Some of the most heartbreaking stories from all the time I've spent advising early entrepreneurs are when they tell me they have this great startup idea and they're already paying a developer to build it out.

I love the aggressive attitude and the can-do spirit. But there are like a million things you need to do before you start spending money on that freelancer or offshore team.

Wait. 

Five. 

There are actually five things you need to do before you hire a developer. 

Step 1: Build Your Prototype

If you've already built a prototype, move on to Step 2.

You're probably familiar with the concept of a minimum viable product (MVP)--and if not, that's the next step. 

The greatest misconception about an MVP is that you build it to prove that your idea can be pulled off. That's not the case. An MVP proves an idea should be done. A prototype proves it can be done.

Now, should you develop the prototype yourself? Most definitely, because you don't even have to learn to code yet. Building a prototype is more about learning to Hack Shit Together. It's like building a regular MVP, only there's a lot more duct tape.

There are all sorts of platforms that can emulate tech functionality with a much more manual approach. I'm talking about WordPress, G Suite, Zapier, Slack, and so on. These let you drag-and-drop your way to building mockups of apps, databases, APIs, whatever, with absolutely no code--you can literally fake the whole thing.

Your prototype should do one thing--the thing that's going to prove out the functional viability of your idea--and do it such that you can visualize the user experience in a way you can document. 

Now, should you launch the prototype as an actual real-world product? Absolutely not. But you can show it to people you trust to get their feedback, which you can use to develop your MVP. 

If the prototype works, you've completed Step 1. Four more to go, and then it's the developer's problem.

Step 2: Get People to Pay for Your MVP

I'm very deliberate in choosing my wording for this step. Building an MVP means nothing if no one is using it. In fact, an MVP that no one is using is still a prototype, just a fancy one.

If you've got people paying for your MVP, move on to Step 3.

While you can build an MVP with the aforementioned tools you used for your prototype, it'll take some learning and trial and error to hack together user input and output, automation, data manipulation, and, most important, executing the transactions that are going to create revenue, the ultimate and only measurement of the viability part of the MVP.

You might as well do this with no-code. I'm a huge fan of Bubble, but there are several platforms out there that let you point and click your way to at least a functioning web app, if not the entire finished application. For example, I built the very popular, very profitable Teaching Startup platform in Bubble, in part to prove that such a thing is possible.

So who is going to pay for your product? Simple question. Really, really tough to answer. This is your target market, and you need to define it before and during your MVP build.

Describe the kind of person who is most likely going to get the greatest value out of your product. Once you have a really tight definition of your most valuable user, find as many people as you can who most closely resemble that definition. Find huge groups of them. 

Then--this is going to sound crazy--sell your MVP to them.

Don't give it to them, don't leave it on their doorstep in the middle of night, don't let them try it first without a path to convert them to a paying customer. 

If you can't do this, you don't have an MVP yet. You still have a prototype.

How you sell it to them doesn't matter yet, but here's the minimum of what your pitch should contain: They should know why they need it, they should know what it does, they should know how to use it, and they should know whom to call when it doesn't work.

Then, you need to be able to contact them and you need to give them a reason to give you feedback. Because they're going to tell you what kind of product you actually need to build and what kind of market you actually need to sell into.

Chances are that product for that market is not going to look a lot like the idea you had at the beginning of this post. So I just saved you a bunch of money in rework.

Furthermore, it's always best to have money coming in before you start putting money out. I'm not saying the damn thing has to pay for itself, but getting people to open their wallets and give you money is the hardest thing to do. If you can do this, then you have a good idea.

You can make some guesses about how much it will cost to make the product and how much you can charge for it. You can be wrong about those guesses. The only wrong you can't be is charging way too little. Introductory pricing is meant to get customers in the arena, but selling a $100 product for $1 isn't going to prove anything. 

And that's also how Ponzi schemes start.

Step 3: Create Your Distribution Mechanism

You may already have a way to get your product out to a mass market. If so, go to Step 4.

No matter how great your idea is and how well your product eventually works, it doesn't mean anything if everyone can't get to it. Everyone. In the previous step, I said it didn't matter how you sold the MVP. In this step, we're making that matter. 

If you're building an app, you're locked into the app stores. Any other kind of traditional or web-based software is going to transact over its own website or some kind of aggregate -- a good example of an aggregate is Steam for games. If hardware is involved in your product, don't go to Amazon with an MVP, you'll get booted off. Stick to Shopify or something like it.

Now, that's just the mechanism. It's not going to push your product through the store. But for your MVP, you don't need a huge audience. What you do need is the ability to track any usage of your product that comes through these mechanisms that your company isn't directly and personally responsible for. You need to know who those users are, how they found you, and why they came.

This will tell you about product-market fit and if and how you can sell more of your product with less direct effort. That's that flywheel that all those startup people keep trying to spin.

Step 4: Get Customers to KEEP Paying for Your Product

If you've got repeat customers, head to Step 5.

Ideally, you want to keep customers coming back and spending more money, whether that's through higher tiers of usage, upgrades, professional services, hell, even in-app purchases. It's much easier and cheaper to sell to an existing customer than it is to find a brand-new customer.

But if your product is limited and low-quality, the customers might not be coming back. No matter how much value you initially provide, expectations will eventually rise to create the need for a professionally built product.

A leap of faith may be required.

Thankfully, it's much easier to take that leap with data. By now, you should know enough about your product and market from previous steps to be able to connect the dots on where that recurring revenue will come from.

Step 5: Do the Math

Once you've got repeat customers, you can calculate a more accurate lifetime value (LTV). You'll also have data telling you roughly how much it costs to acquire each customer (CAC). The difference between LTV and CAC is your profit on a per-customer basis. 

You should also have a good guess at how many customers you think you can reach. Multiply that by your expected profit.  

That number is the maximum you can spend on developing the real product. But I say "maximum" because you're not running a charity. You have to pay for all your time, effort, and growth. 

Then--and only then--you should hire a developer to build the professional version of your product, with your prototype and MVP in hand. Having those established will also save a ton of time and money.

Then, with the developer's help, you can build a prototype and MVP for the next feature set, repeating all five steps along the way.

At that point, you've got a repeatable cycle that will allow you not just to build out your brilliant idea, but to keep building until you hit on the next idea for another product, maybe even another company, and start the process all over again.

Hey! Here's a video of one of Joe's recent articles with some extra commentary. 

8 Corporate Traps That Startups Always Fall Into