The entrepreneurial iterative process

An important principle of entrepreneurship is that there are no facts in the building. Existing corporations have enough background and experience to know their customers, the environment in which they compete, what works and what doesn’t. When bringing a new product to market, they will already have a set of givens that will allow them to predict potential revenues or necessary capabilities. In entrepreneurship, this is not the case.

 

All the information used to set the basis of a startup and its business plan (product characteristics, target market, size of the market, distribution, funding...) will remain hypotheses until actually tested and validated in the real world. Then, even with an imperfect solution, entrepreneurs should test it to get feedback and refine it. This iteration process is the core of entrepreneurship. It is only through small experiments that an entrepreneur will be able to validate his/her assumptions. Not only is this approach less capital intensive, it is also a great way to build the foundation of a company on solid grounds.

 

The table below shows this validation process.