Our Methodology

Component 1: Profitable Market (PM)

Before evaluating a product or operations, SGI validates whether the target market can support a viable business. This sounds obvious, but roughly 40% of struggling businesses Kurt has assessed over 25 years had a fundamental market problem they had not identified.

Four critical market tests

Market Size Sufficiency

The addressable market must be large enough to support revenue ambitions. A brilliant product serving 500 potential customers globally cannot become a £10 million business. SGI uses bottom-up market sizing based on customer segmentation, not the top-down '1% of a £50 billion market' assumptions that appear in 80% of the business plans we see.

Proven Demand Existence

A proven need for the product, or for acceptable alternatives, must already exist. If nobody currently pays for solutions to the problem, the business is attempting to create demand — the most expensive and highest-risk approach. SGI always looks for evidence of existing spending on alternative solutions, workarounds, or adjacent products solving related problems.

Market Accessibility

The target market must be economically reachable. If Customer Acquisition Cost exceeds what customers are willing to pay, the market is inaccessible, regardless of size. This is where many promising UK startups come unstuck — the market exists, but the cost of reaching it destroys the business model.

Affordability and Willingness to Pay

The target market must have both the financial capacity and the willingness to pay the required price point. Serving customers who love the product but cannot afford it creates an unsustainable business model. This pattern recurs in B2C ventures where founders conflate enthusiasm with purchase intent.

Real application example

A healthtech startup approached SGI, wanting to serve NHS trusts with AI diagnostic software at £200,000 per trust annually. The market was substantial — over 200 trusts — and demand was evident, as trusts were already spending millions on diagnostics.

However, our Profitable Market assessment revealed two fatal issues. First, NHS procurement cycles average 18–24 months with complex tendering requirements, and the startup had just 12 months of runway with no existing NHS relationships. Second, the £200,000 price point would require board-level approval and budget reallocation, not departmental purchasing authority.

SGI repositioned the company towards private diagnostic clinics at £2,500 per month — a smaller market, but accessible within two-week sales cycles with manager-level purchasing authority. They achieved profitability in eight months rather than burning through their runway chasing inaccessible NHS contracts.

Kurt's note — The lesson I share with every client: the best market is not always the biggest. It is the one you can actually reach and serve profitably.

Component 2: Product/Service (PS)

Once a Profitable Market is validated, SGI assesses whether the product or service sufficiently meets market needs to generate sustainable demand. Meeting customer expectations is necessary but not sufficient for success. 'Good enough' products in perfectly positioned markets consistently outperform 'brilliant' products in poorly chosen markets.

Four Product/Service assessment criteria

Functional Requirements

Does the product actually solve the problem customers are trying to solve? Many products solve problems that founders think customers have, rather than actual customer needs. SGI assesses through customer discovery interviews, usage data analysis, and retention cohort tracking.

Quality Expectations

Does the product meet the quality standards customers expect at this price point? A £50 product and a £500 product solving the same problem face entirely different quality expectations. SGI benchmarks against competitors and measures customer satisfaction scoring.

Differentiation Strength

Why should customers choose this over alternatives, including the status quo of doing nothing? 'Better features' is rarely sufficient. The product needs to be 10x better, fundamentally different, or significantly cheaper. SGI examines customer switching behaviour and tests value propositions against real alternatives.

Market Fit Evidence

Do customers actively seek this solution, or must the business persuade them through aggressive sales efforts? Product-market fit exists when customers pull the product towards them, not when the business has to push it. SGI measures through inbound enquiry rates, sales cycle length, referral rates, and customer acquisition efficiency.

The critical insight

A great product serving the wrong market fails just as badly as a poor product serving the right market. This is why Product/Service multiplies Profitable Market in the formula. Both must be strong. Zero times anything is still zero.

Real application example

A SaaS project management platform offered exceptional features, earning a 4.8/5 customer satisfaction rating. It solved a real problem and targeted a £15 billion global market.

Yet they were struggling with 67% annual churn and a £450 Customer Acquisition Cost for £99-per-month subscriptions — burning cash despite having happy customers.

SGI's Product/Service assessment revealed the issue: they had built an enterprise-grade product with complex features, extensive customisation, and a steep learning curve, but they were selling to SMBs who wanted something simple and quick with a five-minute setup.

The product was excellent — for the wrong market segment. SGI repositioned them towards enterprise customers at £500 per month on 12-month contracts with dedicated onboarding. Churn dropped to 8% annually, and CAC payback improved from 34 months to six months.

Same product. Different market segment. Transformed unit economics.