It takes a good business idea to make a successful startup company. But how do you know whether an idea will be profitable or not for a new business? That is the question every entrepreneur must think about before investing time, money, and resources to bring their idea to life.
Unfortunately, too many entrepreneurs rush into building a minimum viable product (MVP) before weighing the risks involved. An MVP is the most basic version of a new product concept with only the core features in place. If an entrepreneur builds an MVP based only on an assumption that it will do well in the marketplace, they will probably end up regretting it later.
Why a Proof of Concept is Necessary for a New Product Idea
A smart and savvy entrepreneur with a new product idea will conduct a small test called a Proof of Concept (PoC) to determine whether it is worth spending the time and money on developing the product.
A PoC tests the feasibility of the product idea by identifying all the potential risks and value in it. If the value outweighs the risks, then it may be worth investing time and money in developing the idea into a product. But if the risks outweigh the value, then it might not be worth it.
To create a PoC, you need to thoroughly define your idea and the scope of the success that you wish to create from it. Below are five tips on how you can get started with creating a good PoC for your business idea:
1) Define the Core Product Idea – Clearly describe your core business idea and all the elements related to it, such as its technology and features. You should also describe your overall objective from creating this product.
2) Establish a Benchmark for Success – Setting a benchmark for your PoC will establish a point of reference for measuring your idea’s success. For instance, let’s say you want to create a longer-lasting battery for smartwatches. You could run a benchmark test to see if the prototype battery can hold a charge for at least 7 days before producing an MVP.
3) Identify All Required Resources – Okay, so you came up with a feasible business idea that passed your benchmark test. The next step is to identify all the tools, components, technologies, money, and other resources that you will need to build a prototype.
4) Build a Prototype – Now is the time to take the idea from the concept stage to the prototype stage. Develop a light version of your idea that tests the core function of the product.
5) Measure the Results – Track all the metrics associated with your prototype test to determine if they are positive or negative. The metrics are what you will pass along to the stakeholders to show them if the prototype functions well and meets the original objective.
The key takeaway here is to eliminate all assumptions by testing the idea and prototype firsthand to see what is possible with your product. Based on the test results, you will know if larger investments in the idea are worthwhile for building an MVP from it.
Why it is Risky to Build an MVP Too Early
An entrepreneur should never skip the PoC stage and move right on to the MVP production stage. Doing so could become a costly mistake if the product doesn’t end up doing what they want it to do.
Some of the potential problems and risks from building the MVP too early include:
- Developing the product based on inaccurate assumptions
- Spending many thousands of dollars to develop an untested product
- Investors and venture capitalists have less confidence investing in the product
- Budget increases and unexpected expenses are more likely to occur
- More bugs and technical challenges are likely to appear later
For example, let’s suppose you’re an entrepreneur who creates a new AI-driven healthcare platform for hospitals and medical facilities to record and store medical records. You skip the PoC stage and move right onto the MVP development stage. Then, six months later, you discover the platform keeps inaccurate patient records. That will force you to temporarily shut down the platform, disappoint your users, and spend thousands more on fixing the problem.
You wouldn’t want this to happen, right? Therefore, you must start with the PoC to catch all the problems and imperfections before they end up in the MVP.
Please note: Do not confuse an MVP with a prototype because they are two different things. A prototype is like a demo of the concept idea. It showcases the core function of the idea to test its level of success. On the other hand, an MVP is a more complete version of the product that contains multiple features and functions not seen in the original prototype version of it.
How Proof-of-Concept Development Services Can Help
Most entrepreneurs are not professional researchers with educational backgrounds in business. Because of this, they are probably not going to know how to conduct a comprehensive PoC test on their business idea. The good news is that there are service providers available who can perform this test for them.
Darly Solutions is an example of a company offering proof of concept development services to entrepreneurs who want to test out their new innovative ideas. The purpose of these services is to acquire and utilize real-life data to validate the financial and practical potential of a business idea.
PoC development services will help answer these critical questions for entrepreneurs:
- Is my idea feasible?
- What are the integration constraints?
- What is the investment range for carrying out my idea?
- Is there high demand and buyer readiness for my idea?
- What is the realistic path for bringing my idea from the experiment stage to the production stage?
Once you know your PoC has a pathway to success, you can begin building the MVP and eventually the full product itself. Most experts recommend using post-MVP product development services to scale your existing product without creating a longer project for each release. Product development service providers can help you establish predictable delivery with a controllable scope and sustainable performance as the product grows in use.
Conclusion
Conducting a PoC is necessary to test and validate the feasibility of a product idea before building the MVP. It can significantly reduce your financial risk, improve investor confidence, and identify problems early on before they become too costly to fix. Entrepreneurs who follow this advice will have a much better chance of successfully transitioning their idea from a concept to a practical real-life product in high demand.
