One model of business growth is the one that was developed by Neil C. Churchill (a Harvard Business Review researcher) in 1983. The five stages of business development they identified are survival, success (take-off), resource maturity, and existence.
It all begins with existence. Each new business enters the startup stage when they launch. They do what it takes to grow their customer base and increase awareness. An individual may open a small business in their local areas, such as a bakery, restaurant, or auto repair shop. An ownership group may consist of individuals with shared industry knowledge and experience who believe they can better change the market. This could include technology services or architectural design. A financial group may have an operational leader that opens, manages, and runs the day-to-day startup business. These are the most important.
To best assess market fit, priority 1 is to identify and develop the target customer base. Without a customer base, any business can’t survive. Customers are the best way to validate a new product or service. What are the different customer needs for the development? Are the projections of the ownership market for adoption of this product or service following them? If it does not, what is the reason? Do you think any adjustments could be made to grow the customer base quicker or secure early customers who might order more products and services if these adjustments can be made? Are there market factors emerging that were not anticipated in the earlier projections? Are customers more inclined to work with small businesses or more giant corporations? If early service or product satisfaction is achieved, this could drive higher volumes. Variables abound!
Market fit is a constant. It is something that starts even before a business opens and doesn’t stop. It is essential to determine when or if the startup can move on to the next stage in many ways. The new business will thrive if it has a consistent, consistent market fit, grows over time, and becomes a varied customer base.