In the last post in this series I looked at the extra barriers that face startups in selling a new product or service. Inertia, Limited Resources, Risk and Size all make it harder for a startup to sell a new product than it is for competitors that are already operating.
To overcome these barriers, finding the right sort of market as a starting point is key, and I believe that this markets can be described quite simply.
Potential customers must have a Pain point so intense that they are compelled to act. There are people lying awake at night worrying about the problem that you solve. The product or service must directly address this pain – it must be a painkiller.
There must be Money associated with the pain, which customers are prepared to spend on painkillers. The amount of money must be huge in comparison to what it costs the startup to solve the problem so that there is the potential for excellent margins generating strong cash flow.
The market must be Accessible. The pain must exist within a group identifiable by industry, job role, community, geography, the places they hang out, the events they attend – and it must be possible for the startup to engage with that group (or at least a significant niche within it) with the resources it has available.
There must be Scale in the market so that the cost of creating the product can be recouped and investors can see the potential for a return. The pain must affect a large community now and in the future, and ideally
Pain, Money, Access and Scale – the PMAS characteristics – describe a good initial market for a startup to focus on.
How to go about finding a “PMAS” market will be the next blog in this series, but if you can’t wait for that you can go to our website and download the Salient Point Guide to Finding Markets, which has much more on this subject.