Dedicated team to build a
Minimum Viable Product (MVP)

– longer version for avid readers –

No doubt that hiring decisions are crucial. While scouting for technical talent

• Do not forget that apart from home markets there is a talent pool in Eastern Europe and India, where you can find a lot of remote workers at much lower rates (compare them via Glassdoor for example). Small businesses will benefit financially from placing job offers on such platforms to find part-time or full-time software engineers, software developers and other specialists of various technical skills.
• These services can be used as a way to gather a dedicated team, or as a means of existing team augmentation. It is a common practice in lots of tech companies these days.

From personal experience, I’d also suggest that if you have a technical co-founder going after individual freelance developers is the most cost-effective way. If you lack technical competence in-house – consider partnering with a web development company that will provide a dedicated team and proper project management.

TIP: in some instances, technical co-founder is the only way to deliver. Angellist might be a massive help if you based in the US.

Determining project feasibility. Feasibility study

In short, a feasibility study is a way to minimize risks in the startup world. Why make your development team create high-quality products no one will buy? A feasibility study may only seem a little bit complicated, but it won’t take too much of your time. Studies showed that one hour of feasibility study saves more than two days of product development (software development might be not as time-consuming as some traditional industries but two days is still a lot, huh?). That is a fantastic ROI for your time. The feasibility study aims to find out what clients need, what they want and verify if there is an opportunity for profit.

Main goals here:

• create a value proposition;
• evaluate potential market size;
• define possible business models.

Creating a value proposition

Defining what value you can deliver to consumers is the key to startup success.

A value proposition is a promise you give your clients to deliver the value they need. The proposition states the applicability of your product (or service), explains how your product can solve a problem and how it benefits consumers — present value from a broadly defined standpoint.

Guidelines:

1. Point out your idea and your client’s needs. Start with a single phrase that describes your business. Your main goal is to answer the question: what value are you going to create for consumers?
2. The next step you should define your target customer. You should sell it to the right person. Describe a customer you aim and create for. What type of customer (people or companies) would benefit from your solution?
3. You should define how your business can help clients solve a bothering problem and how they can benefit from this solution
4. Sum all your fundamental values up in a single clear sentence, that even your grandma can understand.

Evaluating market potential. Segmentation. Competitive analysis

You can’t suit everyone’s needs — it is a straight path to mediocrity. You should choose your target group of consumers and provide them with the best solutions possible. You are going to have a solid basis for success if the group is big enough and ready to pay.

How to find your group:

1. You should determine what type of market you aim for: existing or a new one? What your product-market relations are going to be: new product on the existing market, new product on a new market, old product on a new market, or old product on the existing market?
2. Next, you should define the most essential criteria for segmentation: geographic, demographics, psychographics, behavioral.
3. Divide the market into segments, which may be interesting for your business.
4. To create a target client profile, draw a segmentation scheme that visually shows, which criteria you had and which of those you chose.
5. You should choose up to three segments, evaluate target segment size, its growth potential, profitability, competitive power, and accessibility.

You should research products and solutions that already exist on the market regardless of what you intend to offer.

Even a simple competitive analysis can help you see things clearly. Probably, also realize that you are not as unique as you wish to think.

How to analyze:

1. Start with using search engines. Keep in mind, your competitors are not necessarily those you consider as such. Your competitors are those your potential customers consider as such.
2. Talk to at least ten people who faced the problem you intend to solve. You should learn how this problem is solved these days.
3. Take a look at solutions proposed by your direct and indirect competitors.
4. Refer to Michael Porter’s five forces analysis model to gain a better understanding of competitive analysis.

