How small businesses can crack the right product-market fit | The Financial Express

How small businesses can crack the right product-market fit

Ease of doing business for MSMEs: The journey from micro to small and small to medium-sized businesses can take years. Also, building a profitable venture can take a few years. However, if an entrepreneur can crack the right product, something which the consumers want and can address an existing problem, it can play a pivotal role in shortening this journey.

How small businesses can crack the right product-market fit
Cracking the code for introducing the right product in the market can be a critical task.

By Ankur Jain

Ease of doing business for MSMEs: If there can be a perfect name given to a particular period, the one we live in today could be best described as the ‘age of entrepreneurs’. India has become one of the largest playgrounds for small businesses and start-ups, as a report suggests that there are over 77000 registered start-ups in India. Besides these start-ups, the total number of small businesses (including micro and small-sized enterprises) is estimated to be 42.50 million. 

The journey from micro to small and small to medium-sized businesses can take years. Also, building a profitable venture can take a few years. However, if an entrepreneur can crack the right product, something which the consumers want and can address an existing problem, it can play a pivotal role in shortening this journey. However, it is also a fact that almost 95% of new product ideas fail after or even before their introduction to the marketplace.  Also, only cracking a good product will not help. What is needed is to be able to build a product that solves a problem and continue to iterate it as the market evolves or as consumer preferences change. This is critical and big brands that haven’t evolved their products over a period of time have had to face huge losses and even face existential issues. 

Cracking the code for introducing the right product in the market can be a critical task, especially for small businesses that do not have the luxury of research and development resources and substantial capital backup. Also, young brands may not be able to get market intelligence in case they intend to venture into an unexplored category. 

Here are a few tips that can be helpful while designing or conceiving a new product or service: 

Locating the target consumer 

The first step would be to locate the target consumer of the product or service the business intends to provide. The question here would be whether the company would cater to the masses or just a tiny section of society. It is critical to notice who would benefit from the product or service. It is a difficult step and requires product analysis, in-depth market research, and an understanding of your competition. This might mean that a business might have to shelve out time and resources in the first step itself, but it would be worth it as the overall probability of a failed product can be reduced considerably.  

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Identification of customer pain points 

After locating the target customers, a business must find out whether the proposed product or service can address the issues and pain points they face. For instance, if a company wants to address transportation-related challenges faced by the people of a Tier II city in India, it shall also be critical to find out the affordability of the product/service along with the transportation infrastructure, digital literacy, and the issues with the existing services in the market.  

If we take the case of a fintech company that is trying to build a product to enable credit access for the masses, it is advisable to understand why big players like banks have not been able to address this challenge that has existed for long. This is when the concerned company will realize that there are existing gaps around reach, the process being followed and a limited number of customers being a part of the formal banking system. 

Having a clear value proposition 

The value proposition is your core idea of providing the best service or product for your customers and beating out your competitors in the process. For instance, a small business might not compete with large automobile companies in EV manufacturing. However, it can develop ideas and solutions to facilitate mobile charging stations at critical junctures across a city. This will not only make the business a significant part of the EV infrastructure but also ensure that the idea can deliver and transfer value to the customers.  

Testing the product before rolling out 

One of the most significant issues a product fails is the lack of testing and the inability to gain feedback from the end users before its eventual rollout. Any small business organisation should ensure that the product is provided for testing to the employees, friends, and acquaintances before the marketing processes for the rollout could begin. If you operate in the B2B space, it is advisable that the product is rolled out to a small set of customers so that the company can address any gaps/ issues that may crop up. 

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Even though this would mean that the actual launch would be delayed a bit, this could be a significant step towards saving a lot of money and resources otherwise spent on an eventually failed product. Even if a small business plans to develop a consumable material, this step could be taken by providing samples to the users.

To sum up, the size of a business enterprise does not guarantee that each of its products or services will be accepted by the public. Cracking the correct code for product development could be pretty tricky. There are many examples where some of the world’s largest and most influential companies have made a mistake whilst conceiving, designing, and introducing a product in the market. Even though following these steps would not guarantee the success of a new product or service, it eliminates a significant amount of risk, which is a critical consideration for a small business enterprise.  

Ankur Jain is the Chief Product Officer at BharatPe. Views expressed are the author’s own.

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First published on: 05-11-2022 at 10:00 IST