To stay afloat in the competitive business landscape, you must be agile and adaptable. Not only do you need to come up with new ideas and market strategies constantly, but you also need a quick response when opportunities arise. To build an effective business, you need something simple to test the concept with your colleagues or potential customers before developing anything more extensive. This is known as an MVP—short for Minimum Viable Product. And testing an MVP doesn't mean just creating a basic version of your product; it means testing every single component so that you can keep improving it until it reaches a point where there's no going back. But why would you want to build an MVP? Read on to find out.
Table of Contents
What is an MVP?
Giants in the industry who began with an MVP
The fundamental principles of building an MVP
Let's take a look at the benefits of having an MVP
➤ 1. Stakeholder/Investor Buy-In
➤ 2. Testing business ideas
➤ 3. Validating market demand
➤ 4. Developing a monetization strategy
➤ 5. Testing UX and usability
➤ 6. Cost efficiency
➤ 7. Quick product launch
➤ 8. Development with minimal risks
MVP Development: In-House vs. Hire an External Company
Conclusion
What is an MVP?
An MVP is a product with enough features to test the concept with real people. It could be a landing page with a basic form, a product with a few features, or a list of pre-made templates for your app. Any product needs to have an apparent problem if you don't understand what customers want.
The MVP also serves as a roadmap for your product's growth. It will help you identify the bottlenecks in your development and quickly remedy them. For example, if your MVP has too many limitations that prevent it from being functional, you can remove them to give your customers more freedom. Your MVP also helps you avoid over-promising and under-delivering. If the product you're building doesn't have a clear value proposition, you might be promising features that customers don't care about. This is a surefire way to fail at launch.
According to CB Insights, a lack of market demand causes 42% of startup failures. In roughly half of the situations, entrepreneurs invest months or years creating a product only to learn their theory was wrong.
Giants in the industry who began with an MVP
Airbnb
Did you know that Airbnb used to employ employees to perform their now fully automated services? That's right, Airbnb's MVP version required a large workforce to demonstrate what the software will be capable of once the final product is released.
Uber
Initially, the only thing you could do with Uber was connected with a driver and pay for your ride. Fortunately for us all, the demand for this service was so high that it didn't take them long to expand from an iPhone-only MVP to a global transportation solution.
Dropbox
Dropbox initially released a visualization MVP, which meant they demonstrated the functionality of their product through a demo video. Fortunately for them, it went viral. They were able to reach the right audiences, present their concept, and turn Dropbox into one of the most successful cloud storage solutions available today.
Instagram has added video content support, direct messaging, Stories, and more over the last twelve years. The MVP app evolved into a full-fledged social media platform as Instagram iterated on its product. So, what began as simple video moments evolved into a rich media sharing and creative editing experience that allowed users to mention other users and include links, stickers, questions, and polls.
Spotify
Spotify, too, started with a visualization MVP: they created a landing page with essential product information. Following that, they developed an MLP (Mobile Location Protocol) so that users could enjoy the benefits of Spotify.
We've all heard that this social media behemoth began as a Harvard-only social network. However, many people are unaware that the first version of Facebook was nothing more than a simple MVP: a mockup profile page with a messaging system.
Read more to know in-depth why building Minimum Viable Product matters.
The fundamental principles of building an MVP
- Focus on the customer.
- Keep everything simple.
- Build with purpose. Be focused.
- Be data-driven.
- Be fast.
- Be ready to adjust.
- And less is more.
While building your MVP, you must be careful about these critical principles. If you don't, you risk creating a product that is over-complicated or doesn't have a clear value proposition. When building an MVP, you must first decide what product to make. Ideally, you want to focus on a product that has an obvious problem that it solves. When you do this, you'll quickly be able to identify the most common issues people face and find a product that you can build a product that helps solve them. Once you've identified the product, you must also decide how to test it. Ideally, you want to try it with real customers. It's the only way to know if your product is helping them overcome their problem. You must also be careful with fundamental principles when you test your product. If you don't, you risk building a product that is too complicated or doesn't have a clear value proposition.
Let's take a look at the benefits of having an MVP
1. Stakeholder/Investor Buy-In
An MVP is an effective tool for obtaining investor and stakeholder acceptance. It demonstrates what your product or service will do in real-world situations, which is essential to get stakeholder/investor buy-in.
It can also be crucial when seeking capital for your business. Investors prefer traction over bold concepts and unproven theories. Fundera discovered that lack of money could derail the best projects. 27% of NSBA-surveyed companies said they couldn't get funding. A great MVP—accompanied can help you avoid unfunded or underfunded projects.
A great MVP may determine the best business model fit before creating a bigger, more complex product or service.
Also, a working MVP can test different price points and marketing campaigns. It can better understand how people will react to your product and open up new growth opportunities.
2. Testing business ideas
As a business owner, you have to be able to test your ideas to see if they are feasible. The MVP is a great way to do this. Since a minimum viable product is the first version of a product, it can market and collect feedback from users. This will ultimately save time and money, as you won't need to spend months or years developing and testing your idea before it's ready for prime time. You can also determine whether people are interested in buying your product before you go all-in on it.
