We’ve come so far in our series on starting a home-based business, and now it’s time to focus on the details of your first product. You’ve probably had a product or a whole line in mind all along and you may have some very specific ideas. As we discussed in the previous post on customer feedback, what we think our customers want and what they actually want may not be the same thing. As you listen carefully to your target audience, you can develop a clearer idea of what they’ll buy from you and what might be a misfire. To be sure, though, most business experts recommend starting small and simple, with something called a MVP, or minimum viable product.
Confession time: As useful as the term “minimum viable product” is, I don’t much like it. “Minimum” sounds like slacking to me, and maybe to you, too. After all, the reason you’re starting your own business is to wow your customers and impress them with how well you meet their needs, right? Shouldn’t you roll out your very best idea right out of the gate?
Not exactly, according to many successful small-business founders and serial entrepreneurs. Your very best idea may not be quite what your customers want, for whatever reason. If you’ve spent all your capital on this one product that doesn’t quite get customers to buy, your business may run out of money before it recovers from the misstep. That’s a big risk to take, especially if you’re funding your new home-based business out of your own savings.
The 3-step MVP approach to product development
A more prudent plan is to start by offering a basic version of what you’ve heard your customers ask for and then…
- Ask for lots of feedback from your first customers.
- Listen to that feedback actively and with as little confirmation bias as you can manage.
- Roll out a new version with improvements suggested by users and clients OR scrap the MVP if it flops and go back to listening to your customers for new ideas.
If this sounds like the product-version update process for every app and piece of tech hardware you use, it is. Launching with an MVP keeps your risk and expense low while letting you test the waters with your product and your target audience. You can use this process for each new product or service you offer. In fact, you should follow the MVP path for each new product you introduce, because no matter how well you think you know your customers, you can misjudge their interest and end up wasting time and money.
[bctt tweet=”3 steps for MVP product development: 1) ask for feedback 2) listen 3) roll out a new version.” username=”hostgator”]
Skipping the MVP step: a cautionary tale
In case you’re considering skipping out on this important step, let me share my personal cautionary tale with you.
I skipped the MVP step once, when I was the sole proprietor of a tiny dancewear business. I thought I knew my customers’ tastes, buying habits, and interests well enough to invest $600 in an embroidery machine to embellish products I was already selling and add new products with embroidered designs.
What I learned was that although most of my customers thought the designs were cool, they weren’t motivated to spend the extra money on them. Also, embroidering things, even with a digital machine, was time-consuming. I had to watch the fabric in case of snags and to change the thread from time to time. Even when I did sell the occasional embroidered piece, the extra revenue it yielded didn’t come close to covering the (highly discounted) value of my time.
When I spoke to a more experienced dancewear designer and vendor about my problems, she ran through a quick list of questions and suggestions that identified my problems on the spot. My prices were too high for customers and too low for me. My process wasn’t optimized to reduce costs, and it couldn’t be with the type of machine I’d bought. That also meant I had no way to scale production. She was too polite to say I’d really messed up but she didn’t have to.
What I should have done before I invested money and time in my product idea was listen more carefully. If my customers had told me they’d be willing to pay more for embellished items, the smart next step would have been to ask my experienced designer friend for her advice. She would have told me to keep my expenses to a minimum by renting or borrowing the proper equipment to make samples cost-effectively and test sales. That would have also shown how much time each piece required. My only consolation is that skipping ahead is a mistake that more experienced entrepreneurs sometimes make, too.
Won’t early customers be disappointed when you bring out a new version later?
Take care of your first customers by offering them a deal on your updated products later on. Software publishers do this when they roll out new versions. You get a discount on Microsoft Office, for example, if you’re upgrading from an older version. It’s good business (and a smart marketing strategy) to reward your existing customers by giving them a “preview sale” on your new version before you make it widely available. We’re getting ahead of ourselves, though. Right now, the focus is on your first MVP.
The MPV review
Remember to base your first product on what your customers say they want and need. Ideally, you’ll invest only enough time and money to meet your customer’s requests without risking too much on your end. Ask for advice from mentors and peers to make your first product cost-effectively.
Then, see if your MVP sells. Listen to what your customers tell you about it: why they bought it or didn’t, what they thought of it, what they like, and what they’d like to change. Keep those notes for future product updates and changes, and keep track of your first customers so you can reward them with deals later on in exchange for their feedback.
There are three more posts in the HostGator Home Business Guide. Next time, we’ll look in depth at the marketing methods you can use to get the word out about your MVP, drive traffic to your business web site, and grow your customer base.