Unless there is a clear description of problem on hand, the company will easily become distracted from their mission. If this occurs team members will start working as individuals and on different aspect of the problem. A clear problem description will keep team members focused on the goals of the company. Also if the pain is not understood, customers will not understand the value an entrepreneur is adding with their solution. Also, as business has to be able to clearly articulate the problem to customers so the customers understand why they should invest in the product or service offered.

Companies that do not focus their efforts on the pain or desire faced by a company can often run into problems. Many startups founded by engineers fall into a “creeping elegance” trap. They keep developing increasingly better features, without first selling the more-than-adequate initial products. That can easily push small technology companies into bankruptcy, as all their money is spent on tweaking the product, rather than selling it.

It is important to know:
How big is the pain/cost of not having a solution?
Those who have the problem, are they aware that they have the problem?
Will those who have the problem accept a solution?

Other solutions in the marketplace must be investigated in order to both evaluate the size of the market opportunity, as well as to understand the strengths and weaknesses of the competition which customers will ultimately compare to a business’s solution. The value of a solution can also only be measured by comparing it to its potential substitutes and their degree of fitness. No matter how far the current solutions are from being a remedy, they will all be considered as reference points and competition in the customers’ view.

It is important to know:
How is the problem being solved today? (Maybe using one or a multiple of already existing solutions)
If many, are those new or mature solutions?
What are the differentiators?

There has to be a clear description of target customer and users. It is important to differentiate between the customers who pay for a service and the users who use a service. While they often are the same, in some cases they are different. A clear example is Google, who has users that use their google search engine, but customers who pay for the adds which appear from their searches.

The customer and user have to be understood so that their needs, wants, and problems are understood. Also, it is important for a business to understand a customer and user’s views. Same product can have different tangible and perceived value for different markets.

Even if a product/solution would fit the needs of multiple market segments, it is not practical for a startup to try capturing all those market segments right away because they do not have the resources to do so. Clear targeting helps in better planning and more accurate projections.

It is important to know:
Is there a clear definition and well-defined profile of the target user and customer in place?
Who pays for it? Who uses it?

There should be a clear distinction between what potential customers want and what the founders (or engineers) “think” the customers should have. Regardless of how good an opportunity seems, until there is a validation, everything is based on an entrepreneurs assumptions. While common sense may qualify an idea as an opportunity, market conditions may reject it for various reasons.

Market research is crucial for evaluating opportunities. For evolutionary products, if research data exist the market might already be too mature for startups to enter. For revolutionary products however, there is no market data, as the market does not yet exist. The most reliable way of conducting market research is by living and breathing the market itself – by interacting with customers and other market participants.

It is important to know:
Is there a validation that a market demand exists?

Startups are betting on market stability or a positive trend. Unless the trend lasts long enough for the startup to profit from, there is no point of going after it. This is another aspect of market research. A business must determine that their customers will stay with the company and be customers into the future. Also, a business must evaluate if the economy is fit to keep paying customers willing to buy their products and solutions.

It is important to know:
Is the target market stable or growing?
When and why is the market window open?

Market timing is everything. A great product is worthless if the market is not ready to buy it or if the market has become saturated. It is crucial to be ready when the customer is ready.

Once the market for a new product is established, its window of opportunity opens, and new entrants flow in. At some point, the market matures, and the window of opportunity for new entrants closes.

There are specific challenges for being the first in a new market or last in a mature market. The Company has to be aware and prepared for the challenges. If an entrepreneur is entering a new market, they have to be prepared to convince customers or users the product or service is needed, worth the money, and worth the time to use. If an entrepreneur is entering a mature market, they have to be able to convince customers they have something new and innovative such that it is worth it for customers or users to switch.

It is important to know:
Are the target customers ‘ready’ to buy without any aggressive demand creation requirement?