Entrepreneurship and Small Business (ESB) Certification Practice Exam

In which phase does a business ideally create and iterate on its MVP based on customer feedback?

1. Growth

2. Prototype

3. Monetization

4. Traction

The correct answer is: Prototype

The phase in which a business ideally creates and iterates on its Minimum Viable Product (MVP) based on customer feedback is the prototype phase. During this phase, entrepreneurs focus on developing a product that meets the basic needs of customers while allowing for quick adjustments based on feedback. This iterative process is crucial because it helps businesses refine their offerings and ensure they align with customer expectations and market demands. In the prototype phase, the primary goal is to minimize risk by validating the concept through testing and learning from early users. The feedback received during this stage is invaluable, guiding further development and ensuring that the product evolves in a way that enhances its appeal and effectiveness. Growth, monetization, and traction phases focus on scaling, revenue generation, and establishing a strong market presence, respectively. In these phases, the fundamental elements of the product have usually been established, making them less centered on the iterative process of creating and refining a prototype based on direct customer insights.