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15.06.2022 - Read in 16 min.

How to build an MVP: a step-by-step guide for CEOs

15.06.2022 - Read in 16 min.

Build a successful MVP for your business as we go through the 10-steps process, discuss MVP benefits and most common founders' mistakes.

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You’ve probably heard that 9 out of 10 startups fail, right? That is not an exaggeration, as shown by Startup Genome in one of their global startup ecosystem reports. The most common reason for a failure is lack of product-market fit (backed by various analyses, ie here and here), which in turn means that founders were either really way ahead of the time with their ideas or simply didn’t do their homework properly and didn’t verify their ideas beforehand.

There are many ways to validate your idea, and we’ll talk about a few, although the main focus of this guide is to take you from the idea itself through an actual minimum viable product development process.

Strap-in and let’s follow 10 steps to a successful MVP, but first, let’s start with mistakes.

 

4 most common mistakes founders make during MVP development

Minimum viable product or simply an MVP is one of the most important stages when it comes to the development of a newly-founded startup. It seems like everyone knows what it is and everyone understands what they need to do, but our experience shows that there is still lots of confusion amongst new founders when it comes to choosing the right development strategy.

Let’s have a look at the 5 most common mistakes that we’ve encountered in more than two decades of experience developing software for clients from all over the world.

 

Mistake #1: Lack of understanding what an MVP really is

When it comes to the initial stages of designing and developing your new product, many founders seem to ignore the fact that MVP is not the only approach. We also have PoC (Proof of Concept), a prototype and only then – an MVP.

PoC is used for either simple idea validation or, in case of complex technical challenges, to test whether specific tech assumptions are executable. This way you don’t spend your money and extended time periods on ideas that are doomed to fail and can verify that at the very beginning.

Now, a prototype. In most scenarios, it represents a clickable mock-up that emulates how the actual application looks and works once it’s released. The beauty of this approach is that it can be done in 7-14 days and then used to present to investors as well as target audience to gather user feedback and tweak the product before starting the MVP product development.

 

Clickable mock-up example

 

To be clear, you don’t have to follow the PoC – prototype – MVP path. In some cases, after you completed your PoC, it makes more sense to just skip the prototyping and go straight to the MVP phase. Likewise, in other cases, you can skip a PoC stage and start from prototyping etc. This heavily depends on what you are trying to build.

Once you identified what it is that you want are going for, you need to make sure that you understand that the MVP should consist of minimum features – those deemed a core feature, without which your future product would be useless. Otherwise, you’ll get stuck in the MVP development process for much longer than 3-4 months (an average time it takes to build an MVP), you’ll waste tons of money and effort, and most likely will eventually fail.

 

Mistake #2: Skipping the idea validation phase

This one I can’t stress enough. For a period of time, I worked in sales here at RST Software and had a chance to talk to a plethora of soon-to-be startup founders. After a while, you’re getting used to hearing about ideas that, no offence, simply aren’t gonna run.

Some of them have no sensible business model, some are just another copy of another copy of Instagram, some are solving a very specific problem for a particular founder and thus probably have max. 10 other people in the world who could use it. I myself had a few startup ideas that I was extremely gassed about, but thankfully, after a quick market research and a competitor analysis I realized I was the only one who was actually excited.

Yes, it can be difficult to think of your own idea as a bad one, but you need to distance yourself from it and listen to what the market has to say.

 

Mistake #3: Failing to identify your target audience

Another issue with the idea validation, closely connected with the previous point, is that you may be trying to validate it in the wrong place. It could be that your initial assumption that your budget controlling software will be useful to various CFOs doesn’t represent the reality quite accurately. In the real environment, project managers could be the ones who need to be able to control the budgets on a daily basis, and they are your target users, while CFOs will care only about the reporting feature.

Failing to find the right target audience can confuse you and make you believe that the market doesn’t want your solution, which could be simply not true. So before you jump to that conclusion, make sure you double-check whether you’ve tested it on the target users. Sometimes, audiences should be changed twice, thrice or even more times before arriving at the exact fit.

 

Mistake #4: The need to create a complete product during MVP development process

I’ve mentioned this earlier in the #1, but I’d like to dive a little deeper into the matter.

As we’ve established, it’s best to limit the development of your minimum viable product to a max. of 3-4 months. It gives you the agility you need to continuously test your idea instead of diving head-first only later to find out that it was a waste of time and money.

