Defining Your Business Problem: A How-To Guide

There are two main reasons why entrepreneurs fail: First, the execution of the idea is poor (bad location, bad product, poor service, etc.) and second, the startup is not making something that people want. In other words, it does not solve a real problem.

That said, even successful entrepreneurs and investors like Paul Graham have made mistakes.

In 1995, Paul started a business to put art galleries online. What he didn't understand at the time was that that's not the way people who go to art galleries want to consume art. He was so focused on his brilliant idea that he didn't notice that his model was bad until he tried to convince users to pay for the product he created.

The old “model” was not outdated. Since then, Paul has created and invested in a number of successful businesses, many of which solve unique problems. Here is a short list to give you an idea of what these problems are or were:

• Viaweb - Paul's own company that allowed users to create their own online stores. Sold to Yahoo! In 1998, it became Yahoo! Store.
• Y Combinator - another company that Paul helped co-found and that helps young businesses obtain funding, with a particular focus on those that are started by young entrepreneurs that exploit technology and innovation.
• Watsi - the first non-profit organization to receive financial support from Y Combinator. This company is a Kickstarter for funding “low-cost, high-impact medical care for people in need.”

In fact, as a Y Combinator, Paul has invested in 564 startups in June 2013. Since he strongly believes in working with those who solve a problem - not necessarily a big problem, but a problem that has a market - we are going to assume that most of these startups had this characteristic.

In his item, Paul points out that many founders build things that no one wants because they start the process thinking only of their original ideas, rather than problems that need to be solved.

Successful entrepreneurs know their customers' problems

A lot of big ideas start with small ideas

Businesses like Microsoft started out with much more modest ideas.

Microsoft's first product - an implementation of the BASIC programming language on an Altair machine - had only a few thousand users.

According to Paul Graham, “people are bad at looking at seeds and guessing the size of the tree that will grow out of them.” Just because you're not getting funding doesn't mean you don't have a good idea. In the same way, getting financing does not mean you have a good idea! Maybe investors liked you... after all, that's often the main reason why a entrepreneur is going to invest in your business. In fact, they are investing in you.

So how do you know if your idea has potential? Here are 7 good indicators:

You are an integral part of your Project.

The idea itself is not the key to success. You are, and so is your team. Do introspection. Are you flexible and full of energy? Can you adapt? Do you get along well with each other? Feel the excitement of becoming entrepreneur ? If yes, you have potential, even if your initial idea is modest.

It is profitable

‍A good recommendation would be to get you thinking about the quickest way to achieve profitability, even if that's a slight deviation from your original goals.

You have a request.

Start by evaluating whether this is true or not.

Ask people if they are interested in the idea and use that answer as a starting point.

Be sure to ask your target audience (who are not friends or family), they are more likely to give you essential information.

• Use the web to validate your business idea.
• Also, turn to Kickstarter or other crowdfunding platforms that will let you know if people are interested or not.
• Create a “pre-launch” landing page to measure interest (ask people to give you their emails).
• Launch an Adwords or Facebook Ads campaign (without spending a lot of money) by targeting keywords that are relevant to your idea - be sure to set up conversion tracking, otherwise the exercise will be useless.

Do the same on other social networks with advertising platforms, like LinkedIn and Twitter.

You are solving a problem

This is also called value creation.

Ask yourself: are you creating something that someone else will be interested in? How will your idea improve her life? Help him reach his goals? Help her get over her pain? etc...

You genuinely believe in your idea.

‍Do you really believe in your idea - but not “passionately”, because passion involves emotional bias, and this is not about thinking about your “feelings” but rather about your objective analysis - do you really and rationally believe in your product to such an extent that you can make others around you also believe in it?

Test it out.

‍Start by creating the Minimum Viable Product (MVP) - the smallest, simplest version of your idea that allows you to start testing and learning.

The MVP only includes features that allow the product to be deployed. It will also get you back to thinking about what problem to solve. You need to deliver something that works and works even if it's not complete. You will be able to get quick feedback on what your target customers think about it.

Maybe your idea doesn't have potential.

But if you don't start, if you don't get started and don't try, you'll never know. Numerous entrepreneurs fail before succeeding, often several times. It's a learning process. Be smart as you do it and you'll get better at solving problems.

And... if you don't check any of the above, you probably have a great idea for yourself but not for the market.