“The best business idea is the one that solves the problem for people” — Paul Graham
People choose to partake in a trade because they believe they will derive value from it and solve their painful problems. All transactions in a free society are voluntary, so, you can’t force anyone to exchange his hard-earned money with what s/he thinks is not of good value to him or her. The role of an entrepreneur is to provide a good or service that is of value to people and that people want to exchange for.
To make a profit, the good or service must be worth more to people than it costs the entrepreneur to produce. To produce profitable goods or services, there are critical ingredients that cannot be shortchanged. Shortchange them at your business risk.
- 1. Meets Demand
If no one wants the product or service that a business is offering at a point of exchange, they will not use it or pay for it. Some business owners go to the extent of giving the product out for free in the beginning to convince prospects. If the product is perceived to not solve any problem for them or they don’t want it, you are on your own.
You cannot force people to use or pay for your product. I have not seen a successful company that doesn’t offer a product or service that people want. No one would voluntarily engage in a transaction with someone offering something they don’t want. Your product or service must meet people’s demands.
- 2. Solves a Problem
Most of the time the products and services that people are eager to exchange their money for are the ones that solve problems they have.
Before people exchange their money for any product or service they look at the benefits. Though sometimes, they do buy before thinking about the benefits, when they discover the said product offers no tangible usefulness, they might never buy anything from you again.
For example, if someone has malaria, s/he may be more motivated to buy medicine than to buy an office shoe.
- 3. Customers
For a business to be successful, it must have people who are willing to exchange value. Customers are termed as business owners’ bosses because they are in business to serve the customer’s wants and needs. Many companies build a product and get paid by one group of customers, and this will be enough for them to stay in business even if the rest of the customers don’t pay.
Getting many customers as possible is extremely beneficial to your business growth. The diverse your customers are, the more products you’ll produce to reach them, the more profit your company will generate.
- 4. Revenue
The main essence of creating a product or offering service is to earn profit. The amount people are willing to pay is usually directly corresponding to the amount of value it provides to them.
No business stays business without generating recurring revenue.
There are other business idea ingredients that I don’t think are deemed fit to be on the list of critical ingredients.
Key Takeaways…
Your business idea must meet people’s demand.
Your idea must solve problems for customers.
For your idea to be a sustainable business, it must continue to generate revenue.
Your business idea must generate recurring revenue.
Now to you…
Do you know of any other critical business idea ingredients that’s not listed here? Or do you have any opinion that you will like to air? Please, go ahead by leaving a comment.
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