The idea of doing the minimum to build your business might seem a bit, well, suicidal, given how hard it is to stay afloat these days. But it's one that has been gathering steam in startup world — with some good results.
Aware of how the "build it and they will come" attitude undid many a dazzling, big-budget dotcom, some of today's entrepreneurs are launching their businesses with what they call the "minimum viable product." This is a streamlined version of their offering that is just functional enough to help them gauge whether anyone will use it and, eventually, help them to figure out how to develop and improve it.
In one sign of the trend, Lean Startup Meetup Groups have been springing up in entrepreneurial hubs like San Francisco, New York City, and Austin, as well as in major cities around the world. One reason is that better technology has made it easier for startups release a decent-quality (if basic) product quickly — and to improve it just as fast, says Roman Fichman, a New York City attorney who advises many startups.
Here are some tips on how to use the minimum viable product approach with your own business. "It's really starting to hit the mainstream just about now," says Fichman.
Offer a Partial Solution to a Problem
Don't try to be all things to all customers. Look for a way to address a need in the marketplace by offering a few critical solutions rather than every possible one, recommends Fichman. In your business plan, you might focus on developing two or three main sources of revenue instead of ten, he says. Then you would build a basic product or service and release it as soon as possible, forgoing a long development process.
Listen to the Marketplace
Once your product is out, start soliciting feedback from customers by asking for it on your site, trying consumer focus groups, using telephone surveys, and other means. If you're running a website, also take a look at what Google Analytics is telling you about usership of your site, Fichman advises. This will help you see what visitors like and don't like.
Once you have gathered useful feedback, add and subtract features to make your product or service more valuable. How do you know if you're making the right tweaks? "You systematically can change one feature at a time," advises Eric Ries, a Silicon Valley serial entrepreneur and blogger, a proponent of MVP principles. "Over time, those changes compound and good things happen."
Groupon, the fast-growing group discount site, used a similar strategy successfully, notes Fichman. In an original version, it started out with a fairly basic site, where groups of people could organize to work on grassroots projects as well as form groups to qualify for daily, one-time discounts for tickets to events, restaurant meals, etc. When the discounts proved to be the most popular part of the site, the company's leaders made it the site's focus. "They figured, let's pivot," says Fichman. That proved to be a smart business decision.
The minimum viable product approach may not get you as far as it did Groupon. But even if your business fails, it may save you some time or money along the way.
Elaine Pofeldt is an independent journalist specializing in entrepreneurship whose work has appeared in TheAtlantic.com, BNET, Crainís New York Business, CBS Moneywatch, Good Housekeeping, Inc., Working Mother and many other publications. A former senior editor of Fortune Small Business magazine and editor of its website, she does editorial consulting for online and print publications.