This entire volume covers a wide variety of subjects about starting a company. Entrepreneurs have many common traits, not the least of which is impatience. Expecting an entrepreneur to read the ninety or so articles in this volume before starting a company is naive, to say the least. At the risk of overly dampening an entrepreneur’s enthusiasm, this article provides a one question blink test that, hopefully, will ground the entrepreneur and, for some, save them lots of pain and anguish.
The twenty-four word question is simple but not easy to answer. The complete answer may not be known for a very long time. However, by having the question on their minds, entrepreneurs can focus on developing their idea so that the answer is acceptable.
You provide a solution to a problem that many customers agree is worth solving and are willing to pay you for it now.
Before someone attempts to answer this seemingly simple question, they need to consider the underlying implications of many of the words in the question.
Is the proposed product or service a “stand alone” item that does not rely on other components, or is it part of an overall end-to-end solution? Will customers have to integrate the new product into their existing business? Will they have to change the way they do business to take advantage of it? How much will it cost, and how long will it take to add the new product or service?
There are a few other conditions that can be used instead of “problem.” Terms such as “situation,” “capability,” or “issue” might better describe what the proposed product or service provides. Independent of what word is used in the question, it must describe some state or condition that is being addressed.
A dangerous trap that is easy to fall into involves the need to “educate” the customer that they, indeed, have a problem that needs to be solved. Innovative, radical, or new segment products fall into this category. The required “education” process can take a very long time and be very expensive. Many outstanding products have fallen by the wayside because they were ahead of their time, and the companies or their investors simply ran out of patience. A telltale sign of the presence of this situation is when entrepreneurs fall into the trap of saying, “They just don’t get it!”
The solution needs to meet the needs of a sufficiently large market segment to be worthwhile. Also, “many” implies scalability. It is, for example, very difficult to build a business if each product or service requires customization for each customer.
The term “customers” refers to individuals that have the ability to purchase or have a significant influence on those who can purchase the product or service. A fourteen-year-old may show incredible interest in the newest BMW roadster, but by this, and most other definitions, he would not be classified as a customer.
”Agree is Worth Solving”
There are countless solutions to problems that may be interesting but may not be deemed to be worth solving. An in-refrigerator vision system that tracks the number of eggs and reports it via an Internet link may fall into that category (yes, there is such a product). It is easy for entrepreneurs to fall into the trap of focusing on their solution and thinking that others hold it in the same high regard as they do.
Often entrepreneurs do not understand that there is a fundamental difference between a customer’s “needs” and “wants.” For example, I “want” the newest smartphone and sixty-inch flat screen TV. I don’t “need” the newest smartphone and sixty-inch flat screen TV. Although there are clear advantages to the latest and greatest, their incremental improvements simply do not justify the new purchase.
Customers may feel that the solution is worth solving but not at the price point that the entrepreneur thinks it is worth or needs it to be in order to build and sustain a business. We all experience this situation. Walking down aisle after aisle of a Big Box store, there are countless items that would be nice to have but not at the price being asked.
Customers may be willing to pay, but not pay you! As a new entrepreneur or an unproven supplier, customers may feel more comfortable with dealing with someone else. The “Power of Incumbency” is overlooked by entrepreneurs. Customers often prefer to deal with their existing suppliers even if others offer a seemingly better value.
Probably the most frustrating portion of the blink test question is the last word: “Now.” It implies that all other hurdles have been met, but the customer’s purchase timing is “just not right.” It could be that your purchase is number six on their priority list but they only plan to purchase numbers one through five. It could be that funds will not be available until next year’s budget. It could be that the product fits a need that is out of season. The list goes on and on. The axiom that “revenue is always delayed, but bills always occur right on time” captures the frustration with the delay of now.
The eight simple words described above form a series of hurdles that must be crossed or a series of valves that must be open to allow the free flow of revenue. Unfortunately, it is an all or nothing situation. “Almost” doesn’t work. It may seem overwhelming and, in fact, for most entrepreneurs, it is. However, knowing what the barriers are and planning to overcome them needs to be a key strategy. The ninety articles in this volume can help.