Silicon Valley venture-capital-funded start-up companies have created a whole world of business advice and jargon to go with it. Much of that advice is irrelevant to the small, privately funded service firm owners reading this!

However, one VC concept I find fascinating is “Product Market Fit.” (Or PMF as the tech bros call it.)

Because it’s hugely expensive to create high-tech products (software or hardware), you don’t want to spend that money until you know someone wants it and is willing to pay for it. 

The first task of a VC-funded start-up is to find Product Market Fit. You need to find a group of people (preferably a large group) with a common problem. Then, you design an offer that promises to solve that problem (not even a product, just an offer) to test whether they will pay for a solution. 

One offer, to one market. If you can find that, VCs will give you the money to create the product. 

With service businesses, it’s the exact opposite!

Most service businesses have a very low cost of entry. They are frequently profitable from the first client. 

As a result, the incentive is just to find clients. Not “good” clients, not profitable clients, just clients that will allow me to cover payroll. 

So, it’s common to find small service firms with a random collection of clients, perhaps connected by a common tactic or talent that the owner is strong at delivering. 

VCs want their companies narrowly focused on serving one problem for one target customer because that makes growth more manageable. When you have questions about what features to add or how much to charge, you can solve them by asking your target customer!

Companies that have found PMF talk about how the market starts to pull them forward. Customer acquisition becomes easy, and growth accelerates. 

Focus simplifies growth.

When your service firm is trying to solve different problems for different clients, it’s hard to know where to invest to create growth. It’s hard to know who to hire, how to price…almost every question is more difficult!

Once you get beyond the point where your biggest fear is, “How will I meet payroll this month?” The more narrowly you are focused, the easier it is to grow your firm!

Focusing on one offer for one client is a proven path to growth. When you find that key, your business finds traction. The market starts to pull you along!

But we resist this idea. 

Why haven’t you narrowed the focus of your firm?

This is a serious question I’m asking you to answer! Hit reply and tell me. What’s holding you back?