How do you prioritize which features should be classified as a core functionality for the MVP app and which are secondary? The easiest way to do that is to undergo a so-called Scoping Session. You can do it yourself, or you can use external partners, like many of our clients did by starting to work with us. The part of a Scoping Session that you are most interested in, in this particular case, are user stories.

In simple terms, those are a very detailed presentation of all the features your product will consist of as well as their development time estimation (which can be then used to easily calculate approximate MVP development cost). Just to give you an example, a user story can look like one of these:

  • As a user, I’d like to be able to log in with my Facebook account – 8h
  • As an admin, I’d like to be able to change the roles and permissions for external marketing agencies using my platform – 24h

 

User journey map example

 

Once you have it laid out like this, it becomes much easier to see what can actually be done in 480h (an average number of hours for a single team member in 3 months). You’ll also be able to second-guess whether that Facebook login is actually as important as you thought. Most likely not. A regular email/password combination works just fine for developing minimum viable products.

 

6 benefits of a Minimum Viable Product (MVP)

Seeing we’ve managed to deal with the potential landmines, let’s talk about why it is beneficial for you to start building your startup from a minimum viable product.

 

Benefit #1: Low risk with high ROI

You’re most likely aware that developing a complex system like Netflix, for instance, takes lots of time, which also means high development cost. Going with the ‘I-need-every-single-feature-to-be-ready-before-release’ approach is asking for trouble and eventually a painful and rather expensive failure.

To avoid such an outcome, it’s best to allocate limited resources into building core features for your MVP product. Then proceeding to the testing stage, using it to start generating sales, growing the user base or securing additional investments that will allow you to boost your startup’s growth.

If you follow the agile and lean startup methodology, you may be able to release a first version of your product even within a month and start carefully generating ROI with a relatively low risk of wasting money on something you’ll end up throwing away while at the same time being flexible with the direction your product can go.

 

Benefit #2: An MVP saves you time and money

Saving time and money is one of the prime goals of MVP development. Building an overly complicated product when you have no real data to back your internal ‘people will love it’ thoughts is rather stupid.

Take Facebook. It started as a niche product for one specific university and look at where it is now. Google. Started as an almost blank white page with a search field. Product Hunt initially was just a group. The examples are endless.

 

Amazon's MVP

 

Even our own open-source AdminJS tool, which started as a simple admin panel for our internal purposes, is now being used by ten of thousand private users and high profile companies. Which goes to show that listening to the market can do wonders, especially in the very beginning.

 

Benefit #3: Opportunity to acquire future customers

Early adopters are an extremely valuable type of initial users. First, they can become a precious source of qualitative feedback that allows you to produce a better final product market fit. Second, if managed correctly, they are capable of becoming your ambassadors that will boost your real user base growth if you focus on building high-quality relations with them.

To some extent, you should value them as if they were your first employees, as they are those who believed in your product before anyone else did. Use them at all the stages of new features testing, ask for opinions and analyse feedback, show your appreciation. Do things that will allow you to build a bond stronger than is expected from you. You should even make them a part of your marketing strategy.

 

Benefit #4: Minimum viable product is a solid starting point for securing investments

Finding an investor who would want to invest in your product if you have no previous successes might be difficult. Finding an investor who would want to invest in just an idea of a random, in their eyes, founder… good luck with that.

Having a real product with a real user base (it doesn’t have to be hundreds of thousands of users), is a strong argument when negotiating with angel investors or venture capitals.

Ultimately, stakeholders want to get a return on their investment. Knowing how to build an MVP that shows that the market needs such a solution and that the only thing your startup lacks at the moment is funds to boost your development speed and customer acquisition is a sign that the ROI is there to grab, so they’ll be more inclined to help you out.

 

Benefit #5: Verifying market demand and pricing strategies

As we’ve already discussed, an MVP is a marvellous tool for market demand verification. Receiving data that confirms or dismisses your belief in the existence of a niche for your startup can be a make-or-break factor in this endeavour. By not injecting large sums into the software development process of a composite system and relying on agile MVP stages, you can see whether your product has a good future, requires additional tweaking or calls for a creation of a new concept altogether.

Another great way of utilizing an MVP is to test pricing strategies. There are plenty of those that are proven to work, but it doesn’t mean they will work for you. You can be lucky enough to select a good one from the get-go, or you can miss and declare your product idea as a flawed one, while in reality, you just selected a wrong way of pricing it.

