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design innovation startups

Find Product Market Fit Fast

Product Market Fit is one of the hardest things for an early-stage startup to achieve and it’s a critical step for companies looking to scale and be successful.

Product/market fit means being in a good market with a product that can satisfy that market

Marc Andreesen – Andreessen Horowitz

So the first thing you need to do is to understand your target market. Are you building a product for the automotive market, the food & beverage market, the software or technology market or something else? To find product-market fit, you really need to narrow your market and niche down. Don’t try to make your product solve the problems of multiple markets early on. Identify a core initial target market.

Once you know your target market, make sure you really understand and research it. You can’t possibly expect to satisfy your customers let alone a target market unless you really understand their problems.

In researching a market and the problems within that market many entrepreneurs will start to identify problems. Once you have a couple conversations you’ll see patterns emerge in terms of problems that people are experiencing.

In the early stages of a startup it’s typical to build early solutions to those problems. And when these solutions solve those specific problems you have product-problem fit. You’ve identified a problem and you’ve provided a solution… many entrepreneurs think that they are set and they stop there but finding product-market fit is more complex. You need to ensure that your product doesn’t just solve a specific problem, but rather it solves a problem that is repeatable and consistent across a large market segment.

To do this you need two core things:

  • First: You need a good cross-section of customers across your market. Not just your friends’ circle, but knowing that a good portion of any customers in your target market have a similar problem you can address.
  • Secondly: Your product has to be sticky enough that people are upset if you were to take the product away.

Finding and solving a problem is a great start but to really find product market fit you need to make sure that the problem you’re solving is widespread and impacts a large enough market in a scalable way and that the solution doesn’t feel like a NICE-to-Have but rather a NEED- To-Have.

It’s better to make a few users love you than have a lot that are ambivalent.

Paul Graham – YCombinator

You need people to care and the best way to find out if they do is to ask them. Ask your users how they’d feel if they could no longer use your product. The group that answers ‘very disappointed’ will unlock the product/market fit.

Sean Ellis, who ran early early growth in the early days of Dropbox, LogMeIn, and Eventbrite and adviced that if 40% of your customers would be “Very Disappointed” then you’ve found product market fit.

When thinking about product market fit, it’s worth also considering founder-market fit. Some founders have deep experience with a particular market. Maybe they spent a decade at a large company within the target market so they know the right people and they know the problems that are un-solved. Sometimes having a good founder-market fit can be a huge advantage and investors will consider how well a founder is aligned to a market. On the flip-side sometimes founder-market fit can be road-block. Consider how sometimes only an outsider to a market can realize just how broken a market is. If Uber had deep market experience in the Taxi market they may never have build as disruptive a company.

Finding product-market fit is both one of the most misunderstood and difficult steps for any growing startup. Keeping yourself focused on the customer and how that relates to the larger market will keep your company on track.

Categories
startups

How to start a company with no money

Starting a business without initial capital is a process of building a stable foundation while minimizing risk.

There are three things needed to start a company:

  1. Money
  2. Customers
  3. Product/Service

Since we’re doing this without money, we’re left with just Customers and Products. The easiest way to get this started is with a side-hustle. The main idea is that you keep a stable job to provide you regular schedule and the financial stability and work on your business during nights and weekends.

Your side-hustle doesn’t have to be the exact business that you will start but it should move you in the general direction of your interests. If you think your business will be in the food or restaurant space consider delivering grub-hub as a side-hustle. Want to get into real estate? Look into being an AirBnB host. If you’re starting a beverage company, consider working at a bar or restaurant at night.

Think of your side hustle as both some financial capital but also as market research. There are a lot of examples of entrepreneurs getting started this way. Michael Dell started his computer business being a student and having a side-hustle of putting together computers for your friends.

Daymond John, the founder of clothing company FUBU, was working in Red Lobster while he was getting his business off the ground selling hats on New York street corners.

The founder of Mattel sold picture frames as his main thing and used the scraps of the picture frames to start building and selling dollhouses.

Lara Merriken, was working in Whole Foods stocking shelves working on her product the Lärabar, which gave her insight into how Whole Foods works and it also gave her access to store buyers willing to try her product. This access ultimately led to her big break.

Starting your business as a side-hustle gives you the advantage of financial stability but it also gives you a unique view of business problems. It may also give you access to customers.

If you’re trying to start a company with little or no money one thing you try to do to get initial cash flow is to get a customer to pay upfront. How do we do that? You build a prototype or sample.

Prototypes don’t have to be expensive, they can be drawn on a piece of paper, cut out of cardboard, hand made models or recipes baked in your oven. Certain businesses are harder to start without funding but most business ideas can be prototyped.

If you’ve built a prototype or sample of your product then services like Kickstarter, Fiverr or Etsy can give you a platform to sell products your product directly to consumers. These types of services require very little or no up-front capital. You can get customers before committing to a lot of financial up-front risk.

If you have a service business you may also be able to charge an upfront-deposit or down-payment giving you initial cash-flow. This is common in many consulting, construction, and subscription businesses.

Your early samples and prototypes can also give you customer feedback on what people like or dislike about your product.

Initial sales are unlikely to have a significant initial financial impact but they will help you continue to improve your product and they will get the initial flow started. Initial sales are sold one-by-one, so expect to get personal when you start the business. As your product or service gets out into the real world, you’ll start to develop word of mouth about your business or product.

For companies that have Money – they can spend money to get customers. But starting a company with little or no money, you need to make your products really great to get the word-of-mouth and attract more customers.

As the business grows, the revenue flow starts to increase and you’ll be able to spend more on growth, hiring, and talent. Ultimately every small business can be the catalyst for a larger one and the hardest part of starting a business is actually starting.

Good luck on your journey!

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