Low-Cost Startup Strategies | Tory Burch Foundation
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Low-Cost Startup Strategies
Get your minimum viable product into customers’ hands and start growing
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Popular wisdom says you need money to make money. But would-be entrepreneurs who want to start a business with no money have more options than they think. In fact, startup funds may not be an entrepreneur’s main barrier to success. Twenty percent of small businesses fail within their first year because of cash flow problems, limited competitive research and low demand, explained innovation and product expert Dasanj Aberdeen during a small business webinar. “When you’re in business, you really want to understand exactly what space you’re playing in, and how that differentiates you from your other competitors out there,” she said. A fast, no- to low-cost way to understand both your place in the market and the demand for your offering is by developing a minimum viable product.
What is a minimum viable product?
A minimum viable product, or MVP, is a basic version of a product or service created to help a founder or business understand if it will work for a target market. You’ll want to demonstrate only the most important features of your product so you can test them with potential customers. “The goal here with an MVP is to really help you realize that you don’t have to start by spending a ton of money to be able to build a product, service or some kind of an offering,” she went on. “You can really start small.”
Aberdeen emphasized that making a profit isn’t the most important part at this step. “However, if a customer is incentivized enough, they may be willing to pay. So, depending on how much you spend, you may be able to make a small profit on your MVP.” Focus on getting customer feedback. Your MVP should be flexible enough for you to make minor tweaks and get it back into your customers’ hands.
Why are you making this and who are you making it for?
These two questions are ones founders should keep front and center as they develop new offerings. Aberdeen believes in answering these with the principles of design thinking, a user-focused approach to solving complex problems.
Empathize
The first step is investigating who has a specific problem you can help them solve. “This is where you are observing [potential customers], you are engaging with them, you are really honing in on the emotional and psychological aspects of how they interact and how they go about their day to day,” Aberdeen explained. It’s critical to combine observation with direct questions, especially “what is it that the customer is trying to achieve? Because it may not be what you think it is,” she cautioned. It’s important that you focus on collecting data–don’t make assumptions.
Suggested tools: Typeform surveys, UserZoom
Define
This phase is about distilling information gathered during the empathize phase. During this step, you may consider creating personas that sum up the habits and needs of your target customer. The majority of your competitive research should happen during this phase, so you can further clarify what your offering has that others don’t.
Another helpful tool to use during the define phase is a problem statement, which can keep founders laser-focused on customers, their common sticking points and how an offering addresses them:
Identify the customer’s situation (“when I”), their motivation (“I want”) and the expected outcome (“so I can”).
Using a subset of runners as an example, Aberdeen shared the problem statement, “When I go running, I want to get energized with music so I can improve my pace.”
She warned about the dangers of defining a target customer that’s too narrow or too broad, because it can mean either missing opportunities or creating a confusing product that tries to serve everyone.
Suggested tools: MakeMyPersona, Smaply, EnjoyHQ
Ideate
Now it’s time to generate solutions that fit the people and problems previously identified. No idea is a bad idea in this step, Aberdeen said. “This is really creativity and creative problem solving. It’s really about being open, being free–you know, thinking grand and bold, ambitious. Just thinking of really big ideas, and putting them all down.” The one limit is that your ideas need to tie back to your data.
Aberdeen also urged founders who label themselves as not creative to set that idea aside. “It’s really important that you’re not judging yourself.” Use this phase as a chance to brainstorm or create mind maps.
Suggested tools: MindMeister, IdeaFlip, Stormboard
Prototype
Looking at the ideas from the ideate phase, it’s now time to whittle them down and figure out what minimum viable product you can actually build given your resources. Remember, the primary goal is to get your MVP into the hands of your customers so they can give you feedback. That’s why your prototype shouldn’t be too complex or too expensive to create. “You don’t want to have funding be a reason why you can’t go back because you spend everything on the first iteration of the product,” Aberdeen cautioned.
The MVP can be something as simple as a sketch or a storyboard. If your solution is a digital product, you can share wireframes, which are a series of boxes and text to show the content, functionality and layout of a web page or app interface. You may even consider a simple landing page that explains how your product or offering will work, and collect visitors’ information so you can follow up with them.
If you have the resources, your MVP can be more complex than a simple presentation or explanation (like a demo video, for example). “The benefits of having something that’s higher fidelity is that it’s a lot more engaging to the user, because it brings them closer to that final experience,” explained Aberdeen. Just remember, that hi-fi experience shouldn’t be too hard to tweak based on customer feedback.
Suggested tools: Balsamiq, InVision, Boords
Test and validate
Get your product into the hands of those target customers and find out what they think. You may look into usability tests or anonymous surveys to learn how they’re experiencing your product and if it’s actually solving their problem.
It’s essential to remember that creating an MVP is an iterative process, Aberdeen explained. Making changes and collecting information means revisiting certain steps. “It’s not linear, as it’s laid out here. You may get through ideating, prototyping and testing, and learn some new information, which makes you realize you need to go back to defining your problem.” As you continue on, you may find that you’ll have to make changes in your product, distribution model, pricing or even your target market.
Suggested tools: UserTesting, Google Optimize, Sprintbase, PingPong
What happens after the MVP?
Once you and your customers are satisfied with the way your MVP helps them, you can begin honing in on your pricing, packaging and other nonessential product elements. In the early stage of a product launch, you’re not focusing on reaching every possible person in your target market. “It’s about getting folks who are really, really passionate about what you’re doing,” explained Aberdeen. To that end, it’s important to keep in touch with your early adopters; those are the people most likely to share your offering with their networks. They’re also a valuable feedback source.
After launching your product, you can also begin to think about adapting your offering for other target markets, by applying design thinking to some of the information you learned earlier.
Ultimately, creating a product or a business is about keeping your customer in mind. Learning about your customer never ends. Set aside your passion for your big idea and focus on their problem. For Aberdeen, being a business owner is about “loving that problem and being able to provide a solution” to meet customers’ needs.
