Minimum Viable Product (MVP)

Business Academy

Have a great idea for a SaaS business? Before you quit your day job, you’ll want to be sure the idea will make money. The first thing you need to do is validate whether there’s a market. Will (enough) customers pay (enough) for your service?

The most effective way to test if customers love your idea is to offer a Minimum Viable Product or MVP.

The Minimum Viable Product (MVP) is a product with just enough features to validate your idea and to start learning about what your potential customers need. Eric Ries coined the term in Lean Startup. He suggests that using an MVP shrinks the product development cycle, allowing better decisions to be made faster and earlier.

When you’re just starting out, creating an MVP will help you test your ideas and validate your assumptions before you go all in on the final product. It’s a cost effective way to determine if there is a market for the service you’re selling.

Why use an MVP?

When you start developing a product, you need to make a lot of assumptions about what potential customers need. You assume that their problem is one they will pay to solve. You assume enough people have this problem that you can build a business off of solving it.

If your assumptions are incorrect, you want to know as early as possible. Otherwise, you waste valuable time and resources on building a product no one wants.

Offering an MVP to early adopters helps collect feedback on your idea. You can quickly test to see if any users have even a small desire to pay you for it.

You need to be sure people will pay you money month after month before you start bringing on employees, seeking investment and building a business.

Determining your MVP

If you build it, they will come. Or will they?

Deciding what features to include in your first MVP can be difficult. If you’ve got a vision for the final product, cutting and trimming functionality to the minimum viable product will feel like you’re not delivering a full product. You’ll probably be embarrassed by your first launch. (If you’re not, you’ve launched too late).

To determine your MVP, think about the core problem you want to solve. What is the one standalone feature that solves that problem?

When creating Baremetrics, Josh just needed a simple way to calculate his business metrics (LTV, MRR, and churn) based on data from Stripe. As a SaaS business owner, he figured that he probably wasn’t the only one out there with this problem. He whipped up an MVP in about 8 days of work. It wasn’t polished, it wasn’t scalable, and it definitely doesn’t look anything like what we have today, but it got Baremetrics off the ground. In about 8 weeks, Josh hit $2000 MRR.

When you’re building an MVP, each iteration needs to work independently. Your first version needs to be usable by customers. Your second version needs to build on that first version to offer more value.

Take the excellent illustration below as an example. If your vision is a car, don’t start by offering one wheel….that gets customers nowhere. While they probably won’t love a skateboard, at least it gets them from point A to point B

You can safely skip features that existing customers might find helpful later on – like viewing past invoices, updating payment information or an in product cancellation flow.

Anything that can be done manually should also be left out of your MVP. Customers can contact you for anything they need done (like bulk uploads or troubleshooting). If the volume of these questions becomes too much to handle… you might be ready to move on from your MVP! You’ve validated that there are enough customers interested in your service to invest more time and energy in it.

Upcoming Lesson

Setting Goals

Goals! Knowing what your MRR is, but setting realistic goals and taking steps to meet them is another. We’re going to show you how to do just th...

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