Have you ever had that moment when you have a business idea, want to get started, and are looking for ways to test your idea cost-effectively and quickly?
Hoping that you’ve experienced that moment, I’m writing this article.
Here, I’ll show you 3 tools that help build a successful startup.
- By the end, you’ll be able to formulate your business idea into a Business Model Canvas,
- know what Pivot Time means, and
- be able to sprint forward with your Minimum Viable Product.
If all of this still sounds unfamiliar, don’t worry, it’s easier than it sounds.
Before we dive in, let me draw a comparison from the past to today.
The Song of Business Plans
Before the internet, if you had a business idea, the process was quite simple.
You go, write the business plan. Get it checked by the experts or have it created directly by them for a pile of money, and in the end, you had the overview.
I will earn this, I need to do that, and there you go.
The company is founded. BAM. It could take 12-24 months, but it was straightforward, right?
Well, as you’ve noticed, the process could take 1 to 2 years.
Man… that’s a darn eternity to find out that the market has no interest in your idea.
Fast Forward Today.
Today, ideas are tested in much shorter timeframes; let’s take codeacademy.com as an example.
In 6 weeks, they tried 7 different target audiences. From restaurants to developers – to find out which target audience responds most to their product.
So, what used to take 7 to 14 years with antiquated methods, you can now do with a lot of effort in 6 weeks.
But how does this work? Did the folks just act on a whim?
No – there are tools that help us entrepreneurs formulate ideas, test them, and be genuinely productive in the end.
One of these tools is called the Build-Measure-Learn Cycle.
Build-Measure-Learn
The idea is as follows:
Build
You have an idea, want to test it as quickly as possible. So, you build a prototype that may not be complete but gives an idea of where it’s heading. Learn how this works in the MVP section.
Measure
Take this prototype and present it to your target audience. This is where it gets interesting.
You want to learn as much as possible about your target audience, so you collect as much data as possible.
Learn
This is the step where all the magic happens.
We reflect on what was measured, ask ourselves, does it make sense?
The goal is to make a decision based on the collected data on how to proceed.
If your target audience responds positively to the idea, cool, then proceed with the project and expand.
If something doesn’t look good, then it’s PIVOT-TIME.
Uh, man, what is this PIVOT-TIME?
Pivots, the Power of Swinging
You know when you’re in the water with a current. You try to swim against the current, and it just doesn’t work?
Then you realize that if you turn around, swim in the other direction, it becomes much easier?
That moment when you realize how easy the swivel is in the other direction, in that moment, you make a pivot.
Similar to the swimming pool, we can also make pivots in product design and business development.
We try out a new direction, hoping it will be easier. I lovingly call this PIVOT-TIME!!!!
Because learning is so crucial, I want to repeat this.
We look at the collected data, decide based on the result whether it’s good or bad. If it’s good, we continue to expand; if it’s bad, it’s time to pivot.
Build-Measure-Learn Conclusion
We have an idea, build something based on the idea, present it to our target audience, measure if it makes sense, if it makes sense, we continue to build, if it doesn’t make sense, we look for a meaningful alternative.
That’s the Build-Measure-Learn cycle.
A plea to you… internalize this.
It’s just so important that in a startup, these or similar cycles exist.
I’m talking about any way where you take your ideas, clearly define them, build them out, measure them sensibly, and reflect at the end, based on real data and darn quickly.
Testing prototypes damn quickly is easy to say, some may think… to which I smile in agreement.
Minimum Viable Product (MVP)
When you watch this video of Kaitek Labs winning the Business Model Canvas Competition in 2015, you’ll understand why I affirm with a smile.
Let me briefly summarize.
Kaitek Labs and the Mother of All MVPs
Once upon a time, there were a few students with a business idea.
How cool would it be if we could solve the problem of long waiting times for water contamination?
That’s where it all began.
The solution should be quick, reliable, and easy to read. After some pondering, they came up with a pen-like device that shows with colors whether the water is contaminated or clean.
With this approach, they created an MVP. I’ll get to what an MVP is in a moment, but I call this specific MVP the mother of all MVPs.
It wasn’t the first MVP ever built, but for me, it was by far the most astonishing.
They went out and bought pregnancy tests. These were painted, and BAM. The MVP is ready.
Cost: not even $100. Time spent: 2-3 hours. Anyone who sees it knows how it would be when the product is ready.
With this MVP, they attracted their first customers. In fact, the story didn’t end there; Kaitek Labs is still going strong today, all with just a few pregnancy tests.
As you can see, it’s not crucial to have a finished product. It’s much more important to find out if there’s a demand for your solution. If there isn’t, it’s Pivot Time, and something needs to change.
