What is the Product-Market fit stage of Business?

What is the Product-Market fit stage of Business? How to test whether your Business is moving towards the right direction at that stage with Product/Market Fit Score? What is Cash Burn rate? Run Rate?

  • An investor prefers a business which is Effective rather than being Efficient.
  • The first stage of any business is called the Product-Market fit stage where the three primary questions are required to be answered:

o What is the problem?

o What is the solution?

o Who is the customer?

  • This is the stage at which the Minimum Viable Product(MVP) is designed.
  • This is the stage at which Customer Discovery is aligned with Customer Validation.
  • Undertake a survey with the question “ How would you feel if you no longer could buy/use this product?”
  • If more than 40% of the respondents would be disappointed then it is a must-have product which needs to be pivoted.
  • “Cash Burn rate” is the cash spent by business every month.
  • “Runaway Rate” is the time within which the Business runs out of cash.
  • These metrics show the following:

o Efficiency in using cash

o Extent of capital needed

o Time to next fund raising

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