Many books have been written about the different ways of coming up with business ideas. But there is no book I know that talks about the ingredients of a great business idea. In this article I will explain the elements that make up a great business idea.
Some ideas may come from ones hobbies, personal talents, experience from previous employment and training. Extracting business ideas from sources I just mentioned is just the first step. There is another step, and that is to break down the idea by describing the 3 elements that make a good idea: Problem, Solution and Market. Knowing the 3 will give you a better understanding of your business.
What are the problems you are trying to solve?
The problem is what the idea is trying to solve. This can also be called “need”. Each and every one of us has a problem, but only those who are aware of their problems will strive to find a solution. A business idea must always address a problem. If no problem is being solved, then there is a big chance the business will fail. In the fastfood chain business, the problem the idea is trying to solve is the need for quick service food for people in a hurry.
What are the solutions you are offering?
Solution is what the market buys. The market is always willing to pay a good price if they feel the solution is worth more than what they are willing to pay; the greater the problem, the greater need to find a solution. A solution is not just the product feature; it can be the price, the buying place, the promo or the feeling the get when they use the product.
Who will buy the solution?
The market is the most important element of all. Without the market, there will be no buyers of the solution or there will be no problem to solve. There have been many instances in the past where there is a perceived problem and solution but there is no market. One example is the Rabbit Phone Point, a technology before the cellphone. This is a phone device which you can use in dedicated hotspots (limited areas only). The technology was was trying to solve communication needs between 2 people but the possible customers were not too hot is using the gadget because of the limits.
One always gets excited when a possibly good idea comes to mind. Sometimes we are too eager that we jump without thinking through the idea and in the process we get frustrated with the results, if it does not match our expectations. So the next time an idea pops up, get into the habit of naming and describing the 3 elements: Problem, Solution and Customer.