What is the life cycle of a successful entrepreneurship?
To successfully undertake, one must convert a social or commercial value proposition into a viable product or service.
In our experience as advisors to startups and SMEs in Venezuela, Peru, and Chile, we followed the following cycle of improvement of the value proposition(MVP):
Early validation of the MVP with potential customers and users.
We use the Business Model Canvas by Alexander Osterwalder and Yves Pigneur (for more information, access the following link) and a simplified version of the value proposition with key differentiated functionalities (MVP).
A modified Canvas and value prototype (MVP).
Incorporating the required changes in the value proposition into the business model (canvas) and estimating the impacts on the revenue model is the first step in your business model’s life cycle. Establishing variables to measure and follow are necessary activities during this step.
Validate the product-customer fit.
For this, use proper data analytic software. It is always preferable to consider a pilot: a trial-and-error launch of a new product to test the growth potential of the business model in qualitative terms (for social entrepreneurship projects) and quantitative terms (for business or commercial projects).
If the pilot passes the test, one should consider an alliance or look for financial investment to avoid getting out of cash during the following step. The amount of investment varies depending on the business model.
Prepare to scale the business model.
Once satisfied with the viability and robustness of the business model, we incorporate the possibility of replicating it in a national -or even international- market. Carry out testing changes in design, validation, and adjustment appropriate to the problems solved.
Consider alliances to access unknown markets.
Update business plan and strategy.
Finally, we incorporate all the elements of the final proposal, the business model, and its financial estimates into a business plan. This will serve as a basis for preparing investment offers or sponsorship for social initiatives.
In practice, these milestones go through a cycle of design, validation, and adjustment, which require a lot of planning, organization, and teamwork effort.
In summary, the entrepreneurial team’s effort must initially focus on validating the value proposition in the target market (through an MVP) and adjusting the business model to evaluate the viability of the business plan or the social proposal. Here, one decides whether to continue or pivot toward a viable proposal.
Once this cycle is completed, we can begin the most ambitious phase: scaling the local model to the international level to develop a business plan and access financial funds.
This cycle is equally fit for SMEs, especially when launching innovative and disruptive new products and services.
