The problem is the #1 most important part of a business plan. It’s no accident that most business plan templates start here. If you don’t understand the problem you’re solving , you’ll build the wrong solution. If you don’t have the right problem, it will be very difficult to sell your product.
Nature of the Problem
The most common mistake is the nature of the problem an entrepreneur attempts to solve. The hardest thing for startup company is not building the product, but marketing and selling the product. A thought experiment helps us understand why the nature of the problem is important:
Imagine that you’re a busy executive that has been given two proposals. One will save your company $1 million through efficiency while the other will save $500,000 but does so by putting out a fire. You’re very busy so you set both on the corner of your desk. Which will you get back to first?
Most people correctly realize that the project that puts out the fire will come up first. Even a busy executive will eventually experience the fire or have a friend who is hit by the fire, or will read an article where a competitor is hit by the fire. In an effort to not be that guy (perhaps again) the executive will dig up that proposal that puts out the fire.
When choosing a problem, find problems that are significant and acute. When you go to sell the product, it will help your messaging, your conversion rates, and your close rates.
Often entrepreneurs make the mistake of assuming they have no competition because no other companies are doing the same thing they’re doing. Once you understand that you are solving a specific, well defined problem, you can do a better job of defining your competition. There are probably several ways to prevent, mitigate, or put out that fire. One option (though hopefully a very bad option) is to do nothing and deal with the fire if and when it comes. Each of these answers are competition for your business.