Test and react based on gathered quantitative feedback, not blind assumptions.

 

Benefit #6: Testing UX and usability

And last but not least. According to Localytics’ study, 25% of users abandon app after just one launch. They also suggest that usually the main reason for such behaviour is an unfortunate side effect of failing to lead users to value fast enough after they opened an app for the first time.

The MVP development stage offers you an opportunity to gather insight on how real users interact with your product, how intuitive is the onboarding process and what are the most problematic areas of your UX/UI design.

Fixing your app’s user flow, layout, introduction sequence or colour scheme could be crucial for the overall success of your startup. Many times you’ll find yourself doing a number of iterations before finding the right solution, and it’s better to iterate while your product is in its first testing stage.

 

Fake Door MVP

Before I proceed with a step-by-step guide on how to build an MVP, I’d like to mention one more topic. Something that requires the minimum resources but can provide important qualitative feedback, bears minimal customer acquisition cost, all while testing whether the market actually needs your product. The Fake Door MVP. Here is an example from Dropbox:

 

I’ve written a separate article on the matter, which you can find here. I’ll only recap its pros and cons.

 

Pros of Fake Door MVP

  • Lack of risk due to only a couple of hours of personal time investment required.
  • Helps to verify product market fit.
  • Great for testing your business model and allows you to collect feedback.
  • Easy way of attracting potential customers, so you can start building relationships with them and use it a part of your marketing strategy.
  • Saves you from wasting resources.
  • Provides you with extra understanding of your business idea, potential opportunities and threats.
  • As easy as creating a simple landing page.

 

Cons of Fake Door MVP

  • The gathered data doesn’t provide you with a completely accurate image and thus badly interpreted can make be of a threat itself.
  • Poorly executed can damage your brand’s credibility.

 

How much does it cost to develop an MVP?

Everything depends on your particular user case. It might be 10 grand or $300 000. From our experience of working with over 100 of international startups, it’s best to aim for something between $50 000 and $80 000.

If the budget adds up, you can start with either:

  • Hiring your in-house team (takes more time and can be quite a task in itself, because software development companies usually offer higher salaries and thus attract more talent); or
  • Hiring an MVP development company. The latter is usually the most efficient way of starting as you can access not only commercially experienced developers but also additional software development expertise and standardized processes. You can switch to your own team later on or create a mixture of both in-house and outsourced devs. We, of course, offer such development services, so feel free to drop me a line at ross@rst.software if you’d like us to assist you.

 

MVP product development in 10 steps

Step 1: Identify the problem you are trying to solve

You may remember from the founders’ most common mistakes, that identifying your target audience and the value you want to deliver is crucial. One of the simplest ways to do the latter is to find a problem that needs to be solved. To achieve that you can use one of the many approaches.

Some founders find the issue organically, for instance, while working in a selected field and having to deal with a concern that no one has yet decided to tackle, so they took on resolving it themselves. However, such products may not be of use to a wider audience. Others might not see this problem of yours at all and if you fail to create a proper marketing strategy for your startup, there’s a high chance of failure.

Another way to approach it is to research an industry you’re interested in and identify the issues people are having so that you can present them with your solution. By doing so, you’ll also create opportunities for acquiring early adopters and even your first big customers, especially if you start testing it with a specific company.

 

Step 2: Outline your user journey

Once you’ve picked the problem you’re going to solve, it is time to start going more in-depth. Outlining your user journey should be your next step. But what is the ‘user journey’?

Put simply, the user journey is a high-level map that showcases how active users move through your application, what they see, when they see it etc.

Usually, this step is done by an experienced UX/UI designer. In our case, we create user journeys, amongst other things, during our Product Design Workshops, but you can also do it yourself. Maybe in a bit less detailed way, but it will still give you a general overview on the minimum viable product software you’re aiming to build. There are multiple user journey templates on the internet, so it should be fairly easy to do.

Just don’t forget that some details are more important than others and your real users should be able to intuitively access vital features of your product.

 

Step 3: Break it down to its core features and prioritize milestones

Time to get technical. Starting from this step, you’ll need to have either your own in-house team or an external software development company to help you navigate through the technicalities of developing a web app or a mobile app.

Focusing on the core features is the main goal of developing an MVP product in order to avoid over-complicating the solution you’re trying to build as well as to keep to deadlines and stay on budget.

