We tell you how to save your money and prove the payback of your project to investors. If you want to implement your innovative ideas, this text is for you.
So you have an excellent, innovative business idea, such as a consumer product, a SaaS business, or even a real cash 3 patti game, and have an investor ready to invest in it. It’s a promising start, but according to Startup Genome, 90% of startups fail. There may be many reasons, from incorrect market analysis before launching to banal burnout.
Creating a new project involves risks. But the one startup out of ten which survives can be a success. Daniel Ek and Martin Laurenson launched a small app in 2006. Its primary function was music streaming. The service quickly gained popularity, and its creators signed contracts with record labels. The company’s market value is estimated at $42 billion.
Checklist: How to start a startup from scratch
For a project to take off and not crash, it’s essential to prepare a strong foundation. Check yourself:
- Start by working out the idea: formulate a hypothesis, spell out the desired outcome, how to achieve it, and the benefits. Next, identify the target audience and do market research – is there a demand for such a project, and are their analogues? Finally, make a small presentation for your project.
- With a ready-made description, you can find and interest an investor for the business. Some projects start with the financial support of relatives or friends. But if there is no such possibility, you can:
- Turn to one of the startup platforms, such as the Startup Network;
- Choose a network of “business angels” that support aspiring entrepreneurs every step of the way;
- Raise money through crowdfunding platforms;
- to use the help of business incubators;
- Look for an investor on professional sites like LinkedIn;
- Once you have secured an investor’s support and decided on a startup budget, move on to finding performers. You can find a team of developers both in your city and remotely. Again, company cases and other customer feedback will help you decide.
- Negotiate with the team about the product MVP development, so you can quickly enter the market and test the business idea in practice.
What is MVP?
Minimum viable product means minimally viable product. It is a simplified project version which implements only the basic idea. MVP allows checking if the offer is attractive to the target audience without significant investments.
It is possible to create MVP in two months or less. Such a short period from the idea to the market launch is an advantage for the startup. You can quickly demonstrate to an investor what the app’s logic will look like. However, long product development time also increases the risk of someone coming up with the idea and beating you to it. In addition, the market is changing, and the startup may lose relevance after six months.
MVP development also ensures the prevention of significant financial losses. In our experience, it is at least three times cheaper compared to a full-fledged application. Negotiating with an investor to finance such a project will be easier. And if the idea does not “go well” at the start, you will shut it down with minimal costs.
How MVP development works
The process of creating a minimum viable version depends on the specific project. However, there are three primary stages that no digital startup can do without:
- The presentation of the idea and its discussion with the developers. When the picture is fresh and excites the mind, you want to do everything at once. During the debate, it is essential to focus on basic functionality and not get bogged down in your desires. Start small: Agree on an app with a few key features.
- UI/UX design. You get a project prototype at this stage, which you can “tinker” with: see how functions and navigation are implemented. Even at the initial stage, the application should be understandable and user-friendly, and its appearance should reflect the product’s principal value.
- Development. Based on the prototype, the team creates the product MVP. When the application is ready and tested, the specialists launch it.
Why a startup needs an MVP
The obvious answer is to save time, money, and nerve cells. But let’s look deeper. First, the project needs development if the business idea is in demand. And then, the first users will become a focus group for UX research. Then, before finalizing the application, experts will evaluate their experience and analyze feedback.
As you develop, you will attract new investments into your startup. Therefore, UX research will be necessary to create a sound growth strategy. This will protect you from losing money on unnecessary updates and investors’ interests.
An example of modifying an original idea with MVP was WhatsApp. The app’s creator, Jan Koum, wanted to make an online phone book where users could put a status: “at home”, “on the road”, or another. That way, other people understood what you were doing and whether you could answer calls and messages. But very quickly, at the request of the first users, the service transformed into a messenger: they added the function of sending messages. Now WhatsApp is famous all over the world.
Find a promising business idea
You don’t have to live in Silicon Valley, attend the best university in the country, or regularly attend business conferences to find a promising idea. Ideas are everywhere as long as you learn to recognize them.
The biggest misconception that can be found among aspiring entrepreneurs is that the idea has to be innovative and groundbreaking. Many believe that originality is the key to success. In practice, this is only sometimes the case.
You can invent something entirely new to succeed. You can be an innovator. It’s more important to do better than what someone else has done. And having a business with the same or similar idea should be okay.
If someone has already implemented your idea, it means that someone most likely conducted market research, found a niche, saw potential, made a business plan, assembled a team and took a risk, believing that the idea is worth something. So having a similar product or service is just a reason to think about whether you can do the same, but dozens of times better, for a more specific audience or a narrow niche. Because in business, you can be first. It’s more important to be the best.
And there can be many factors that will make you more loved than your competitors: design, quality, customer service, price, image, brand values, etc.