Leap-of-Faith Assumptions are the Riskiest Assumptions in a Startup's Business Plan

Every business plan is built on a set of assumptions. Most of these are mundane and based on well-established facts. However, hidden among them are a handful of assumptions that are much riskier. These are the "leap-of-faith assumptions," and the success of the entire venture rests on them.

Leap-of-faith assumptions are the beliefs that are held to be true, but have not yet been validated. They are the assumptions that, if they turn out to be false, will cause the entire business to fail.

The two most important leap-of-faith assumptions are the value hypothesis and the growth hypothesis.

• The value hypothesis assumes that customers will find the product or service valuable.
• The growth hypothesis assumes that the startup will be able to acquire new customers.

The goal of a startup's early efforts should be to test these leap-of-faith assumptions as quickly and cheaply as possible. This is done through a process of continuous experimentation, as described in the Lean Startup methodology. By testing these assumptions early, a startup can avoid the trap of building something that nobody wants.