F..k I should know that
I think you’ll agree with me that no one wants to be in a position 5 years from now saying:
I ought to know that, I can’t believe I made such huge mistake with my life.
Nonetheless, in business there is no such thing as predict the future, neither we have to hesitate because we think we don’t have all the information in our hands so as to make a “knowledgeable decisions”. If we wait too long it will be too late, the opportunity will not be there anymore (the ship has sailed).
As Tim Ferriss put’s it “For all of the most important things, the timing always sucks. Waiting for a good time to quit your job? The stars will never align and the traffic lights of life will never all be green at the same time”.
This post will be about one crucial decision that each entrepreneur need to take in the early stage of his/her entrepreneurship path.
The decision of deciding if the business opportunity that he/she identified, or if you wish the market problem that he/she recognised and intend to create a solution for if it worth solving it.
Is product-market fit enough?
The conventional logic says that; if the new entrepreneur is convinced that he/she has a product-market fit (a solution to a clear market problem) that’s it!this is the ultimate criterion for taking the leap of faith and pursuing it.
I would say that this is the half true. As it is pointed out often in our blog posts,this product-market fit is indeed the absolute objective that any new aspiring entrepreneur should seek for. It’s not a rocket science any startup that wants to be successful must have this problem-solution fit.
Thus, you might ask; ok it sounds good for me why you claim that is only the half true?
My reply is clear; The question; is this problem worth solving?in order to be answered it required another one dimension other than the much-desired product-market fit.
Is something that need to be answered by us before even start working on achieving having the product-market fit.
What is missing?
Although that in the very beginning of this post we pointed out that is impossible to predict the future, by taking into account thisother dimension will make us in a far better position of taking the right decision, either try solve that problem or not.
This dimension is composed by 2 core elements and if we factor in both of them we can evaluate our problem through them and come up with the answer that we are looking:
Either; Yes it worth solving Or: No it doesn’t worth solving
I am sure you will ask me, why the heck I need to do that, what’s will happen if we don’t do it?
What we try to prevent
The problem of not doing so is that we might achieve product-market fit, proceed with developing our startup, and spend an enormous amount of time in our newly-born business but to come across that harsh reality.
Related Article: The Dark Untold Side of Entrepreneurship
Problem #1: Have an one-use solution
What do I mean by that?
Our product/service to be of one-use. In other words the prospect that we vehemently wanted, we invested “X” amount of money acquiring him (marketing& sales), to purchase only once from us.
Because the problem that customer has was solved and probably will not have it again so as to need come back to usanother time.
You might say, but this is not the purpose of any business? To convert the prospect into a buying customer?
My answer; this is the goal of some companies.
If you seek to have a startup company that can generate an income only by new customers, or by constantly need to add new products aiming tocross-sell them(a seller tries to sell something else) to your current customers, go for it.
However this is not the way startup experts suggest to go. What they suggest?
Bear with me and I will give you the answer in a while.
Problem #2: Been in a position that want to bang your head in the wall
What do I mean by that?
In simple words spend the rest few years of your life hate yourself because you can’t stand anymore doing what your entrepreneurship role dictates.
Namely, your entrepreneurship daily routine include tasks or the nature of your business make you feel overwhelmed because you don’t enjoy anymore what you are doing.
What you can do of avoiding that?
Bear with me.
How to prevent those scenarios
Here we are, I am happy to say that these scenarios could be prevented, or to be more accurate we could decrease the possibilities of happening to us if we assess our main question: Is this problem worth solving through our 2-level approach analysis.
Which is that?
a) Solution #1: Life-time Value Analysis
What many successful entrepreneurs suggest, is that the most successful startups achieve to earn recurring revenues (revenue that is highly likely to continue in the future).This can be done with a high degree of certainty only if you manage to have customers that continue buy from you more than one times.
How to achieve that?
Let’s bring in the “table” the Lifetime Value Analysis concept. As Josh Kaufman describes it;“Is the total value of a customer’s transactions over the lifetime of their relationship with your company. (profit per transaction * years)”.
Essentially startups are recommended when considering about the problem that they intend to solve to evaluate it from that perspective.
They have to think if that problem or need will be one-off or if it’s going to be on-going.
The higher the projections of the Life-time value of your target customers the more attractive become for you solving it.
But of course you’ll say, how I will predict that? as we know future can’t be foresee. Yes you are right but some problems or needs have a recurring nature.
Take for example subscription services; if they manage to keep their client satisfied will be able to have him as customer for a long-time period.
Or take the example of accounting services; no matter what, the client will have a need for an accounting service many times during the year and thus if he is pleased with his accountant is a long-term business relation.
I think you got the point, you have to think the nature of the problem or need trying to solve/filland by understanding the LTV of your potential target group evaluate their potential for recurring revenues through long-term retention.
b) Solution #2: Where I want to be analysis
Each one of us as aspiring entrepreneur has a certain ambitions about his/her life; is how we visualize our ideal life-style, the kind of daily routine that we’ll have as successful entrepreneurs, the benefits that that role will bring in the equation.
Is how we dream our life would be.
Thereby when we have a problem or a need that we considering solving/filling we have to make our homework and think if through setting up our startup and solving that problem can allow us to materialize those dream lines as Tim Ferriss often mention.
Each problem will take us to a completely different path, yes will be an entrepreneur but our life-style, work-balance, day-to day activities will be affected dramatically by the problem trying solving and the respective startup that we’ll need to create for addressing that problem/need. This is the one of the reasons why I recommend to build a startup around your passion.
I am sure you understood the underlying argument about this kind of personal analysis (for further info about that this subject check out that post; The ross-colored glasses phenomenon).
That’s it for today;
Thought of the day: Proactiveness always beat reactiveness there is no argument here.
Is your problem worth solving? Please tell us about in the comments below.
About the Author
Andreas Aravis is the founder of No More Startup Myths. He is a 25-year old junior startup development specialist, blogger and aspiring entrepreneur.