4 Steps to Identifying Problems Worth Solving with a Startup

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Let’s just quickly get started talking about problems. If you have ever talked with an entrepreneur, you likely heard their idea pitched to you. However, an idea is only a part of the entrepreneur’s formula for their startup. The opportunity has both an idea and a problem. The idea is the entrepreneur’s unique solution to that problem. However, the idea is not the place to begin if you are just starting out on your startup.

One of the major flaws entrepreneurs make in starting a business is to quickly jump to an idea without carefully considering the most important starting point: the problem. When we start with an idea, we are likely to end up building something that nobody wants. Or, we spend significant amounts of money searching for customers that might be able to use our solution. Unfortunately, this happens all too often. Because we as entrepreneurs highlight ideas when talking about our startups without devoting equal attention to the underlying problem they solve, new founders often think that they need a great idea to get started. Instead, you need a great problem, something worth solving, when you decide to start a new venture.

My goal is to help you understand a process you can use to get a solid start as a founder. The focus is on understanding the complexities of a problem. We engage in a process where we first look at the symptoms that exist. We identify points of concern by talking with people about pains or challenges. These are the symptoms of an underlying problem. Second, we diagnose the problem by evaluating the reasons why these pains and challenges are appearing. Third, we need to connect those problems to a specific customer segment. Without a customer segment, the problem has minimum economic value. Finally, we define the relationship between the problem and the customer segment as a customer need. It is a customer need that makes an opportunity’s problem worth solving entrepreneurially.

Symptomatic Problems + Customer Segment= Customer Need

Understanding how to develop your problem will set you up for a better chance of success.

1. Understand the Symptoms

If you look at the above description, you can see how the first part follows the process used by physicians. When you visit the doctor, you discuss with them your symptoms. These symptoms are the outward reflections of their underlying problems. Looking at symptoms is also a natural way to think about the world around us. We typically find problems by first understanding the symptoms the problems are causing. It is these pains that make us aware of a problem.

2. Diagnose the Problem

However, the symptom (pain) is not the problem itself. It is an outcome of some underlying condition. We can see this illustrated in the example of the physician. Our symptoms help the doctor diagnose our illness or problem. We need to do the same thing when starting a new venture. We often describe the symptoms of a problem. It is your job to diagnose the problem from the visible symptoms. I suggest you carefully ask the question “Why does this symptom exist?”

3. Evaluate How the Customer Relates to the Problem

While you likely find many problems that are painful and problematic. Not all problems are worth solving entrepreneurially. They may be great needs that appear to be worth our efforts, but they do not have all of the components necessary to make an entrepreneur model successful (In these cases, we use other models — Learn More). So, what is the key difference between problems that work for entrepreneurs and those that don’t? The way you determine that a problem is a good starting point for an entrepreneur opportunity is when that problem has a clearly identified customer segment. Furthermore, is the customer segment increasing in size, does the segment have the ability to pay for a solution, and is the customer segment accessible to you? These conditions are necessary for an entrepreneur's opportunity to be successful. Remember, you are not a customer. You may have the problem, but you need to know that customers in the market also have a relationship with the problem and meet the conditions for a problem to be solved entrepreneurial.

4. Define the Customer Need

Once we carefully match a problem with their related customer segment, we can combine them to create a definition of our customer’s need. When we talk about problems in entrepreneurship, we are really describing customer needs. It is the combination of existing problems and well-defined customer segments that make entrepreneur opportunities more likely to be successful.

Before you start working on an idea for your startup, first begin with a well-defined customer need. By doing this step first, you will improve your chances of building things people need and are willing to pay for. Don’t fall victim to building things nobody wants. Instead, start the way successful startups think about their businesses. Start with the problem.

Researcher | Entrepreneur | Mentor | Investor | Director CSUSM Innovation Center

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