The best way to sort out what’s being developed is to create a list of user stories. Once a complete list has been created, it is time to estimate each one of them, highlight the key features and develop a plan for the next 1-3 months, prioritizing only those features that are necessary for the MVP stage. The rest should be put aside.

Once everything is prioritized, divide it into deliverable milestones, and you’re all set.

 

Step 4: Create and test your clickable wireframe

Jumping straight into coding wouldn’t be the wisest idea without first testing whether our initial assumptions are true. In most cases, we start by creating a clickable wireframe mock-up. It’s the fastest way to produce a version of your product that you could play with as if it was a real app, which usually takes about a week, including additional tweaks and iterations.

 

 

The main goal here is to test our user journey and receive customer feedback before spending a couple of thousands of dollars on full-scale implementation.

 

Step 5: Proceed with design before building an MVP

When the general experience has been tested, we are free to start getting colours into the mix, creating the app’s look & feel. Typically, during this step not much is happening on the development side apart from DevOps tasks, such as setting up dev and testing environments, connecting analytics, debugging tools etc.

Transforming the design into code isn’t a simple task, thus you want to be sure that your app design is final. Otherwise, you’ll waste time and money on rewriting code over and over again. Wait until you’re happy with your designer’s work, and only then hand it off to your software development team.

 

MVP development cycle

 

Step 6: Kick-off the MVP development

Now the juiciest and the longest part of the process – actual development stage. If you’ve estimated and prioritized your vital features correctly as described above, then there should be no nightmarish surprises along the way, although you can expect some shifts in your initial assumptions due to the nature of software development.

From our experience, it’s best to plan your sprints (usually 2-weeks development periods) in such a way that your team is able to deliver smaller working parts of the system rather than tackling huge chunks that won’t show any visible progress for a couple of sprints.

If you do find yourself in such a situation, there’s a good chance that something wasn’t planned properly.

 

Step 7: Start the testing stage mid-development

If you follow my advice from the above and develop your app in smaller but working pieces, after a month-or-so of MVP development, you should have a working version of your product that you can start testing in a closed alpha stage.

We did something like this with bussr, one of our clients, although that was a somewhat extreme case, but after the first sprint we were able to start running the main features with test drivers that used the app to simulate the actual usage by driving around the city. As a result, we were gathering tons of quantitative data that was quickly used to optimize the app’s performance as well as user experience.

 

 

Step 8: Release an MVP and start collecting user feedback

As you get closer and closer to the release date, you can consider doing a soft launch. It’s an approach some companies use to test how the final product will behave in its ‘natural habitat’, but in a somewhat controlled manner. It usually means rolling out your app to a limited target audience with a zero to low marketing budget.

The main purpose is to catch any major bugs that could ruin your hard launch and fix them before proceeding.

 

 

Once you’ve tested your app for critical issues and analysed user feedback, you can release your MVP to the broader market to acquire more users and start gathering even more user feedback.

 

Step 9: Plan the next stage of development

Hopefully your successful MVP development process went as planned, and you were able to launch. Now it’s time to think about moving forward with the development. To do so, it’s best to take the data you’ve gathered and bring up the initial plan you created during the first steps of MVP development.

It wouldn’t be wise to stick to it without considering where you are right now with your MVP. Some assumptions might have changed, and you may need to focus more on specific parts of the application that you either planned for a later stage or didn’t even consider at all. Everything should be based on the acquired data.

Once the plan has been updated…

 

Step 10: Iterate

It is time to loop back and start everything from the very beginning. Plan – develop – test – iterate.

 

Building a successful MVP is not easy, but definitely worth it

As you can see, the entire process is rather straightforward. If you decided to build a minimum viable product, following outlines steps can save you time at the very least and most importantly capital.

If you’re looking for an MVP development company and would like to utilize our broad expertise in building mobile and web applications, feel free to contact me at ross@rst.software. More so, if you’re looking to build a location-based software, an app like Uber, for instance, we do have decades of experience developing such solutions. Trans.eu – one of the leading logistics platforms in Europe and Asia would be a great example.

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Ross Krawczyk

Ross Krawczyk

Senior Business Generalist

Senior business generalist with a mindset focused on getting things done in the shortest possible time with the best possible quality. Started his professional career in a software development company and moved up the ladder working nearly in every position available, accumulating valuable knowledge and experience related to startups development. Privately, spent his last decade understanding modern gentlemanship. Mesmerized with space industry and playing with people's minds through Sherlock-themed events filled with mind-boggling riddles.