All businesses strive to create value – they just don't always know where that value lies.
A minimum viable product (MVP) is the most basic level at which a product can enter the market. It's an experiment to determine if the execution of an idea has enough marginal utility to make or improve profits.
MVPs are common in the tech world because they're easy to manipulate and tweak into a better version for release. An MVP is never the ultimate goal, but a profitable company can't spring up from nowhere. MVPs allow you to learn about what people want, what they're willing to pay for and what method of delivery is best for your product to achieve growth.
When you view an MVP as an experiment and a cycle of learning, it's easier to see how any business in any industry could benefit from one.
Any business can use an MVP to solve a problem
MVPs aren't limited to apps or software. An MVP could be anything from a food truck in the restaurant industry to a car share in the transportation industry. No matter what problem your business is facing, this five-step cycle can help you find a solution:
1. Identify the problem. Whether you're having trouble figuring out how to bring a product to market or you have a process that isn't working, you need to identify the exact problem you're trying to fix with an MVP.
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 to justify a big investment. Testing with an MVP can help you validate your business idea in a low-risk way. In fact, your MVP could be temporarily converting your car into a food truck armed with your new product to see if anyone is interested in what you're making.
2. Make your "buckets." MVPs are all about testing the most important aspects of your experiment. Before you can begin, you need to determine the bucket of priorities for your MVP – the bare necessities (or features) that must be included in your MVP to satisfy your customer personas. These should go in your first bucket, with additional features going into later buckets for subsequent iterations of your product or business.
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 want to offer in your restaurant and the dishes your customers will expect from your type of cuisine.
3. Create an MVP. MVPs can be as simple as you like. Once you find something that works, you'll begin to see the demand for your product and the type of investment your business requires.
Opening a restaurant right out of the gate is a big commitment, but you can create an MVP with less risk. Test with a small catering venture or a food truck that you set up in a location rich with the types of people you identified as your potential customers.
4. Talk to customers. Once you have your MVP, ask customers what they think. Watch for repeat buyers, monitor your social media sites and listen to what customers are saying about your business. There's immense value in talking to people about your MVP because it allows you to get feedback on how it works and their level of satisfaction.
If you notice a lot of repeat business, get some good reviews, or overhear someone in line telling their friend this is "the place" he was talking about, you may be onto something. On the other hand, if business dwindles after a week, you should probably go back to the drawing board.
5. Make a decision. 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 MVP, tweak your existing business, or if you can start expanding your menu.
Entrepreneurship is all about creating something out of nothing. Still, you have to start somewhere, and MVPs provide a lower-risk vehicle for moving from nothing to something over and over again until you find success.
Don't be surprised if the first solution you test doesn't work. In fact, most of the time itwon't work. But eventually, you'll get it right. And you'll know it when you do.
Kuty Shalev is the Founder of Clevertech, a New York City-based firm that designs, develops and deploys strategic software for startups.
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world's most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.