Product development process every startup owner needs to know

The founding of a startup is a complicated task that requires precise planning, knowledge, and lean, robust execution. Some of the headliners from different industries have started in their basements, so your initiative may always grow into something bigger and world-changing, too, and you should prepare for that. The mapping of your strategy and business is crucial for starting a company, no matter which market you want to enter.

We collected some useful advice for the different product development stages you can use to avoid common mishaps and shared risks. This article aims to help you define the main steps in your product development process and offers insights on how to succeed while going through it.

Process of prior preparation

The first stage of the new product development process is frequently called “The Stage-Gate” or the New Product Development (NPD) process. This is the critical point to choose the startup direction by identifying the main pain of the target customer. The product you will develop has to offer a direct and efficient solution to the customer and address this pain in a very clear way.

At this stage, you should also recognize the potential dangers and obstacles to your product development that might prevent you from starting successfully. Experts from Forbes state the significant risks of failure are currently under financing, small target market, weak promotional support, lack of market need, or premature/delayed market entry. They equally warn that up to 70% of upstart tech companies fail if not planned efficiently.

Mark out the “traffic lights” — figure out how attractive your key ideas are for the potential customer and select the ones that solve the most crucial, most relevant customers’ challenges.

Let’s use the digital healthcare industry as an example of how to apply your idea to the current needs in the high-demand field. You may consider streamlining patient identification for the current condition as a response for COVID-19 pandemics and the related risks, as it’s very important for healthcare to quickly identify the patients—and it’s often impossible to do this when a patient can’t talk due to, for instance, a critical condition. Or, your startup can offer technologies that will boost clinical innovation, tackling the consequences of the pandemic. To address customers’ pains properly, British Business Bank advises you to pay special attention to market analysis.

So, on this stage of preliminary preparations you need to:

  • Research your market;
  • Estimate your potential customer base and make assumptions on who exactly might be your core audience;
  • Define and address the target customer’s main pain;
  • Create a strong business plan and, if possible, secure your funding;
  • Make a SWOT analysis to understand what is going well and what still needs improvement.

Product development

At this stage, you already go from your theory into practice throughout your multi-step product development process: with all the necessary data on your hands, you can already outline the next points within your strategic plan.

You will have from three to five years to observe how your startup is performing—and, most likely, you’ll face obstacles while implementing your idea—your product—in real-world settings. Include your pricing strategy and financial plan into your major business plan you’ve created earlier: be careful and try keeping within the estimated budget.

software development for startups

After this, you can start the very process of engineering your product following your initial plan.

Create a Minimum Viable Product (MVP) to observe how it can satisfy your potential customer’s needs and expectations at the beginning stage. MVP is a primary form of your product still lacking many functions but demonstrating the core idea of solving the target customer’s pain.

You may already consider a specific space for your product improvement at this point: improvements will be gradually added as you continue working on your product. With each new development cycle, you will be able to assess functions that are already verified more precisely and have a better understanding of how to add new features without disrupting existing architecture.

Testing the ready product

As your product develops, you should start a testing period to observe its actual functioning and customer feedback.

In software development for startups, you can consider co-creation as an outgoing dialogue with your existing target customers. This trend is continuously growing worldwide. For example, Lenovo urged its customers to send their own designs for YOGA products to see what type of laptop could be most comfortable to use. This shows the participants that their input is valuable and that their needs are met and appreciated.

Another good example of such an approach is the giant Etsy that took advantage of the two-week-sprint development cycle to boost its growth. Their engagement feedback loop enables the sellers to interact with the features-still-in-development. It allows the software developers to integrate them into the final product that contributed to its success.

Create a website or any other outlet where you can keep your audience interested, engaged, and updated on what’s going on in your development process. Find your way of involving your potential customers in the testing process, so they could see your interest in satisfying their needs and your readiness to incorporate the most promising concepts into your product.


As you launch the product to the production environment, make sure that you keep your potential clients interested, so they do not miss the moment of launch—you can do this by warming up the subscribers with a series of marketing emails. If you consider hiring teams for software product development for startups, think through any feature requests your audience has asked for before and mention them when discussing the roadmap. Notify the audience about the new toolset. Maybe there are many potential customers waiting to click “buy” as soon as your product goes online.

Learn how you can make your first clients feel special and appreciated—celebration screens are an important part of the user experience; think over what special first-to-be-served features you can provide to make them happy. Remember that startup development doesn’t end with the product release but rather keeps on perfecting itself once the audience tests it and defines its flaws and benefits. Though this might feel like starting a fire, the launch’s momentum is highly crucial.


This easy-to-follow product development process will help you start your project and find the audience to promote it to. Remember that creating a project is a two-sided road: you should engineer it and simultaneously keep your audience interested and invested in what you do. Remember that passive consumers are a thing of the past. Make sure that you include all the necessary elements into your business plan to keep it in check and not to overlap your budget. Implement up-to-date, relevant, and highly in-demand ideas that solve people’s challenges to attract their interest and get them on board—and then, they will become your main helpers in building a successful product.


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