Defining the business model

Give a brief answer to critical questions about your business model:

1. How do you plan to attract clients?
2. What is your value proposition?
3. What channels are you going to use to communicate with your clients (ads, social media, etc.)?
4. What makes you better than your past, present and future competitors?
5. How are you going to build relationships with your client?
6. How do you plan to receive consumer feedback?
7. How are you going to encourage clients to interact with your business/brand closer?
8. What is your revenue model?
9. What are your clients going to pay you and how often?
10. Can you calculate your profit over one month, one quarter, one year?
11. Are those calculations based on solid facts or assumptions?
12. What capital assets do you have at your disposal to launch this business?
13. What opportunities you lack now and do you intend to fill that gap?
14. Who are your key partners?
15. What fixed expenses are you going to deal with regardless of the volume of sales?
16. What variables of your expenses depend on your product or volume of service delivery?
17. Don’t worry if you don’t have all the answers.

You should start with something and update your business model over time.

Process design

Product development never exists apart from services: delivery, warranty, customer support, etc.

Service design is a concept of planning and organizing, that includes people, infrastructure, communications, and material components. It helps to improve the quality of service and overall customer experience, as a result.

Guidelines:

1. List all the actions a client has to perform to get and use your working product (or service, if you are a service provider).
2. List all the actions you have to take to get a client and deliver your value proposition.
3. Draw a “client’s travel map” — a visual representation of how a client is going to use your product/service and for how long.
4. Analyze the map and identify the weakest links in the chain. You should think about how to minimize the risks of negative experience for your client using your product/service.
5. Try to come up with ideas on what to do to achieve higher sales, gain more loyal customers and improve your business results in general.

Down to unit economics

You need to know your expenses. The standard business model suggests you answer a question:

What amount of revenue such a business model can kickstart and when?

It is a bit different from startups, and the question will be: how should we spend money to guarantee growth and, eventually, profit.

Here is a guide:

1. Decide on what revenue model to stick to “freemium,” premium, price leadership, pay per use, subscription, licensing, etc.
2. Calculate your fixed expenses and estimate how they can change over time.
3. Calculate your variable expenses and make a budget plan.
4. Estimate your rate of expenditure; break-even funds point and time need to reach it.
5. Calculate how much investments you need and plan on how you should use it.

Experiments and hypotheses check

Well, you have a value proposition based on facts. What are the next questions?

• How to minimize risks if you plan on selling something new?
• How do you know clients are going to buy it?
• Are you sure your price is optimal?

Here’s where experiments and primary data gathering are going to help you. The significant question here is: what assumptions to check and what ways are optimal to do it?

Primary goals for this stage:

• Test hypotheses;
• Make adjustments to the business plan and unit economics;
• Develop a marketing strategy.

The author’s research showed that most startups don’t pay enough attention to hypotheses verification, because they’re unable to do it competently and efficiently.

Guidelines:

1. Determine which assumptions have to be verified.
2. Use the experiment map for each hypothesis.
3. Find potential customers to verify your hypothesis.
4. Choose the type of interaction model and decide on how much data you need for end verification.

TIP: before building an MVP, consider a more straightforward test with a landing page and a mix of ad channels. Often it is referred to as a ‘prelaunch’ campaign.

Creating minimum viable product (MVP)

The major mistake startups tend to make is that they often see no difference between the words and actions of their clients. Saying and paying is not the same. Rather than interviewing potential clients, the minimum viable product is a much better tool to make sure your product is going to be in demand as it hits the market.

A minimum viable product (MVP) is a version of your new product that provides maximum feedback and requires not as much effort to produce. In short, MVP includes essential functions, which provide clients with a general understanding of what your product is. In exchange, you receive feedback and opportunities to verify your assumptions.

Primary goals for this stage:

• Create an undeniable offer;
• Plan the best message delivery on that offer;
• Build, measure, learn.

Task 1. Stop following myths. Launching big — is a myth

It is insane to count on big launch before you even adjust your product for market needs, identify your clients and test your distribution channels. According to Sean Ellis, 80% of startups fail to launch big.

How to minimize risks of failure?

1. Instead of dreaming of the big launch, verify it on a smaller scale first.
2. Test your channels once again. Also check how your channels, target segment and value proposition are interconnected.
3. Always analyze sales figures and remain guided by facts, when you make decisions.
4. Seek and eliminate errors in your business processes regularly.

