Is Your Business Idea Good? Here's How to Find Out
Q: I’ve spent a year investing in a new product, but it just isn’t getting anywhere. What’s next? Do I just keep at it? -- Karl, Pittsburgh
In nearly 10 years of consulting, there’s one question I wish more clients asked: Is my business idea a good fit for the market?
This is the first place we start when working with a client. A company has to identify core customers, understand how to engage its audience, and build a custom plan that sells the benefits of a business or a product.
But you can’t truly scale until you’ve found product-market fit -- that magical match when people simply can’t get enough of what you’re offering. It’s the Holy Grail for businesses, and often completely misunderstood.
Recognizing product-market fit is a superpower, and also super difficult. Just because people are buying what you’re selling doesn’t mean it’s been achieved. Conversely, just because you haven’t exploded with growth doesn’t mean you’re not on the right path. So how do you know when you should double down?
1. Start with your product or service.
Too many businesses try to find a soft spot in the market and then develop a product. But there’s too much variability and unpredictability. Instead, have a clear idea of what product you want to create, whom you want to create it for, how it will work, and why they will care.
If you don’t know who your core consumer is and how they live, it’s very hard to believe your “why” will be accurate.
Where do you get this information? Glad you asked.
2. Leverage your customers.
Too many founders want to get things perfect right out the gate, and this is a massive mistake. You need to create a product and then iterate. There are many ways to do this, but your greatest tool will always be the same: analytics and insights.
Get your product in front of people, and then listen to them. It’s not enough to just ask if they like it; oversimplified answers can give you inaccurate results. Instead, go deep. Net Promoter Score is a great system to do this; it’s a way to survey users (and nonusers!) to learn exactly how they think.
You need to know everything about your audience -- what they read, how they process, and what they would tell their friends. Every detail crafts a clear picture of what’s working, what’s not, and what gaps remain.
3. Assess your market.
Once you know your product and your target audience, it’s time to understand if you’re in the right market. Start with three simple questions: How many users currently exist? What is the potential for new users? What are the barriers to user acquisition?
Remember that the right market isn’t just one with growth potential -- it’s one that you can also understand well. As you search for your fit, make adjustments to rise above the noise and become your consumer’s hero. To do that, you must be able to identify which details, designs, or iterations will strike a chord and make a lasting impact.
As a rule, give yourself 12 months to see if you can find product-market fit. Business is a game of survival. If you go in knowing you’ll need to scratch and claw your way through it, you can put in the work and increase the likelihood that what you’ve created will be a success.