Growth: Why You Need A Minimum Viable Business (MVB) Before Adding New Offerings

Whether startup or established business, the most common growth strategy for entrepreneurs is to create new offerings. Most attempt to create minimum viable products (MVPs). However, no business can grow merely by creating new products or services. Even if the market clearly indicates a gap and need for a new product or service and the entrepreneur can easily make or provide it, a business that has not already built efficient sales processes will not grow. Even a business with a great product can perish without enough sales. What is required to take a product and make a viable business that can then grow and take on more?

Here are some truths we all know:

- Ideating new products or services is easy. One can even persuade oneself or others to finance production.

- "If you build it, they will come" is a myth. Selling products or services is not easy, even if they’ve won awards.

- If selling one or two products or services is difficult, then selling three or four at scale is much more so.

- Making a profit or having enough margin is a matter of reducing fixed and variable business costs while increasing sales volume. Breaking even takes time.

So, what is a good way to grow if adding new offerings could overwhelm the business? Most product or service people just hope for the best and fail to understand the business dynamics required. They focus on just production and might even implement MVPs. However, they cannot possibly grow until they establish a minimum viable business (MVB)

An MVB is a business that has a repeatable sales process and enough sales momentum with the existing product or service portfolio. Break-even or profit may yet be in the offing. Exponential growth might still require external financing. However, seasoned VCs and angels expect to see a picture of sales momentum and profitability before they will write checks. An MVB has steady growth because it has both a viable product or service and viable sales processes that bring in a reasonable margin or profit when you discount costs.

Investing additional attention, effort and financing on a new offering is only justifiable after establishing such an MVB.

For startups, it is paramount to take an MVP and start establishing viable sales processes. Even though popular startup lore lauds the idea of an MVP, creating efficient and profitably repeatable sales processes around the MVP is much more important. Expecting growth or even additional financing without sales processes is silly. The first step to growth after establishing an MVP is to put it in the market and create operations and sales processes that establish an MVB.

If you are not a startup, adding potential new offerings begins with asking how new offerings should be staffed, produced, financed, marketed and sold. The simplest answer is to allocate some fraction of existing capacity to the new offering. However, is there sufficient capacity for this additional task? If your current business is an MVB as defined above, you could justify this division of capacity. If not, diluting your efforts to accommodate a new idea risks dissolving your existing business momentum. Even if you had an MVB to begin with and found the extra capacity to start a new offering, it behooves you to go through the process of establishing an MVP and then an independent MVB for the new offering.

The crux of growth is establishing an MVB with efficient and profitably repeatable sales processes. Startup or otherwise, if your processes for sales are not clearly understood, cost too much or are too complicated to repeat, then you do not have a foundation to expand in any manner.

Without an MVB under your belt, your current business is incomplete and probably not very stable. Starting on new ideas is unlikely to manifest the business discipline needed to succeed, and you are unlikely to inspire the investment you might need from anyone.

So, the first step to growth or expansion is to ensure that your current sales processes for the existing products and services are profitably repeatable. This means that the entire chain of the sales process must all be clearly understood and practiced, and bring you margin:

- Marketing and lead generation: How does one create a sufficiently large funnel? Are the appropriate types of customers being convincingly messaged?

- Qualifying prospects: How is the lower end of the funnel made skinny and efficient by ensuring only leads with need, budget and urgency are given attention?

- Sales approach, negotiation and closing: Is the sales effort prepared with appropriate collateral, objection handling and alternative offers?

- Cost: Does the cost of all of the above in addition to production cost leave you a margin?

If you have all this to a point where you can guarantee sales and margin, then you can train new salespeople and produce enough revenue to finance some growth yourself. Is such margin only possible after production at scale? It might be true, but the food industry, in particular, is a great example of margin via production at scale still failing. There are few exceptions.

Being rigorously disciplined about the sales process gives you, your business and any expansion endeavors a much more key skill set than merely producing new products or services. It forms the most important part of viability even without a great product or MVP.

A profitably repeatable sales process and MVB leave you in the comfortable position of needing to just train and scale sales efforts (all other efforts in a business except research are much easier) to take your current business to ever-increasing heights. You then have a foundation for growth by making the choice to enhance existing offerings or build entirely new ones.

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Article resource: https://www.forbes.com/sites/forbesbusinesscouncil/2020/04/22/growth-why-you-need-a-minimum-viable-business-mvb-before-adding-new-offerings/?sh=5891119b88cb