What is an MVP?
So, what is an MVP, actually? When we talk about an MVP, we’re talking about a prototype of the prototype.
As a fan of simple words, let me put it differently.
An MVP gives a glimpse of what it would be like when the product is finished.
An MVP is assembled very quickly; a few days are not uncommon. Months are unacceptable.
An MVP is not your final product but is good enough to present.
You can build on an MVP, but you can also quickly go in other directions.
An MVP helps you test ideas quickly.
Those are the most important characteristics of an MVP; there’s another characteristic that is damn important, and that is you should be able to make money with your MVP.
The emphasis is on “able”!
Earning money too early is a topic in itself, but there must be a financial possibility for your business idea to be sustainable.
How to Create an MVP
Now that we know what an MVP is, the question arises: How do I create an MVP?
Everything is correct that gives an idea of how your product will ultimately feel.
It can be a landing page where you go into detail about the benefits your product offers to your customers.
It can be an edited video showing the end product.
It could also be pregnancy tests, like at Kaitek Labs.
Here, you can get really creative.
You’re on the right track as long as people recognize how it would be if it were there.
Minimum Viable Product Conclusion
The goal is to get started as quickly as possible. This means an MVP that only takes a few hours is better than an MVP that might be fancier and works better but requires at least a 2-month development phase.
Focus only on the most crucial features of your product. Cut out all the fluff and let your imagination run wild.
What the Business Model Canvas is
Now that we know how to create a quick prototype, have a cycle to test this prototype, there’s still something missing. Something to clearly formulate our ideas. Something faster and more concise than an ordinary business plan. For this purpose, we use something called the Business Model Canvas.
It’s a template for all business areas that every company goes through.
You often find this template printed large on walls. Each business area can be easily covered with post-it notes, where each post-it represents an idea.
An idea is much more of an assumption you have. You assume your product is simply good, the usability is excellent, and it’s cheaper than the market.
You’d post such an assumption under Value Propositions.
A good German video that delves into business areas can be found from the Unternehmerkanal here.
I want to draw more attention here to how you use it because it’s not explained clearly for most people.
Let’s say you have a Business Model Canvas and post-it notes ready. Your assumptions are, as mentioned:
- Cheaper than the market
- More user-friendly than anything else
- Better features
The goal is to build a business concept based on confirmed assumptions. That means, only fill out the first assumptions, no more! Really. That is enormously important. Start small and build on it.
With these 3 ideas, you go and think about how to find out if that’s true.
Cheaper than the market
Here you can easily find out if your assumption is correct. Do some research, list all providers, create a table where you record the prices, and BAM. If your intended price is genuinely cheaper, confirmed, and you move on. If not, it’s Pivot Time, and you think about how to proceed.
More user-friendly than anything else
This point is more challenging to test. For this, you’d need some user tests, and to confirm this point, your customers must simply love the product. That’s genuinely tough.
However, if it’s a goal, you can build your product in a way that considers user tests as a metric and strongly focus on achieving your goal during development.
Better features
Here, you orient yourself again based on the competition, and if your product offers better features, the assumption is confirmed.
Once all ideas are confirmed, move on.
If an idea at some point no longer makes sense because it simply cannot be confirmed, then throw it out.
In the 2nd step, you could fill in Customer Segments.
Your target audience is Digital Designers, FullStack Developers, Freelancers in the IT sector.
With these assumptions, you test again if it’s true. So, you decide to approach digital designers, tell them about your product, ask what they think, or even present the MVP. If they like it, your assumption is confirmed.
Caution… if someone says they like it after you’ve asked if they like it, they’re just being polite.
Conversely, if someone says they like it on their own, they genuinely like it.
But real interest is when the person wants to know more, things like where can I buy it, when is it available, etc. That shows you someone is genuinely interested.
Out of 100 people, there should already be some, more than 15, who are excited about the product.
In this rhythm, you build your Business Model Canvas step by step.
Because it only builds on confirmed assumptions, the probability that you won’t be successful in the end is zero.
The thing is, assumptions just need to be confirmed, too many assumptions are hindering.
Focus on testing a few ideas simultaneously, and remember that at any time, a pivot is possible in any area.
If you pivot, make sure to confirm the old assumptions.
That’s much about the Business Model Canvas.
Conclusion
As you can see, the Lean Startup is fantastic.
The Business Model Canvas is a template that helps you formulate your ideas and thus build your startup. The Build-Measure-Learn cycle helps you build these ideas sensibly, and an MVP makes you fast as lightning.
I hope it helped. In any case, I now want to know from you, have you had any encounters with any of the three tools, and if so, how did it go?
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