Young couple complaining to a bank manager about excess service fees.
If you are considering starting a company, you need to understand the entrepreneurial landscape in terms of how you can increase the odds of your startup success when so many startups fail. According to a report by Startup Genome, 90% of startups fail. Why? One of the biggest reasons is that just having an idea does not guarantee success and many startups are proof of that. When you have an unproven idea, it’s hard to know where to start or whether your idea has any merit. As a matter of fact, it’s really not about ideas at all. It’s really about finding problems worth solving that already have a large market (people), could be in a large industry where new trends are actually highlighting or magnifying the problem.
So, in addition to researching and learning about people, industry and trends, you are looking for problems that people are tolerating or being underserved because there are no alternatives. For example, if people were getting their morning energy from coffee and wanted something later in the day, but not coffee, what did they drink? They might have chosen soft drinks as a solution but did not really have much choices. They tolerated soft drinks until a better alternative came along.
So, here comes the category of energy drinks to solve that problem. Same thing with unreliable taxi service by city. Customers tolerated that service for years until they got a better perceived solution with Uber. Uber did not create the ‘taxi’ industry or create a new service. The founders simply observed that customers were frustrated (inconsistent service and payment options) and provided a simple tech-based solution. So, your goal is not to dream up ideas but to look for problems in large industries with lots of customers.
If you want to become good at finding problems, do the little things right the first time. Before you waste anyone’s time and post the news of your new startup on social media, complete a few steps of research to determine if the problem is even worth solving.
Google it. Jump on google and look for statistics or research about your problem. Are there industry reports, blog posts from thought-leaders or media articles talking about the problem?
Talk to customers. Determine exactly who experiences this problem the most and find some of these people to talk to. Ask them about their experiences with this problem, how often do they experience it, is it’s a small or big problem for them, how are they currently solving it?
Customer observation. If the problem can be visually spotted, find some potential customers to observe. Ask them to go through their usual motions or routine where they experience the problem, and note down anything interesting you see them do or say.
Anyone else trying to solve the problem? Once you’re confident that you evaluated and confirmed the problem and it’s worth solving, find out if anyone is already solving it. These will not only be direct competitors, but anything customers are using to solve this problem. This will help you spot the gaps in the marketplace.
If you really have no specific starting point in your hunt for an amazing problem, here are some thought starters that might lead you to a magnificent problem.
Tolerated or undeserved. In any industry, there are always going to be problems. Pick an industry you like or are curious about and ask yourself what do current customer tolerate or where are they underserved?
Pay attention to trends. Again, by industry, are you paying attention to the current or forecasted trends? Read more, set up Google Alerts, use AI to get you information on a steady basis on those trends you might care about.
Conduct an observation lab. You can learn a lot just by observing customers in a service or product environment. What are they doing? What is the business staff doing? Observe any frustrations? Observe any workarounds?
Talk to customers. This one is so simple but very few people will do it. If you would have wandered pet stores in 2010, you would have observed people looking for and inquiring about organic dog food for their ‘family member’ dogs. It was the beginning of the shift in natural and organic dog food in a what is today a $40 billion marketplace.
Talk to experts/user influencers. If you don’t have any problems you ae currently focused on, talk to some industry experts or even other entrepreneurs to learn what they are observing. The beauty of this is that if you talk to ten experts, only you have all the ‘dots’ of information and maybe you can triangulate them to a problem.
Monitor customer conversations. Let’s say you like the travel industry. It’s big with over $1 trillion in global revenue. Lots of customers. So, listen in on some Reddit posts or social media that have to do with travel and read what customers are tolerating or complaining about. Lost luggage, can’t find cheap flights, can’t find good local tour guides, etc.
