In a world where more than 90% of startups are closed, every IT project must start with MVP product development. As practice shows, this is the easiest and most inexpensive way to test a new idea for viability before implementing it. Given the high competition in the market, which has been intensified by the pandemic, this is almost the only opportunity for a startup to choose the right direction. Today, launching sales of a product with dubious demand is a road to nowhere and a waste of time and money. How to avoid mistakes and really assess the prospects of a startup in current conditions?
Testing business strength during a pandemic
The popularity of MVP web services and mobile app development for modern companies is due to the increase in startups worldwide. The pandemic has created a harsh competitive environment for newcomers: the market is now over saturated with similar goods, leading to a decrease in demand and forcing entrepreneurs to fight for a place in the sun.
According to Financial Times, which refers to government statistics, this trend is seen in almost all major countries. For example, in America, in the summer of 2020, the number of applications for launching a new business was 95% higher than the indicator for the same period in 2019. In France, 20% more enterprises appeared in October, compared to the same month of 2019. This trend was reflected in the IT-sphere: compared with 2019, the number of startups grew by 20% in 2021 (the largest growth was in October and December).
To survive in the current environment, you need to be confident in the competitiveness of a startup. Is your offer up to date? Does the consumer really need your product? Will your startup company be able to compete with experienced players for sales markets? All of these questions can be answered through minimum viable product software development.
Testing a startup for demand will help you:
- Quickly identify a niche and track trends
The pandemic has contributed to a massive transition of consumers online. In 2021, this trend continued: now everything is popular that allows you to keep in touch with the outside world, work, and have fun without leaving your home: marketplaces, applications for online shopping, mobile games, services for webinars, etc. It’s important for a startup business to study trends and find a middle ground: your proposal should be relevant but at the same time different from others. So, although the world is crazy about TikTok, it makes no sense to create its analog. Wouldn't it be better to lean towards a video blogging service?
- Understand in which direction it is profitable to develop
According to statistics, 17% of new companies do not succeed for a simple reason: their product is extremely complex and inconvenient. MVP solves this problem easily. If you have a stripped-down web version of the game that is in demand, you can check out the new idea for convenience, the mobile version. It is enough to build an MVP app in the landing page format, add the ability to pre-order and target the offer in communities of people who have been playing your web game for a long time.
- Win the fight for the consumer without even starting to fight
About 14% of businesses fail because they ignore customers. The successful launch of MVP allows you to establish contact with the audience and even get the first profit before the final version is released. The additional income and powerful feedback will speed up your launch. It’s a chance to save valuable resources, time and money, for further scaling. With positive feedback, the launch will take several weeks. If necessary, it will take from 3 to 12 months. MVP reduces app cost by 2-3 times only by eliminating unnecessary and redundant functions. Nobody canceled the Pareto Rule: 80% of customers are likely to use only 20% of capabilities.
According to Investopedia, 90% of entrepreneurs quit in their first year of operation. The main reason remains low demand (or lack thereof), which applies to 42% of startups. The inability to outperform existing companies affects 19% of startups. As you can see, many novice business people overestimate their strengths, being confident that the idea is worthy of attention. But they forget that there is only one way to gain this confidence: testing it on real users.
Simple steps to creating a trial version of a product
The standard action algorithm of MVP developer looks like this:
- Setting a goal: formulating an idea and hypothesis about why society needs your product.
- Customer analysis: the study of the needs and desires of potential users. So, an app for business people should be simple so that it does not take up their time, and an app for young people should be catchy and not overloaded with content.
- Analysis of the competitive environment: the study of companies in the market from the perspective of strengths and weaknesses: a positive experience opens up prospects for improvement, and a negative one helps avoid mistakes.
- Description of functions and prioritization: thinking through the final version's functionality and highlighting the most important ones.
- The selection of methods: the search for the best solutions to implement the plan. It can be agile, scrum, lean, or a hybrid method, depending on the timeline, technical details, and project capabilities.
- Testing: presenting your idea to the public. If it turns out that the project needs improvement, this is in your favor: now you can bring it to perfection, based on the feedback, and get rid of unnecessary details.
According to Michael Seibel, managing director of the Y Combinator venture capital fund and co-founder of startups Justin.tv/Twitch and Socialcam, the ideal MVP has 4 important characteristics:
- speed, when the work takes not months, but weeks;
- a limited set of functions that solves the main problems;
- participation of a narrow audience, rather than a wide range of potential users;
- a starting point for further improvement of activities.
The expert claims that a landing page and a Google spreadsheet are enough for testing. At the same time, the MVP should play the role of a launching pad, ordinary and straightforward, not requiring serious investments. With this approach, you can create an initial version in no time. According to Michael Seibel, it requires 4 steps: defining the time frame for doing specific work; preparation of technical specifications for setting the zero point; removal of secondary tasks from the technical assignment; creating space for scaling.
Eric Rees recommends dividing your idea by 8 before testing it. It may bring negative reviews, but that's the whole secret: consumers should feel certain emotions about your software product and clearly express their opinion about whether they like it or not. Amid the market uncertainty created by the pandemic, MVP is the best check of the product for survival and assessment of the feasibility of its development.