As finding a business model is of utmost importance for startups a great way to achieve this is to use the “Build measure learn” - loop.
This loop can be described in three steps
- Get an MVP out and in customers hands. The MVP should just be enough to draw feedback.
- Collect meaningful metrics. Talk to actual customers so you are certain you understand your data.
- Now that you validated the learning, improve and optimise on your product or service. Sometimes this will show when you need to pivot and be flexible.
The more loops one can go through, the quicker they will hone in on their business model.
Reference
Ries, Eric. The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. 1st ed, Crown Business, 2011.
Highlights or timestamps
To facilitate this, set up so-called BML loops. BML signifies the cycle build-measure-learn:
— ^947478 from The Lean Startup
First you build a simple version of your product, like a prototype or a smoke-test.
— ^ac660a from The Lean Startup
Second, you take this product to its actual market and gather customer feedback. By collecting quantitative data from this experiment, you measure interest in the product; for instance, how many people clicked the purchase button and tried to buy shoes from your fake web shop.
— ^0bb1ee from The Lean Startup
When measuring, make sure you don’t just look at the numbers but also talk to your customers. If you want to understand your data, you should learn about the individual impressions and opinions of your customers as well.
— ^030f5c from The Lean Startup
What you learn in one cycle should then be used to conceptualize and build a new, optimized product, which brings you into the next BML cycle. This process is then repeated until you find a sustainable business model.
— ^2ae6ee from The Lean Startup
The more loops you can go through, the more likely it is you will find your sustainable business model.
— ^664f23 from The Lean Startup