We love what we do because to us, and our clients, it’s so much more than writing code. We’re turning people’s ideas and dreams into a reality. But once you’ve been struck with a great idea for a product that is going to change the world how do you turn that into a functioning and profitable app?
If you’re looking ahead to 2021 and think building an app could be on the horizon for your business, you’ll want to make sure that your idea is actually viable and will generate revenue before spending lots of money building it.
Here are the four steps that will take you from idea to app, and prove viability along the way.
Step 1: Research & Plan
When you are at the idea stage, you don’t need to draft up a complete business plan. A business model canvas can suffice to quickly map out your idea and test some assumptions you have made on just one sheet of paper. The business model canvas allows you to map your core activities under 9 titles:
- Key activities
- Key resources
- Key partners
- Value propositions
- Customer relationships
- Customer segments
- Cost structure
- Revenue streams
Developed by Alexander Osterwalder in 2005, the business model canvas can be used to improve the focus of an entrepreneur and give clarity on what a business is trying to achieve.
Step 2: Build (The MVP)
You need to know what works and what doesn’t with your idea before taking the leap and setting up your business. You need to test that you have a valid business idea, and you need to test this cheaply, quickly and efficiently.
A Minimal Viable Product (MVP) is the smallest version of a company that has just enough features to allow you to learn. It allows you to test your idea with early customers and plan for a future product/service development.
What does an MVP look like?
First thing’s first, your MVP is not a vanity tool and will not be used for scaling your business. Your MVP is purely to try and see whether clients or users will use your business idea and whether they will eventually pay for it.
There is no set menu when it comes to building an MVP, but there are definitely some key questions you can ask yourself:
- Does your MVP have to be bespoke? For example, if you are looking to build a chatbot, can you become the chatbot and message 10 clients manually for a week?
- Can your idea be a piece of text or a landing page? For example, Buffer created a simple landing page that described what their business was going to do. If someone clicked on any of the pricing plans, the user would get the message “Hello! You caught us before we’re ready.”
- How much money and time can I spend on this MVP? Whatever your budget is, we would recommend putting half into the MVP, and assign the other half to other activities such as marketing, travel and sales.
Step 3: Measure
You’ve built your MVP, and you’ve released it “into the wild”. But how do you know whether your MVP has worked? To test your assumptions, you will need to measure the results. These can come in two formats: Quantitative and qualitative data.
Quantitative data: KPIs
Key performance indicators (KPIs) should be fixed to check assumptions. It is important to choose the right KPIs for your MVP, as these can vary depending on the product: Do not select vanity metrics!
Choosing to monitor the number of registered-users to your site could be a vanity metric. Indeed, a better KPI to look at might be active users and conversions of users who pay a membership fee.
Some examples of KPIs:
- Monthly recurring revenue (MRR) will validate whether people will use and pay for a product or service. It will also allow a business to predict future revenue.
- Customer acquisition cost (CAC) or cost per lead is the average cost of acquiring a customer. This is an important KPI to establish whether a business is viable or whether it has the correct marketing or sales strategy.
- The lifetime value of a customer is the predicted profit a business makes from a customer over their time using a product.
- Traffic-to-Lead Ratio (New Contact Rate) will show you how many website visits convert into leads. This is an important KPI for businesses who are in eCommerce or SaaS, for example.
- Active users is a performance metric that shows how often people use a product. This is particularly useful for apps.
Qualitative data: Customer Interviews
There’s no escaping it: If you want to build a successful MVP, you need to speak to your users! Interviews can provide you with valuable information that you would struggle to get from online surveys or KPIs.
Interviews can also allow entrepreneurs to create conversations with their early adopters. The aim here is for quality over quantity, and there are several interviewing techniques that you can use.
Step 4: Learn (Pivot or Persevere)
There are several reasons why you may need to pivot your idea. This is very common and does not mean that you should give up on your idea.
For example, the original idea for YouTube was a video-based dating service with the slogan “Tune in, hook up.” People could upload a video of themselves describing themselves and their ideal partner – it was a flop. YouTube pivoted to simply host online videos, as market research showed that there was a large audience of people who wanted to upload general videos of themselves and their lives. Google later acquired it for $65 billion – worth the pivot!
There could be several telling signs that you need to change your idea:
- The people, not the product, are generating money. When you look at the revenue your business has generated, is this because the customers bought into you? Is it from contacts that you had before? Make sure that your MVP is tested with a wider community that you have not necessarily been in contact with before.
- A brand is not a product. You have users, members or fans, but these people are not generating revenue and have not expressed any interest in paying for your product.
- Your marketing is not a product. You might be generating a buzz thanks to a well-thought-out marketing plan, but this does not necessarily mean that you have a viable company.
There’s no doubt that the app sector is booming, and this growth has been accelerated by the Covid-19 crisis. App Developer Magazine reported a 198% increase in app development from February to May 2020 and as the pandemic continues, demand for digital solutions is only set to grow.
If you’ve got an app idea that you’d like to turn into a reality in 2021, download our full guide below, or get in touch for a friendly chat to explore your idea and it’s feasibility.
Download the full guide: From Idea to MVP