What’s an MVP and Why Is It Important for My Business Idea?

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In the garages and conference rooms of the tech industry, the acronym MVP has nothing to do with sports greats. Forget about “most valuable player.” In today’s businesses, the term stands for “minimal viable product” and refers to the simplest possible form of any merchandise or service you aim to bring to market.

The reason for building a simple product before embarking on a complex version has to do with resources. With an MVP, an entrepreneur can begin to prove a product’s viability before he or she invests the sum total of hours and dollars that a polished, shelf-ready item requires. Instead, with a set number of hours and a small budget, it’s possible to discover enough about the product and the market to decide if the project deserves additional time and money. Think of it as a way to reduce sunk costs and prevent regret.

Take this complicated product: a founder wants to create a high-tech smart home system that waters a user’s plants and feeds the cats while he’s on vacation, using a series of tubes hooked up to the kitchen sink. It’s obvious why the entrepreneur would want to make sure that such a  contraption is viable before hiring a half dozen expensive automation engineers. But the premise behind the MVP also applies to all those less complicated ideas you might have for a new business or for an extension of your current small business.

Here’s how to make this jargon-y tech term useful for whatever business you’re building or running.

Be sure your MVP is representative

When creating an MVP, you can’t just make a Minimal Viable Anything. In fact, an MVP is more than a blueprint or prototype. It’s the truest version of your service, product, or idea–only created with the least possible effort. The MVP should act like a microcosm of the (expected) final version. For example, if you’d like to open a restaurant that specializes in lasagna made from nonna’s recipe, you might consider opening a pop-up restaurant for a weekend or renting a food truck for a month. In either MVP, you can test out your recipe and streamline your process for prepping and cooking. But keep in mind that pop-ups and food trucks can drum up the kind of marketing buzz that brick-and-mortar joints can’t always rely on. This means you have to think critically about whether your MVP is as representative as possible. Maybe a monthly guest dinner at an existing restaurant will better capture the experience than the pop up or the food truck.

Find a test audience

Once you know what shape your MVP will take, you’ll want to see what your audience thinks. If you’re an established business, use your newsletter list to ask for volunteers who are interested in sampling and providing feedback on a new product. If you’re new, reach out to personal and business networks, as well as to members of your target audience. If your MVP is marketable, you can even also offer a limited version for sale. Whatever your plan, make sure to get a broad but relevant swath of potential customers to get useful feedback.

Have an iteration plan

Once you’ve made and shared your MVP, you’ll have information that will inform the next version(s) of your product or service. You’ll likely have learned a lot, both about making your product and about the product itself. As soon as you can, incorporate these details to make your next iteration better. Set aside any preconceived notions about what features you had hoped would succeed in favor of actual feedback and data. The whole idea of the minimum viable product was to prevent you from expending any more energy than necessary on an idea or product that won’t be profitable. Negative feedback might convince you to pivot earlier than expected. Positive reinforcement should motivate you to keep moving forward.

Stick to your budgets–both time and money

Probably more than with other initiatives, launching your MVP requires that you adhere stringently to the allotments for time and budget you’ve set. Don’t allow yourself to be distracted by grand ideals and perfectionism. You’re headed towards a grand, perfect product. But to get there without wasting money or energy, try to embrace the limitations of your MVP. Once you remember that this first iteration isn’t everything you want in a final version, you should have an easier time holding fast to the time limits and financial boundaries you created. Respect the hard stops in your plan, and spend more money and time only after validation.

The purpose of an MVP is to keep a project lean while you gain certainty about its viability. By testing something that’s like the original idea—but cheaper and easier to build—you have the opportunity to fine-tune production, find an audience, tweak your idea based on experience, and save both money and time. Even if it’s hard for you to imagine circulating an unpolished product to a real live audience, seriously consider the trade offs. An MVP’s savings make it worth your consideration.