Proof of (business) concept

Proof of concept is a form a validation in business ; it can be easily used to prove that a business idea works and is commercially viable.

Its one of the essentials venture capitalists/investors look out for before putting in money in a business venture.This is because it quantifies how much a business has (and is able) to accomplish in a way thats measurable.
When you create a product/service and are able to achieve a certain level of traction with it ,it is easy to relate with whatever  huge projections you have set especially when seeking investment.
Showing proof of concept can help zero in on a definite path when scaling up a business. In the bootstrap model, a business shows proof of concept somewhere along the “sell” stage, just before the “growth” stage; 

proof of business concept
photo credit :www.bizpenguin.com

When a business idea shows proof of concept,it means one or all of the following
1) The business has been able to capture its own sizeable audience.
2) The business has been able to successfully sell a product/service and make money (profit) from its audience .
3) Systems and processes within the business are reproduceable on a commercial scale.
A business that has not attained a proof of concept is not necessarily failing, however, such business has most likely not been able to clearly identify how to make money from an audience on a commercial scale. To increase a business’ potential of success,it is important to look out for proof of concept before scaling up commercially,it verifies important assumptions about the business and reduces the risk involved in taking a small business/startup into the mainstream market.
how to test a business idea
photo credit: www.showme.co.za

Here are some parameters considered when checking for proof of concept in business.

– Net profit
– Gross profit
– Revenue/ revenue growth rate
– Number of customers/clients/users
– Customer/clients/users growth rate
– Systems and processes
– Total amount of money that has been invested in the business
These are parameters to consider when testing an idea for proof of concept. These are also some of the parameters used to see how well a small business/startup is doing.
If you are a bootstrapper, i recommend checking these parameters as you use the bootstrap model to develop your business.

learn more about how venture capitalists make investment choices

Leave a Reply

Your email address will not be published.