A few years back while testing the idea for a startup and SME in Wukari, Taraba State. I asked someone who owns an SME to narrate the activities he undertakes each day he gets to his shop. All those activities are based on hope. Hope is good for a business but it’s not just a strategy to depend on. It makes you powerless and unable to create the kind of future you want.
In Nigeria we have slang that says “e go better”, meaning it will get better. For years now Nigerians have been saying that but nothing has actually gotten better. Instead, it has gotten worse. Because “e go better” is not a strategy to make things better; it’s simply hoping that someone else will. It is giving up responsibility to get in the ring to make things happen.
When I started talking with Stanley, the founder and CEO of Courier Hub (www.courierhub.ng), an indigenous courier company, I expected him to talk more about hope as a strategy. Something like one day we will get there and so on. However, he talked about a data-driven business. They launched out in October, 2021, and today they have 600 riders serving Lagos.
We discussed their strategic advantage and innovation. I was touched by his simplicity and humility. He knows his numbers. They ventured a highly regulated with big players, but he is carving out a niche. They are entering through the unmet needs in the market that most big players take for granted. This is a great way to enter a market. He completely avoided head-on competition with the big players. Gradually they are building their clientele.
Their value proposition is all about delivering convenience to their clients. I had to download their app to prove his point. The experience was seamless. And I noticed that they are ready for scaling; which means they have achieved product-market fit and have a repeatable and scalable business. He wasn’t hoping that they will achieve their numbers but had scientific empirical evidence to back up the goals they set and projections they have made. Now, they at the stage of scaling and are looking to raise $1.3 million (US) to scale throughout Nigeria.
Start-ups are all about product-market fit; if you don’t have it, you can’t wish it. From the start, your purpose should be to get to that stage. It starts with knowing the pain points of the people you want to be a hero to. A pain point is the problem a product successfully solves. Most times it is something so painful to the customers that they can’t do without it or will rush to buy the solution.
No amount of marketing and selling can compensate for a lack of product-market fit. If you don’t have that fit, you just don’t have it. It is the foundation of a start-up. You can’t start to build a company until you have achieved product-market fit. Most people assumed that they have a business the moment they register it with the government and rent an office. No. You only have a business when your product solves a problem for the customer and the customer is willing and ready to buy it and continually buy from you.
When I started my first business I had a similar mindset. I got a partner who brought in the money and we rent an office. We placed banners outside announcing what we were doing. We already had the product and were just hoping that customers will come in. We built it and expected them to come running in. We had no strategy but hope. So when customers weren’t coming in as we hoped, we added prayers to our strategy.
That seemed not to work also. After a year in business, we had to close shop and ended our partnership. What ended that partnership? We never had a product-market fit and the money only lead to our quick demise. A start-up doesn’t need to raise funds at its early stage.
When you don’t have product-market fit and have funds, your best strategy will be hoping that something will work. But it never does. What will work is what you work. Miracles or luck may happen once in business, but to sustain it, you must have more than hope as a strategy.
Start-up founders are experts at building products that people want to buy and then testing their assumptions to validate that it is true. Start-up success comes down to product-market fit. Your product should have a validated truly great value proposition that delivers value in a measurable way and practically sells itself. The right time to invest in sales and marketing is right after you have attained product-market fit.
We must understand what a start-up is. It is not a company or a business rather it is a temporary organization designed to search for a repeatable and scalable business model. This means that a start-up produces a business model as its outcome not necessarily a product. Your customer should fall in love with your product while you build your business model.
This means that the primary objective of a start-up is to validate its business model and iterate it until it works. This will mean getting to know the customer and how the customer interacts with the problems they have and then testing your value proposition to ensure that it is true.
A start-up may start with the vision of the founder on how they will solve the problem of the customer but it ends with a business model. Hope, therefore, is not a strategy: developing a business model that works is the strategy.