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