16 Aug First, Make Sure It Fits
Don’t Be A Wanna-preneur
Entrepreneurs often have a tendency to focus on the “fun stuff” … designing the perfect website, having a beautiful logo, filing trademarks and patents, networking with successful people, dreaming up grand visions for market domination, and so on. Although these tasks can make you feel like you are accomplishing something, in reality, you are only spinning your wheels. These are the habits of “wanna-preneurs”.
Your first priority as an entrepreneur is to set up conditions that motivate a person to spend their hard-earned money for your product or service. As simple as this may seem, many entrepreneurs overlook this first basic rule.
Product – Market Fit
We’ve already discussed the negative condition of a mismatch between the product and market as a common reason businesses fail. This dynamic is known as product-market fit and describes the degree to which a product successfully serves market demand.
As the first step in building a business, entrepreneurs should engage with early adopters, gather feedback, and make adjustments to the product or the target market as determined by the feedback information. After going through this procedure repeatedly, entrepreneurs will eventually end up with a product that should strongly satisfy market demand. Rushing this process inevitably results in poor product-market fit, so follow through at a determined but unhurried pace.
This process can mimic the market only so far, so once the product or service is finally launched, the reevaluation process should continue. Most companies pivot multiple times before achieving a product-market fit with desirable results. This process can take a lot of trial and error!
There are, however, ways to make this process more efficient and less time-consuming.
The first step is to get a minimum viable product (MVP) out as soon as possible. An MVP is essentially a version 1.0 of a product that serves the needs of the potential market with as few features as possible.
If you’re running an e-commerce store, an MVP might be getting a templated store up on Shopify, buying inventory in small quantities, and running some ads linking to your site to see if there’s any interest. This is an example of prospecting the market.
Once you have a market presence, you’ll want to gather feedback and data from your customers. This can be accomplished in the following ways:
- Ask your customers to fill out a survey about their perceptions and experiences with your business and your product.
- Have your customer support team analyze the complaints, compliments, and ideas you receive from customers.
- If you’re a small team, consider doing customer analysis yourself so you can gather feedback directly and even press for more information if you think it’s pertinent.
- Always weigh feedback in context by keeping an eye on where the feedback is coming from, how customers are using the product, and whether or not they are looking for something for nothing.
- Don’t try to please everyone because it can’t be done. Your goal is to satisfy your high-value customers. Remember the 80/20 rule: 80% of your profit will come from 20% of your customers.
Five Common Mistakes to Avoid When Seeking Product – Market Fit
When seeking the balance of product–market fit, entrepreneurs are subject to making mistakes. Here are the five most common mistakes with some ideas on how to avoid them.
1. Solving a Problem No One Has
Always make sure your user’s pain point is something customers are willing to pay for. You can determine this by conducting market research, interviewing potential customers, or allowing people to pre-purchase the product. Do whatever you can to validate the pain point and the attraction of your product or service as the solution before spending too much money on development costs.
2. Not Hiring a Good Product Team
Entrepreneurs often seek team members who share the vision but lack experience. Hire people who have experience bringing similar products to market with success. If you foresee any problems that your business may face, having a team of people who have already confronted those same issues can be extremely helpful in guiding you through those obstacles faster and with less trouble. Ideally, you want to build a team of industry experts who share your vision and have the experience to move your business past the inevitable challenges.
3. Assuming Product – Solution Fit Is The Same As Product – Market Fit
Just because your product or service solves a problem doesn’t mean you can make money from the solution you created. A business finds a product-market fit when it is in a good market with a product that meets the needs of that market. By definition, being in a good market means that people are willing to pay for your product or service. Solving an existing problem doesn’t always mean there’s a sizable number of people willing to pay for your solution.
4. Assuming Product – Market Fit Is a Stationary Goal
A problem that exists today may no longer exist in the future, or a new, more pressing problem could replace it. A product or service that solves a problem today might be undercut by a better product from a competitor tomorrow. Don’t be apathetic about market research or product development if you’ve been initially successful. Always keep an eye on the horizon for changes in your industry, in society, and especially in your target market. You can be guaranteed that change is 100% certain, and businesses that can’t or won’t adapt simply won’t survive. Examples of this are everywhere.
5. Assuming That Having Customers Means Product – Market Fit Is Achieved
You don’t want to just go after any customer you can get. A better approach is acquiring qualified consumers who contribute to strong sales, referrals, and high lifetime value. You want enough of these quality customers so you can build a profitable business. Learn to be discriminating and strategic with your customer acquisition. From the beginning, cast a wide net and then narrow your criteria as you learn more about which customers drive your most profitable sales. Segregate the market into segments based on needs, wants, and behaviors as this can help you determine which segments are the most profitable. Once you know this, you can determine the best ways of finding more customers in these market segments.
Three Companies that Pivoted to Create Product – Market Fit
Some companies pivot so much that they wind up developing a very different product than they first envisioned. Here are some examples of such companies.
Netflix started in 1997 with a DVD-by-mail service. A decade later, they realized that streaming was probably going to become the next future for video rentals. In 2007 Netflix pivoted and launched its streaming service based on the expressed desires of its customers. Customers didn’t want to wait for their movies to show up in the mail; they wanted their films instantly. By listening to what customers wanted and adapting accordingly, Netflix created the video streaming market we are accustomed to enjoying today. But will this be enough for the next new future? Perhaps someday we’ll be entertained by holographic projections rather than streaming on our screens, or another technology we haven’t conceived yet. Will Netflix pivot again, or will a competitor redefine the movie-watching experience of the future? More will be revealed!
In the 1930s, Kutol was a Cincinnati-based company whose primary product was a pliable substance used to wipe soot from wallpaper. However, less than two decades later, as oil and gas heaters took hold, the company found that demand for its product was plummeting. Faced with bankruptcy and scrambling for a new business channel, they learned that nursery school teacher Kay Zufall had been using their product for arts and crafts so children could create shapes and objects. Using this new information, Kutol explored the idea of distributing the product to kindergartens, and since then, more than two billion cans of Play-Doh have been sold worldwide. Hasbro eventually acquired the company in 1991. This was a pivot that resulted in over 95 million cans being sold per year.
3. Restaurants During the COVID-19 Pandemic
When the coronavirus became a pandemic, social distancing, government mandates, and lockdowns crushed the restaurant industry. As a result, restaurants and their suppliers were forced to cut costs or go under. Many closed their doors temporarily while others pivoted to serve takeout and home delivery. Services such as DoorDash, GrubHub, and Uber Eats worked with restaurants to market the concept of food delivery. While this is not a typical story about pivoting to find product-market fit, it provides an example of adjusting a business model in reaction to sudden and severe changes in the market.