Few years ago, I was approached by a coffee roasters brand that was getting started.
They plan to buy coffee beans wholesale, roast them, pack them, and ship them. As part of their business, they purchased beans, a roasting machine, custom packaging designs, and logistics costs.
During their first month, an estimated figure of S$3000 was spent for everything. For the next 2 months, they didn't make any sales at all. It's only after the fourth month, that they started making sales. Let’s take a closer perspective on this case study.
Case study analysis
They bought 20kg of blended beans at S$20/kg. A good, mid-range roasting machine ranges from S$2000 to S$2200. Packaging designs ranges from S$100 to S$200. In this analysis, we shall exclude the logistic costs.
|Items||Quantity||Unit price||Total price|
|Roasting machine||1 unit||S$2100/unit||S$2100|
|Packaging designs||Enough to pack all the roasted beans||n/a||S$150|
Typically, coffee beans have a shelf life of 2 years if stored properly. However, roasted coffee beans last around 1 week before they go bad. For our case study, the beans were roasted upon demand and the beans only started selling after the 3rd month.
Over the period of three months, the costs of starting a coffee roasting business total up to S$2650.
How minimum viable products resolve this issue of cost & time
The case study above seems to be working extremely well. But in fact, this does not happen 99% of the time.
According to an article, reasons most businesses fail include money running out, being in the wrong market, a lack of research, bad partnerships, ineffective marketing, and not being an expert in the industry.
Build your MVP today
Have an idea? Let's discuss it over coffee!
Take a moment and ask yourself this. Would it matter if your product is made on time but users aren’t interested in it?
If users aren’t interested in it, why does it matter whether you have/ have no actual product? If users aren't interested, your finished product is a waste of time and money.
Your business idea needs to be validated before anything else can be built. An example of this is to use landing pages combined with Google AdWords! A simple landing page ranges from S$300 to S$500. You can invest S$500 on Google AdWords.
Next, you need to connect your website to Google Analytics to measure the traffic sent to your site. Depending on your objective, Google Analytics is used to measure the conversion you desire. (E.g.: No. of sign-ups, no. of checkouts)
|Items||Quantity||Unit price||Total price|
|Landing page||x1 website||S$400||S$400|
|Packaging designs||Depends on your budget||$500||S$500|
Your website campaign will run for a month once everything is set up. During this month, you are required to monitor your conversions. Towards the end of the month, there will be 2 outcomes, where each option might take you: 1) Users had displayed purchase intentions & they are interested in your product. 2) Users are not interested.
If you come across the first option, congratulations! This means that you had successfully validated your ideas and you can take your business to the next level. However, if it is the latter, this indicates that your users are not interested in your idea. Now it's up to you to decide if quitting or changing your startup goals makes sense to bring your initial idea closer to success.
Comparison between both case studies
Based on our case study, we learnt that starting a business using the conventional route takes us three months and a figure of S$2650. Whereas, starting a business via a minimum viable product (MVP) only takes us a month and $S900 only.
Comparing between both routes, you can see why utilizing a minimum viable product (MVP) represents a much more sensible option. It allows the user to learn quickly using the least amount of time and money spent! Plus, you don't have to sink a lot of time and money into your startup if it doesn't work. For more reasons why, read our other article to find out the main reasons why you need a minimum viable product!
In conclusion, building a Minimum Viable Product (MVP) can be a game-changer for startups, entrepreneurs, and businesses of all sizes. By focusing on the essential features and functionalities of your product, you can reduce your time-to-market, save money, and get feedback from your customers early on.
The MVP approach allows you to validate your product idea, test your assumptions, and make data-driven decisions about your product development process.
By embracing the MVP mindset, you can optimize your resources, avoid costly mistakes, and increase your chances of success in today's fast-paced business environment. Ultimately, by investing in an MVP, you are investing in the future of your business.