How can MVP testing help you identify potential roadblocks in your business model?

When you have a product, how your customers are going to get access to product/services, how your customers are going to get the perceived value from utilising it and how it is going to help you generate revenue? Such type of questions are being answered in your business model. Business model helps you identifies how you are going to place your product, to whom you are going to sell, what model you will design to sell your product. Your business model can pivot/change if something is not working or targeting different geography or targeting different audience. Be sure of having clarity of your business model and regularly update, if needed.

É importante distinguir seu produto do modelo de negócio. Muitos empreendedores erram ao acreditar ter um negócio quando apenas têm um produto ou serviço desenvolvido. De fato, o produto é parte do seu modelo de negócio. Preencher um Canvas ajuda a entender a complexidade do negócio e, para trazer uma perspectiva paralela, é possível pensar que o modelo de negócio seja como uma esteira em uma linha de produção. É necessário então entender quais insumos precisam ser adicionados durante cada fase produtiva, para então o produto ser produzido (e não acaba por aqui), ser vendido e entregue. Então precisa validar o valor gerado para o cliente, manutenção do cliente com sua recompra junto a métricas financeiras, comerciais e de crescimento.

Imagine your startup promises to transport customers from Point A to Point B, aiming to eventually offer a car for this journey. Initially, instead of attempting to build a full car without wheels and an engine (an incomplete solution), you start with a scooter as your Minimum Viable Product (MVP). This approach allows you to hit the road quickly, testing the route and understanding the end users needs without waiting for the car to be fully developed. You encounter various roadblocks: perhaps there's a demand for an environment friendly vs a faster ride, so you build a more sustainable car. These insights represent potential roadblocks in your business model, such as product-market fit, customer preferences or operational inefficiencies.

MVP (Minimum Viable Product) testing is a strategic tool to uncover potential roadblocks in a business model. By releasing a simplified version of the product or service, businesses collect real user feedback on functionality, usability, and market demand. This process quickly reveals operational challenges, user preferences, and areas for improvement. Analyzing MVP results allows for agile adjustments, minimizing the risk of investing in a flawed business model. It provides invaluable insights, enabling businesses to refine their approach, address roadblocks, and enhance the overall viability and success of the venture.

Business model designed are based on your own understanding of market segment, target audience or competition. These understanding may not hold true, hence to validate them you need to test your hypothesis to tweak your business model. Second, external factors, like market condition, audience interests, competitions, etc. are dynamic in nature and hence you need to fine tune or sometimes pivot altogether your business model to make sense and provide your customer associated value and successful venture. Again, do strategise how you are going to test your business model. Make sure it is crisp, measure outcome and time-bound allowing yourself to measure its success and roll-out to larger audiences or pivot.

Minimal viable product (MVP) allows you to quickly roll-out your product with core features your customer need which solves customer's problem while you can iterate and release more optional features. With MVP testing, you roll-out your business model with target set of audience and validate your assumptions about market, their demand and pricing and other aspects of your business model. This allows you to tweak and fine-tune your understanding and make a decision on what works and what doesn't, with significant less investments. MVP is level above prototyping and typically covers all core features you consider having in your product which solves customer's core challenge or they are able to see the value.