I have two questions for you:
- What problem do you solve in your business?
- How profitable is it to solve it?
Most entrepreneurs can answer question 1. But question 2 is another thing entirely.
More often than not, I see startups that are confidently solving a problem that they think is critical to a customer...but, it turns out they were wrong.
Why? They made assumptions about the customer's issues based on their own experiences instead of going and asking people what they want to buy.
But, it's worse than that. See, if you identify the customer's BIGGEST problem, they will pay you the MOST money. Simple.
But if you're slightly off the mark, you'll struggle big time -- not only with getting paid what you want to, but also with getting customers in the first place.
It's a case where if you're off by 1 degree, you'll lose 10% of your value right off the top. If you're off by 2 degrees, it's more like 25%.
If you don't believe me, consider what Apple can charge for its iPhone, just because it nails exactly what customers want. Then consider your local plumber, who can't raise his prices $1 because his competitor is looking to always beat the price.
If you want to make real money, get yourself into a business with protected margins (that's the fancy way of saying: you can raise prices and people will pay you more). That all starts with solving the right problem - the most PROFITABLE problem that your customer has.
To get at that problem, you have to have a lot of conversations with customers and prospects. Not 5, or 10 - but 50 or 100. Explore their wants, fears and desires. Get to know how they think. Go deeper.
As I told a client a few weeks ago, "conversations are free...but they could be worth millions."