How to answer the MVP question in a business plan
Minimum viable product business plan – how to answer the minimum viable product (MVP) question in a business plan or a business plan template.
The question – “MVP (i.e. 1st paying customers)”.
This question is part of the business plan template of the Lagos Angel Network.
So, what is an MVP and who are your first paying customers?
This article would address these aspects of an angel investor business plan.
Minimum viable product business plan template
The angel network simple business plan template addresses aspects such as:
Asking you for a One line pitch statement.
In addition, you are required to include your target customers.
What is your value proposition? For example, why a customer should be interested in your product or your service. How are you different from the rest of the competition?
Market Size: are you solving a problem that impacts multiple customers. How many are they and how are you addressing the problem?
Who are your competitors? For example, which businesses provide similar product or service. How is your product or service is different from your competition?
Previous year’s total revenue: this is a financial question. For example, considering the quantity sold and the amount customers are willing to pay for your solution. In terms of these, how much in total did you make in the previous year?
Projections: for example, if an investor invests in your business, what are they expected to gain?
What is a Minimum Viable Product (MVP)
A minimum viable product (MVP) is a basic version of a final product. It has just enough features to be usable by your early customers.
A minimum viable product or an MVP is not the idea in your head that you want to build. That draft of your first idea is a prototype.
The prototype is a flexible solution to the problem you’re are trying to solve.
The prototype is flexible because it will change as you refine your ideas.
In addition, the MVP is different from the final product because you get to add more features as a result of feedback from those you’re trying to solve the problem for.
So, before you launch your minimum viable product you need to find and target your early customers – a group of users or a segment.
Minimum viable product business plan – early customers question
The minimum viable product early customers can then provide the feedback you need to fine-tune your solution.
Remember that you’re the expert and you already have a flexible solution.
Therefore, the feedback from your early customers should be in the form of problems.
That is, the problems they (users) are facing. With more problems, you’ll be better able to tweak the solution for future product development.
After the early customers have used your basis version, the data and information from the MVP is what you need to pitch to investors in your business plan.
This process is an evidence that your idea is capable of providing solution to a problem.
Minimum viable product business plan – why are angel investors interested?
The aim of an minimum viable product (MVP) question by a funder or an angel investor is to be able to prove that your new idea is viable.
The way you answer this portion of your business plan would show the potential funder that you have the skills and technology: to produce a product that the public will want and will be willing to pay money for.
A prototype the draft idea of your solution to a specific problem (your product or service).
An MVP is a basic version of the final product. It has just enough features to make it saleable to your early customers.
Your MVP is a source of feedback from users to help polish the final product.
Angel investors are interested in your MVP because it shows them that your idea is not just in your head but that it can actually solve a problem and customers will be willing to pay for it.
However, a challenge of minimum viable product is that it may be unsuited to environments where the protection of intellectual property is limited.
While you’re still testing your basic version, your competitors may come to the market with a standard product – which is really an imitation of your idea.