Starting up any business is hard. In fact, 70% of Startups will fail for many reasons including No Market Need (42%) and Ran out cash (29%).
On top of this, in recent years Software as a Service (SaaS) has become an increasingly attractive and rewarding business model. It is predicted that by 2023, the SaaS marketing will be worth $623 billion with an annual growth rate of 18%.
With the market being so saturated and competitive, it’s hard for SaaS Startups to get noticed and find customers. However, when a great idea is combined with the right technologies, everything is possible. So, what can you do to try and prevent becoming part of that 70%? The answer is to create a Minimum Viable Product (MVP).
What Is The Goal Of An MVP?
The goal of a MVP for a SaaS Startup is to validate your ideas and get them out into the market quickly. It also allows for feedback in order to develop the business in the right direction. In most cases this is usually done through creating a very basic version of the application.
An MVP is a version of the application that has minimum features so as to only satisfy its early users. At the early stages of your business, it is important to talk to these potential users and gain insight as to how they might use your application. The aim is to provide evidence that there is a place in the market for the application, whilst conducting the least amount of risk possible. Having this proof also enables you to prove to investors that your application is worth investing in.
Once you receive and analyse feedback from the product’s initial users and possible gain funding, you can begin to design the full version of the application with a complete set of features.
What should an MVP Contain?
Your MVP is a version of the application that contains just enough features to be viable and covers the main functionality of the final application. MVPs succeed by creating a simple experience to test demand. By limiting yourself to testing just the main value of your product, you give yourself room to fail without too much risk at stake.
To help you decide what these main features are, remember that MVP ‘s have three key characteristics:
- Designed with enough features to make users want to buy and use the product
- Demonstrates the benefits of the application to attract early users
- Generates feedback, which allows valuable information needed for future business developments to be gathered.
When creating your MVP, it is important to separate the must-haves features and the bonus features.
It is easy to come up with a number of ideas that your application could do, however remember that it’s what your MVP needs to do that you must concentrate on. Ask yourself: Does this feature support your value statement? Does it help validate your application? Make sure you only include features that allow you to show there is place in the market for your idea and how it would help users at a very basic level.
How Should I go about Building the MVP?
If you have programming skills, then great. Lots of programmers work on building an MVP as a side project over evenings and weekends. We would certainly not recommend to do this full time till the concept is tested via the early adopters and you have enough feedback to understand what will make your SaaS a success.
If you do not have development skills, then the best option is to find a good developer. A common way for many non technical founders is to find a programmer who is willing to work on building the MVP in return for an equity stake in your business. This is great if you have no cash, however you will be giving away a part of your company. Many a time apart from just skills, you need to look at a perfect fit for your developer as there will be discussions around which direction the product will go.
Another common way if you have some funding, is to hire a development company to build it for you. This costs a bit upfront, but allows you to retain full ownership of the company and control the direction of the product exactly as you want it. Many companies have overseas operations which allow to reduce the cost of this development to minimise your risk at this early stage.
The modern market has many examples of great products which started their life as an MVP.
DropBox , for example, made a video on their webpage explaining their application and shared it with their network to see people’s reactions. Dropbox’s video provided a simple yet effective experience by walking potential early adopters through what the product was and clearly demonstrated how it would help them, eventually showing users why they would want to pay for it.
However these days a simple video is not going to be enough to get consumer and investor interest. The easiest way is to build a minimum viable product, demonstrate the concept, demonstrate your expertise in building and launching the product and refining it by listening to the consumer feedback.