan B” in case things go completely wrong.
- Refer to the external experts, MVP development company, and other startuppers' experiences within your market and related industries.
The Mindset of Large-Scale Thinking
"Large-scale thinking” means thinking beyond your current size and imagining what your company would look like if it were 10x or even 100x larger. It can help you identify potential roadblocks, prepare for future product growth, and identify opportunities you may have yet to consider.
The key areas to apply large-scale thinking are:
- Product or MVP software development. Just think about how your new product/software will scale as your customer base grows. Can the technology or infrastructure you are using handle increased demand? Can it integrate with your existing systems and processes?
- Hiring. Think about the types of employees you will need to scale your business. Consider hiring not just for the roles you need today but for the roles you will need in the future. As a result, you will avoid a rapid hiring spree as soon as you realize that your scaling startup needs a larger team.
And if you’re looking for a tech expert to partner up with during the Scaling Stage, ElifTech can be the one. Not only do we provide MVP development services for startups, but we also assist companies at any stage of their software development.
- Marketing and sales: Consider how you will reach and convert new customers as your business grows. Will your current marketing and sales strategies be effective on a larger scale? Will you need to invest in new channels or techniques to reach a larger audience?
Adopting a mindset of large-scale thinking helps to ensure your startup is prepared for future growth and success.
MVP development for startup is an effective approach to validate their ideas and test the market demand with minimal resources. By choosing the right type of MVP development for startups and following the necessary steps, startups can reduce risks and increase their chances of success.
The key takeaways from the post are:
- MVPs come in different types, and you must choose the right one.
- Steps to MVP development for tech startups include identifying the problem, defining the target audience, determining core features, and measuring MVP success.
- Growth and scaling are different concepts, and understanding the distinction is crucial for a startup's success.
- Scaling preparedness involves several considerations, such as having a scalable team and infrastructure.
- Large-scale thinking helps startups envision their growth potential and plan accordingly.
As soon as you start progressing with your startup, leverage the MVP approach to test your ideas before scaling your business further. And if you have no expertise in doing this the correct way, a seasoned MVP development company is always at your service.