MVPs are also suitable for startups because they can receive valuable feedback from potential customers early in their development process.
3. Validating market demand
The product is "viable" if it generates significant revenue for the company. Therefore, an MVP allows you to gauge whether there is sufficient interest in your product and determine whether you should continue developing it further before investing too much time and money into development.
4. Developing a monetization strategy
Every organization has numerous product monetization strategies, making it difficult to choose the best one. A minimum viable product can test a strategic assumption in this case. It provides the company with information on whether this strategy is result-oriented or whether they should take other approaches to monetize it.
5. Testing UX and usability
Creating a mobile product that is engaging for the user is a challenging job. Localytics reports that 32 percent of users stop using an app after three months, and . The app's uptake must be supported by more than just downloads.
The purpose of UX design is to retain users by providing continual value, and an MVP will evaluate the product's potential for user engagement, longevity, and lifetime value. Reducing costs before further development is again a good idea. An MVP can provide data and insights on how users interact with the app, which can help companies identify new opportunities to expand functionality and provide a better user experience by identifying how quickly users understand the purpose and flow of the product.
6. Cost efficiency
Building and releasing a custom software application requires a lot of money, time, and effort. Furthermore, if your whole product concept does not work as planned and fails, you may lose a lot of money in your venture. Alternatively, you may develop a minimum viable product with little risk and low expenses. An MVP can reduce this risk. Forbes also emphasizes that development pivots are inevitable. Therefore producing an MVP early with core functionality will save money.
Additionally, creating an MVP requires only the most basic features, which enables the development team to finish it quickly. As your startup attracts more customers and gathers more data about the product from the MVP, you can begin investing more prudently as your business keeps growing.
7. Quick product launch
Businesses are constantly competing to deliver innovative products faster than their competitors. MVP development allows them to connect with their target customers at a lower cost and time. A quick product launch is how your business can get the product tested in the initial phase and receive rapid feedback.
8. Development with minimal risks
It's important to know that large-scale polished apps take many years to develop and require a lot of time and money. Most popular software products started as small, simple applications and gradually adopted expensive, extensive features over time. You can gain early users by releasing a minimum viable product for your business. It will draw people and potential customers interested in your product to it.
MVP Development: In-House vs. Hire an External Company
In-house MVP development requires you/your company to manage and recruit top tech talent. Hiring great tech involves time and effort so that it won't happen fast.
To succeed, balance technical and soft skills and shared vision in the recruitment phase since you're responsible for building a product-success team.
Hiring an external company involves contracting an outside team, and you're commissioning a group of specialists to make your business idea real. These tech collaborations enhance MVP development. You'll get immediate access to developers, project managers, UI/UX designers, and more. You'll benefit from seasoned software developers' knowledge. As an example, Imaginary Cloud has helped many companies launch MVPs. You can leverage this accumulated experience. And our perspective will give new and insightful contributions that can be key to success.
How do you choose between hiring an outside team and in-house development?
Your available developers and finances primarily determine your option. Even if outstanding tech people from your company, sustaining the momentum may not be enough.
Because the timing is crucial, you must create the MVP as soon as possible. So, take a hard look at your ultimate aim. Do you have what it takes to make an MVP on time and within your budget? Do you have a sufficient number of software engineers to code it?
Here are the pros and cons of each option.
In-House MVP Development
Pros:
- Total control
- Cultural fit
- Direct communication
Cons:
- Significant costs
- High employee turnover
- Scarcity of local tech experts
Hiring an external company
Pros:
- Affordability
- End-to-end service
- Immediate access to top tech experts
- Timely project completion
- Scalability
Cons:
- Time difference
- Cultural differences (mainly if you live on a different continent)
- Security concerns
Before determining whether to develop your MVP in-house or hire an outside team, you need to understand the development process thoroughly. This method will also assist founders in deciding the route they want to take with their digital product.
You can manage your resources more effectively when you are thoroughly aware of the many components of application development and the invoiced stages. This will also help you prepare for any future issues that may arise.
Time-wise, it’s faster to work with an expert team. The experts have worked together on other projects and developed a working method. An in-house team will spend the first few months figuring out how it works without real progress.
Conclusion
To stand out from your competitors, you need to have an MVP. An MVP is a product with just enough features to help you test the concept with real customers. It could be a landing page with a basic form, a product with just a few features, or a list of templates for your app. There are significant benefits to choosing this iterative, agile process over the all-or-nothing approach. It helps you identify the most common problems people face and find a product that you can create a product that helps solve them. Also, new technologies keep changing, and it can be hard to keep up with the latest trends.
Once you've identified the product, you must also decide how to test it to know if your product is helping customers overcome their problems.
This way, the key to building an MVP is to take an approach that combines research, product development, and testing.
Like other business giants, you should build an MVP to create a product that helps your business stand out from the competition. If you need help developing a minimal viable product for your product concept, contact our team. Our team of experts will analyze your business idea, define critical functions, and build an MVP prototype to prove your assumptions.
