You may have an idea for a new business — or an idea to add to your existing business — but you’re not sure it will really work. Can you test it out with relatively low risk?
In the tech world, there’s a concept called a “minimum viable product,” also known as an “MVP,” that allows you to do just that. The idea is that you develop your idea at a very basic level and begin by offering the scaled-back version to customers.
An MVP is never the ultimate goal. Instead, it allows you to learn what people want, what they’re willing to pay and what method of delivery is best for your product to achieve growth.
Any business can benefit from the concept. Here’s how to get started using this five-step cycle:
Whether it’s how to bring a product to market or a process that isn’t working, you need to define the problem you’re trying to solve.
Let’s say you’re thinking of opening a restaurant. All your friends and family like your food, but you’re not sure if it will be successful enough with the general public. You want to test your business idea at the minimum level possible, to limit risk. In other words, you’re not ready to have a full restaurant just yet, but eventually you might.
Decide what must be included in your experiment to satisfy your potential customers. In other words, what are the core aspects of the idea that you want to test? This is just the first iteration, so include the minimum amount of features possible. If you succeed with it, you can add more features later as you continue to refine the product.
Going back to the restaurant example, you probably shouldn’t start by offering a full menu. Instead, come up with a few signature dishes that you can prepare very well. These should be representative of the types of flavors you’d want to offer if you opened a restaurant and the dishes your customers could expect from your type of cuisine.
The minimum viable product can be as simple as you like, as long as it’s something that would draw potential customers. If you find something that works, you’ll see demand for your product, and you’ll start to get a sense of the type of investment your business requires for a full-fledged version.
For example, to test your restaurant idea, maybe start with a small catering venture you run out of your home or a temporary food truck in a location filled with the types of people you’ve identified as your potential customers.
There’s immense value in talking to people about your minimum viable product, because it allows you to get feedback on how it works and their level of satisfaction. Watch for repeat buyers, monitor your social media sites and listen to what customers are saying about your new small business idea.
If you notice a lot of repeat business, get good reviews or overhear someone in line telling their friend this is “the place” he was talking about, you might be onto something with your new business idea. On the other hand, if business dwindles after a week, it might be time to return to the drawing board.
Finally, you need to analyze all the data you’ve gathered during the course of your experiment and make a decision. What did your user feedback and personal experience tell you? This will help you decide if you need to go back to step one with a new minimum viable product, tweak your existing business or start expanding your menu.
Entrepreneurship is all about creating something out of nothing. Still, you have to start somewhere, and minimum viable products provide a lower-risk vehicle for moving from nothing to something over and over again until you find success.
Also, don’t be surprised if the first idea you test doesn’t work. In fact, most of the time, it won’t work. But eventually, you’ll get it right. And you’ll know it when you do.
There’s more to learn, so continue reading at usbank.com/small-business for more insights.