How To Determine Market Fit
By: Jeff Bevis
Every business, whether it be large or small, corporate or entrepreneurial in structure evolves through a process. In particular, there is one classic model of business growth devised by academics Neil C. Churchill and Virginia L. Lewis in a 1983 Harvard Business Review study. Their five stages of business growth are existence, survival, success, take-off and resource maturity.
It all starts with existence and the fundamental test to determine and solidify market fit for your product or service. When every new business launches, they are truly in the startup mode of stage 1. They do whatever it takes to build awareness and grow their customer base! The ownership may be an individual who opens a small, local business (such as a bakery, restaurant, auto repair service, etc.). The ownership may be a team of people with shared knowledge and experience in their industry who feel they have a better idea or mousetrap to reshape the market (such as technology services, architectural design, etc.). The ownership team may even be a financial group with an operational leader who opens, runs and manages the day to day startup business with employees (such as specialty manufacturing, order fulfillment, transportation logistics, etc.).
No matter what the product or service, priority no. 1 is identifying and growing the target customer base to best evaluate market fit. No business of any size operates without a customer base. It is a continual sprint to validate the new product or service being offered by finding customers! What are the varying customer need for the product or service? Does it match to ownership market projections for adoption of the product or service? If not, why? Are there adjustments needed to increase the customer base faster, or, solidify early customers who may order more product or services if the adjustments can be made? Are there other market factors arising that were missed in early projections? Are customers leaning more to the small business side or larger corporate customers who may drive higher volumes if early product or service satisfaction is achieved? The variables abound!
The importance of market fit is constant. It begins even before the new business opens it’s doors and never really goes away. In many ways, it is a fundamental requirement to determine if or when the startup business is even able to move to the next stage of growth. If market fit is solid, consistent and evolves into a growing and diverse customer base in the early weeks and months of operation it will literally enable the potential success of the new business to survive and even thrive for years to come!