What Business Owners Care About Most? Two Key Factors: Low-Cost Iteration and Fast Iteration
The lower the cost of trial and error, the faster the iteration frequency, and the easier it is for you to discover a viable business model. Conversely, you are far more likely to go bankrupt.
If it takes you a year to develop a product and deliver it to market, you can only try a few dozen times in your lifetime. But if you shorten that cycle to just one day, you can try thousands of times. In the first case, you are limited to testing small-probability events that have at least a 3% chance of success. In the second case, you can afford to test events with less than a 0.01% probability. Under equal probabilities, the latter vastly improves your hit rate; under varying probabilities, the latter dramatically broadens your range of options.
That is why savvy businesspeople are especially averse to heavy upfront investment. Once they have spent a year building a successful bubble tea shop, what is their first instinct? To rapidly scale into a chain brand and franchise model. They no longer test things themselves. Instead, they have others test for them—others spend the money, while they collect the data.
This is how business works. Any seasoned merchant who has not lost their mind thinks this way.
