So you have a great idea for a business. You have developed the “next best thing” in an area you are completely passionate about. Before you think about investing your own money, trying to raise capital from investors, applying for a bank loan, or even figuring out the catchy name for your company or product…you must ask yourself 2 key questions:
- What problem do my potential customers have that I am solving?
- Will the dogs eat my dog food?
In other words, does your customer base have enough of a real or perceived problem that they are willing to pay you for the solution that you developed? If you cannot define the problem your business idea is solving, or if customers do not place enough value on your solution that they are willing to pay for it — then you simply do not have a valid business venture idea.
The solution to not having a valid business idea? Find the right problem to solve and develop a solution that offers a unique value in the market…keep refining solutions until you land on the right one.
Defining the Problem
The first step any entrepreneur should take when developing a business concept is to recognize that someone else’s problem is really an opportunity for the entrepreneur.
At the pet food company Castor & Pollux Natural PetWorks, an organic pet food brand, they clearly state on their website the initial problem their customers faced when they started 18 years ago:
“As pet parents, Shelley and Brian understood how people truly consider their pets to be members of their family. They saw an opportunity to do better by making high quality, healthy food for dogs and cats using natural & organic ingredients-that was the beginning of Castor & Pollux Natural PetWorks.”
The founders of the company recognized that pet owners value their four-legged family members in such a way that they desired healthier, higher quality pet food than what was available at the time.
But how does the entrepreneur really know if that is a problem that matters to people enough that it deserves to be solved (which means, do customers value the solution enough to pay for it)?
The entrepreneur needs to talk to enough potential customers to determine if they also recognize the problem and are willing to switch their current pet food choice to a healthier version. The entrepreneur needs to know if the dogs will eat the dog food.
Establishing a Unique Customer Value Proposition
As an entrepreneur, you might think your idea is going to change the world. But does anyone else care? You won’t know until you ask them.
Entrepreneurs must become experts at asking their potential customers about what they value. Do they care if their pet food is 100% organic (which might mean that it costs a lot more than other options), or would they rather have their pet food meet a certain nutrition profile — such as it being hypoallergenic or grain-free?
In 2017, Castor & Pollux asked their customer this question and probably thousands more like it to inform their decision to take an entire pet food line 100% organic.
The company website explains the decision in this way:
“In 2017, Castor & Pollux did what only the leader in organic pet food can do: we set the new standard with the introduction of the only comprehensive portfolio of purposeful pet food. We elevated our ORGANIX® recipes to all be USDA Organic — making it the only complete line of USDA organically certified pet food — and introduced PRISTINE® — the only complete line of pet food made with responsibly sourced ingredients.”
The company recognized that customers would value a 100% organic certified pet food, and used that customer value proposition to establish further differentiation in the pet food category.
What is Your Plan?
Are you speaking to your customers? If so, can you clearly explain what your customers value, and can you deliver the solution they are seeking? If you can honestly answer “yes” to these questions, then you have the foundation of a business idea and you can move to the next step in the venture creation process: developing a business model.
The business model development process is where it gets more complex for the entrepreneur. Answering questions that seem simple at first, but quickly become head-scratchers, will occupy the entrepreneur’s mind space for weeks. Founders will be required to think about issues such as “what is your business’s revenue model?” or “Who are the key stakeholders?” and “How will you set up a supply chain? “
Answering difficult questions often requires outside expertise. WNB Strategy Advisors helps founders and entrepreneurs develop the right business model and approach to the market to offer the best chance for success. If you would like to learn more, you can inquire by email: firstname.lastname@example.org