Having the right product market fit can make or break a startup. In fact, The Top 20 Reasons Startups Fail report from CBInsights named that the main reason 42 percent of startups go under. Yet, many entrepreneurs don't even consider their product market fit until well after they've started their company. To be honest, that just seems careless and naive.
Entrepreneurs spend time and energy conceiving the idea behind their company and then planning to execute that idea, but they don't take product market fit into consideration. In doing so, they're putting the cart before the horse and assuming that there will be people ready to buy their product at the end of the road.
But that's not guaranteed. Not by a long shot. If you want to up the odds that your startup will succeed, then you need to take product market fit into consideration along the way. Here are four ways you can develop a better product that more people will be interested in:
1. Know that it's all about timing
There are very few products that have timeless appeal. Most need to be released at the right time to the right audience to catch on. Successful startups address a need or an issue that is current and they get to market before someone else beats them there. Launching too soon or too late means almost certain death.
Before you start pouring time and money into your idea, think about timing. Consider what type of situation would allow your idea to flourish. Would people need it more during a certain time of year? How likely are they to continue needing your solution in the future? Will the cost of your product or service be something that people could afford? Also, look at what other companies are offering in the space. Can you compete with them? Is there a different angle you should take to earn more of the market share?
Once you've answered all of these questions, you'll know whether or not it's a good idea to continue developing your business plan. Just be prepared to accept the truth if the stars aren't lining up for your startup right now.
2. Research the market each step of the way
Imagine that product development is like cooking. You need to taste and test what you're making along the way to make sure things are coming out right. With product development, the tasting equates to iterating. By following an agile startup process, you take development in steps, testing your product against the market as you go.
At my startup studio, Coplex, we use this methodology to help companies validate their core concept and turn it into a minimal viable product that is developed with input from potential users. You focus on one aspect of your product, build it out, then see how the market responds to what you've done.
By looking at their actions and how they interact with your product you can see what resonates with them and what needs more tweaking. Based on those results, you make changes and test the next version of your product. Each time you iterate, you learn more about your target market and are better able to take them into account when developing. This continues until you have the basics in place and can release the product to an already proven market.
3. Don't try to reinvent the wheel
Andrew Chen, a product market fit expert, has a theory on startup success. He says that in order to be the next big thing, a company doesn't need to be a huge, new innovation. It's actually better if the concept is based on something that has already proven to be successful. He recommends having 80 percent of your product built on an established idea and making the other 20 percent the thing that makes your startup better.
By taking this approach, a large portion of the market fit work is already done. Looking at other startups, you can see what they've done wrong or where they faltered. You can avoid learning those lessons the hard way and simply further develop the proven concept.
Go after your share of a market you already know exists so you have a better chance at mass adoption. That will improve your chances of success while also lowering the overall risk.
4. Know when it's time to start growing
Many entrepreneurs start wondering very early on when their idea will take off. They focus on reaching millions in sales and let that dictate their decision-making process. However, if you try to expand too quickly, you won't have the foundation in place to make your growth sustainable.
The time to start thinking about how you're going to grow is when you're finishing up the seed investment round. You've already proven your market is out there. Now it's time to go out and spend money on acquiring those customers. Focus your efforts on educating consumers and converting them into users or customers.
You can also expand at this point by releasing new features of your product that widens the market appeal. Just make sure your initial bases are covered. And pace yourself so your growth doesn't become unmanageable and hurt the company brand.
After spending so much time, money, and energy developing a product, there's nothing more disheartening than releasing it and realizing it has no market fit. Avoid making that mistake by taking steps along the way to ensure you've identified and are catering to your market.
What are some other reasons to take product market fit into consideration in the early stages of a startup? Share in comments below!