Task 2. Lay foundation for a strong brand

A strong brand is what helps products outstand among competitors.

Guidelines:

1. Determine what position on the market you want to establish.
2. Define the brand’s characteristics: how you see its mission, what its value promises and its features are, what emotions it causes, what makes it individual and unique.
3. Design a brand identity: how people are going to perceive it, feel, see, hear.
4. Make your brand alive. Make sure that your real and online presence matches brand identity.

Task 3. Identify and conquer customer touchpoints

Guidelines:

1. List all the possible scenarios and situations, where a consumer can interact with your brand.
2. Lay out a map of interaction between a client and your brand from the beginning.
3. List and analyze crucial issues and problems clients have with your brand.

Task 4. Creating an undeniable offer.

Guidelines:

1. Sketch out an offer, stressing on customer benefits. Also, show how you can minimize their risks: promise a return guarantee or provide a freemium model of use.
2. Create a unique offer for every customer touchpoint.
3. Overcome skepticism and make your offer more reliable. Use social proof, client reviews, awards, technical evidence, and logical arguments.
4. Remember: your offer should match your brand identity.

Task 5. Get yourself ready for cross sales and make upsell and down sell offers.

One sales offer is not enough. You need additional offers to increase revenue.

Let’s see:

1. Come up with a minimum of three ideas on how to increase your revenue and test them.
2. Think about how to use sales or additional services to involve buyers.
3. Think: how you can sell once, but profit many times.
4. Be ready to lower your proposition cost if clients consider it to be too high.
5. Find partners for interrelated sales.

Task 6. Write a marketing plan on a single page.

It will guarantee you a clear understanding of marketing goals.

Guidelines:

1. Define a significant goal for your marketing. Use SMART methodology to define your objectives;
2. You need to outline subgoals to achieve the result;
3. Split every goal into tasks;
4. Bind tasks to specific dates.

Task 7. Stick to “build, measure, learn” approach to keep the learning curve going.

Guidelines:

1. Set a goal for every week.
2. Make short weekly reports on what your achievements are.
3. Analyze your mistakes and learn what to do to avoid them in the future.

Testing media and distribution channels

Over 91% of startups researched by the author confirmed that the time they spent testing marketing channels paid off over and above. Successful marketing is: delivering the right message to the right market using an efficient channel.

Guidelines:

1. Plan on how you are going to reach your clients and deliver a message about your value proposition.
2. Layout stages of your purchase funnel and distribution channel.
3. List potential distribution channels for your message. Research and explore channels your competitors use.
4. Test your channels in small portions. Do not invest in a channel until you make sure it is profitable.
5. Update your business model if necessary.

Evaluate profitability and growth potential

Startup founders often lose their minds and sense of reality when the first significant profit comes through. They dream of growth, but they don’t know what it is and where to go for it. Revenue shrouds their perception, and they crash. Successful startups know which direction to choose for growth. They evaluate the profitability of each scenario and growth potential of different markets and different marketing channels.

Guidelines:

1. Evaluate your margins, define the best ways to increase it and keep three criteria in mind: average expenses to produce one unit; average return from each sale; average expenses on marketing for each purchase.
2. Calculate how many clients you can attract through selected distribution channels.
3. Verify the efficiency of a purchase funnel. Measure every stage of it using established metrics.

Alternative marketing strategies

Key questions marketing strategy poses: what, to whom and how you sell. Successful startups are always able to give alternative answers to those questions.

Let’s see:

1. Find out how your product relates to the market: new product/new market, new product/existing market or existing product on a new market with a potential for innovative use.
2. Choose a growth strategy direction and focus on it.
3. Define a marketing strategy by seven statements:
   1. Marketing goal;
   2. How you reach it;
   3. Your target market;
   4. Marketing tool you’re going to use;
   5. Your market segment and product positioning;
   6. A hallmark of your business;
   7. Your budget.
4. Define an alternative marketing strategy for each of those.
5. Update marketing strategy, if necessary.