As an entrepreneur, chances are you are always hearing the term product market fit. The meaning of this term is often unclear and the importance often left unknown. Product market fit means finding what the best target market is for your product.

For a startup, this could make or break your business. If you have a great product but are targeting it towards the wrong people, your business will fail. Every product must to fulfill a need and even the smallest of niches can fill that need.

Entrepreneurs often find the problem their product solves, but fail to find the individual they’re solving it for. As a startup, this leads to a dire situation because you simply cannot market to everyone at once. Instead, you need to find your target market and then niche down as far as possible.

Finding your perfect product market fit is essential for the success of your business. To help move you towards success, here are three keys to finding your startup’s product market fit:

Define the Problem Your Product Solves

When you’re creating a new product, find a problem and then discover a way to solve it better than anyone else is. For example, the founders of GigTown knew that local venues were having a hard time finding musicians to book for their events. This led to the start of their on demand app that enables venues to book local musicians in a matter of minutes. They focused on a specific person (in this case people booking local musicians for events) who were having a problem and then created their product around solving it.

Defining your problem should be a continuous process as you’ll constantly be expanding your vision. Startups often begin with one focus and then expand features by learning what other problems their current array of customers face. Continue re-defining the value of your product and the solution it provides until you feel like you have developed something that really represents it well.

Determine What Kind of Individual has that Problem

Now that you have defined the problem your product solves, find the person you are solving it for. Decide who experiences that problem and how you can connect with them. For GigTown, the type of individual who experiences that problem is could be a local coffee shop, bar or restaurant owner who likes to provide live music but doesn’t have a way to connect with live musicians. On the flip side, GigTown also solves the problem for musicians trying to find local paying gigs but don’t have a platform to connect with venue owners.

If you’re having a hard time defining whose problem your product solves, make an Avatar for your ideal customer. Give him/her a name, daily routine, feelings and frustrations. When Josh Anton was starting Drunk Mode, a mobile app that helps students stay safe on a night out, he used avatars to grow his app to over 1.2 million downloads. A potential avatar for them could be a 23 year-old guy who works a 9 to 5 and likes to party on the weekends but wants to stay safe and responsible at the same time. By simply defining their ideal customer, Drunk Mode was able to easily target the right demographics with their marketing campaigns.

Test Your Theories

Now that you’ve defined the problem your product solves and know who your ideal customer is, it’s time to put your theory to the test. Take your product out start interacting with your ideal customer. Call them, visit their office, go up to them in malls, etc.

The real test comes when you ask them if they would buy your product right now. If they commit and there is no hesitation, then that is a good sign that you have found your ideal product market fit. If you continue to get a negative or hesitated response, then it’s time to find a different focus! Continue to do this cycle, going over these three keys, testing and retesting until you get your perfect product market fit.

Defining the perfect product market fit for your startup is an essential step towards building and marketing a successful product. Without taking these three crucial steps, you may find yourself building a product with no market fit. By defining the problem you’re solving, determining what individuals have this problem, and testing your theories, you’ll be more likely to have a successful business!