by Mellonie Francis Thu May 28
A product-market fit is considered one of the most important goals every startup wants to achieve. It’s an important point to note that having a few test customers or early adopters doesn’t mean you have achieved a product-market-fit solution.
A product-market fit is viewed by successful entrepreneurs as the end-game where a startup has built a product that satisfies a strong market demand and creates significant customer value. Therefore, a solution achieves product-market-fit when it meets real customer needs in a way better than the alternatives.
Most startups fail to achieve this because they do not first carefully consider or plan for the moment when customers actually want what they are selling. However, validating your business idea can make you achieve product-market-fit before even putting resources in developing it.
Here are 4 simple ways to validate your business idea to ensure you have a chance to get to product-market-fit:
The first step towards validating a business idea starts from finding a profitable niche. It’s important to choose a niche where you have worked previously, have networks in, and can understand the pain point. Remember it is difficult to design a solution for an industry you don’t understand.
Tip: Don’t choose a broad market like “SME with 0-50 employees” or “B2B Companies” as that is not an industry niche and would make your work much harder. According to a study by CB Insights, a whopping 22% of failed startup founders pointed to a lack of interest and focus in their business concept as their primary reason for failure. Therefore, it becomes necessary to have a good reason for choosing a niche and not make the mistake of pursuing a random opportunity.
You should make at least a list of 10 potential clients you can reach out to and schedule about a 20-30 minutes meeting in person or over a video app like Zoom or Skype. These meetings are more about getting you the answers and validating if these people would pay for your product! If so, how much?
Platforms such as LinkedIn or Facebook are a great way to find people matching your criteria. Remember, meeting and learning from these people will help you transform your business idea from abstract to concrete.
In the early stages, your main purpose of meetings should be understanding your target market. What are they struggling with, what solutions/alternatives are they using right now and how are they expressing their thoughts regarding the issue you’re addressing. By doing so, you can be confident that you are spending your resources building a product that solves a problem that does exist and the demand is out there. It is the only way to ensure you’ll be able to get clients and build a solid business.
Before telling them your idea straight of the bat, ask them what is their biggest pain point at the moment? This will gives you an immediate insight into their real pain point and might change the direction of your product. Ok, it’s time to pitch your idea. Frame the problem first and let them talk about the way they see the problem. Then provide an elegant solution. Keep your pitch simple and easy to understand. When they are talking don’t interrupt them and pay attention because each response is like a golden nugget that you can use later in both improving the solution and marketing it. Try to understand how much you could potentially charge for your proposed product in their minds. This will enable to decide on a revenue model.
At the end of the meeting, ask if they would like to be the first users or beta testers of the product you’re building. Then ask if you can contact them again to schedule another interview if you need to. Finally, review all the feedback received to decide what worked best
Validating a business idea and building a product-market-fit means talking to paying customers before building. The above 5 simple steps are a great start in assessing product-market fit. I want to end by saying that even if you have a few test customers or early adopters it doesn’t mean you have a product-market-fit and your solution is set up to success. A solution achieves product-market-fit when it satisfies a strong market demand and the users’ retention rate and adoption rate are high enough and stable.
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