Part 1: The Business Idea Equation - The Problem
To better understand business ideas, I have broken down a business idea into a simple equation. We'll look at the size of the problems you need to identify to be successful, as well as different types of problems. Then to get you started there are three actionable steps you can take at the end to find problems you can solve for your business idea.
What is the business idea equation?
The business idea equation is a breakdown of the pieces that come together to create the business. I created this from all the knowledge I’ve gained over the years from entrepreneurs through education, reading, and interviews. This equation is important because it provides a better understanding of your business idea, so when you are ready to make it a business, your chosen idea will be worthy.
This equation also helps you think of more business ideas. The more business ideas one can think of, the better. If you are able to think of 10 new business ideas each day and do this every day, you would have over 300 business ideas in a month! Imagine how much better your ideas would be by then. The exercise we explore later will help with this part too.
When you learn how all the pieces of the equation fit together, each business idea you think of will be much better than it was if you did not consider this equation. It also allows you to kill business ideas quickly if the one piece is not very strong.
The first piece of the puzzle: The Problem
Every business out there solves a problem. For example, accountants solve the problem of dealing with taxes every year, or a caretaker providing elderly assistant services to solve the aging population problem.
Problems come in all shapes and sizes, and it is important you have the ability to recognize both those aspects. It can be great if you know how to identify problems, but if the problems are extremely particular to one individual, you are not gaining a broad enough view of problems.
The size of the problem:
For the problem piece to be effective for your business idea, the problem you are going to try and solve needs to affect at least 1,000 to 2,000+ people for it to be worth pursuing. Otherwise, it is too small of a problem, and you may not make enough money to stay in business.
Types of Problems:
There are problems that relate to all levels of Maslow's Hierarchy of Needs.
All off these levels can be catered to because each one has problems that these needs solve. For example, if you are dying of thirst and buy a water bottle, they solved the physiological need that you had. It was a problem that you were thirsty and the company was there to solve that problem.
Another example is esteem needs. Companies that offer products and services to this level are what make up a majority of companies in North America and Europe. Clothing, jewelry, and accessories are all examples of types of companies that cater to esteem needs. Although they do not solve the real problems associated with the esteem needs, they do cater to them.
Problems You Can Relate To
It is best to try and solve problems that you can relate to and have a passion for. A great example of this is the creator of the app Peerex, a recent case study done here on the blog. The founder saw a problem related to currency exchange that personally affected him, and wanted to solve it because he himself would find the solution valuable. Knowing other travelers would benefit, Kai became very passionate about solving the problem.
The only way to do great work is to love what you do. - Steve Jobs
How to find problems to solve
If you were like me and struggled to find problems to solve, here are a few ways to get started.
This tool is great if you are want to find problems to solve using a technological business idea. This matrix gives you a great understanding of where others are in the marketplace, and possible places for you to fit in. Once you find a spot that you would want to think of business ideas for, you can begin by finding the problems in that industry. Check out the tool here.
Problems found in the news is a great way to get started. The reason I love it so much is because the problems you find are usually from groups of people, so you are not depending on one person's opinion. Another great aspect is that new articles get published by the minute these days, so you get a fresh stream of content to peruse. As an aspiring entrepreneur, it is important to learn how to identify the real problem that is presented, and question if you want to solve it. For in-depth examples, check out this post.
Asking Friends & Yourself
Finding out the problems in your own friend group is a great place to start. It can be as easy as texting them, and asking what problems they face. Try to ask questions that dive into the details so you understand why it is a problem. Sometimes the problem a person says is not the actual problem that they are facing.
Now, it is time to take action. Use one of the three ways I just showed you to come up with problems so we can think of solutions later! If you don’t do it now, you will never get started. This will help you come up with business ideas and you will be ready for the next part of the puzzle!
Next week we will be adding on the next part of the equation, the value you can bring