The "Problems & Solutions" of a Business Plan
In this first part of the series of articles for Validating an Idea for a Startup Venture, we examine the problem(s) and solution(s) pertaining to a business plan for a startup venture.
Investors look at the problem(s) that your business has identified and the solution(s) it is providing.
If your business idea is a multi-player platform business, it needs to present the problems and solutions for all market players.
For example, let's look at Uber. Uber is a two-player platform for drivers and passengers. Drivers have a problem of underutilized vehicles and lack of income opportunities. Passengers have a problem of unavailability of transportation means. Uber providers the solutions for both players to earn more money and a transportation solution.
Another example is Facebook. Facebook is also a two-player platform for users and businesses. User has a problem of being disconnected from their loved ones and friends. Businesses have a lack of marketing channels to reach out to consumers in a cost-effective and targeted advertising manner. Facebook solves these problems by providing users a means to mass-update and communicate with all their family members and friends of their activities and also provides a demographic marketing avenue for businesses to reach out to these users.
If your business idea is a single-player service, it needs to solve the problem that faces the customer.
If you have identified a certain software to fill a market needs and your business is targeting only a particular consumer segment, your business is a single-player service. A software product or a cloud computing service could be an example of a single-player service if they are selling to a specific consumer.
First, your business idea needs to be examined whether the problem(s) actually exists and will the solution(s) solve the problem(s). Secondly, are people willing to pay for it... :-) If your business idea does address the market needs and it is clear how you can monetize by providing the solution, then you have basically passed the problems and solutions test.