Don’t start with the idea, start with the problem

When people think about creating a business, most start with the idea. Others start with the lifestyle. Both are important factors, but none of them is a sufficient start.

The principle is: you will create what you aim to create. It’s as simple as that.

If you want to create hand-made dolls, or parenting webinars, or a lovely coffee place, you will, with enough effort, create one. But all of these are products, not business. I think this is the biggest pitfall of any newcomers: they obsess about creating a wonderful product, and they forget, that this wonderful product is not your business.

Business in essence, is a system, that allows to solve a problem in such a way that your costs are lower than your earnings. Let me stress this once again – business is not what you produce, business is how effectively you solve a problem.

Success then will depend on actual existence of a problem, it’s scale, and whether you can build an effective system to solve it. Let’s have a quick look at those four items: a problem, it’s scale, the system, it’s effectiveness.

Whatever idea or product you’re in love with, forget about them for a moment and ask yourself a question: is there a problem? Do you notice scarcity of handmade dolls around? Then perhaps there is space for handmade dolls as such. Or perhaps the scarcity not in the dolls as a product, but ability those who want them to meet those who produce them, and it’s the marketplace that is lacking. Or personalisation. Or distribution channel. Who do you think would want you product? Go and talk to them. What is their problem? I discovered, luckily at the very early stage of my business, that my assumed problem simply did not exist. I wanted to build personaliseable rental properties, where one could go and style the room to one’s taste. It sounded so unique and rare. I imagined the beautiful system of on-line style builder, interchangeable style elements, and how I’m going to be the first to the market. Bottom line is – no one cared. “Yeah,” – they said in the interviews, – ‘I guess it’s nice… but to be honest it’s ok, as long as the landlord is decent and neighbours are a good fit. It’s such a pain go and view and pay only to discover that the landlord is pain in the ass. They don’t tell you that in advance”. There was no problem on personalisation. There was a problem of lack of reviews, vetting and clarity, quite an apparent one.

People will pay you when you solve their problem. And the more acute is a problem, the better your chances are in being successful.

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Second part of the equation is the scale. Of course, you may not necessarily want to build an empire and create a ‘the everything store’, like Bezos of Amazon. But if your problem is only relevant to the handful of people, you’ll spend more in building channels to them, in reaching them through marketing and PR, in servicing them due to the lack of economies of scale.

Which brings me to the most important part: the system of business. This IS your product. If you are bored and want to fast forward to the ‘idea’ conversation you may want to rethink whether it’s the business you want. There are so many great hobbies and some can even make you some money. But if you truly want a business you must be obsessed with the system (or have partner that is). I just had a conversation with the marketing agency, who asked me whether I liked the content they are positing into my social media channels. My answer was: I don’t care if I like it or not – does it work? What’s happening to the conversion rates and net promoter score? How many clicks are we getting? And so on. Building a business is essentially building a system: it must get your product to the customer: you need distribution channels. It must make your customer aware of it: you need marketing and customer service. It must feed of something: you need financing. It must produce the product: it needs manufacturing,  pick, pack & ship, quality control, stock planning, warehousing. It must have something that operates this engine: you need the team. It needs a name and reputation to bring in investment, talent, customers: you need the brand and PR. It must exist effectively in the world: you need legal, accounting. It must be stable: you need insurances, licenses, leases and permits. It must be able to develop through learning loops: it needs strategy, analytics, planning, tracking, accountability. You don’t need to understand each of those parts in great detail, but you at least need to acknowledge they are more vital for your business than the best idea or product you can come up with. Markets change like weather, and great system can easily diversify and even pivot to a totally different product. In essense, someone in your team need to be obsessed about building the best system possible, and better it be you.

Finally, creating all the parts is just a starting point, making it work effectively is key. Effectiveness is defined as something capable of producing a desired result. The key result of business is profit. Therefore effective system is one that allows for all part to work in synchronised way leaving you with the profit at the end.

That leads me to the final point: business is there to make money. I know the question of money is often deemed as somewhat undignified. A lot of self gratification is to be gained from helping the wider community, saving the world, acting for a higher cause. That is all true and important, and there are multiple ways we can all contribute to society, and we truly should. But the primary goal of business is to make money, and if you find it uncomfortable to own as your goal, perhaps it’s worth addressing your relationship with money. But’s that’s a different topic altogether, perhaps for some other time.


3 thoughts on “Don’t start with the idea, start with the problem”

  • 1
    Liudmila on 17th May 2016 Reply

    !!!

  • 2
    Maryna on 18th May 2016 Reply

    Это полезная информация, спасибо !

  • 3
    Galina on 19th May 2016 Reply

    Спасибо за информацию к размышлению!
    Хочется еще добавить пункт, что успех запланированного бизнеса зависит еще и от платежеспособности целевой аудитории. А то проблема у конкретной группы людей есть, решение им бизнес предлагает, а ЦА не готова платить в принципе, потому что к примеру сидит на социальном пособии.

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