One of the first questions I ask business owners when we discuss ideas is about pain points they are addressing or want to address. When there is a long silent pause or the individual is at sea about how to answer the question correctly, it shows a lack of planning and thinking their problem through. During the course of the day an entrepreneur could possibly highlight a 100 new potential business ideas. The true test is how many of these ideas address realistic pain points that customers are willing to pay to remove. When a business has an unclear focus or is addressing a pain point in a highly saturated market, the chances of success becomes increasingly low.
When generating ideas for a business you want to get into, do your best to continuously outline pain points as clearly as possible. This will be the core of your business proposition and you need to build value around it. In the case of InnovoGS a company that I am actively involved with, launched psychometrics in the beginning of 2007. The problem we wanted to address was to reduce the number of people being wrongly hired by a sizable percentage. Being a business owner I know first hand how difficult it is to manage someone who does not fit into your organization. The entire process of doing your best to make it work, and then eventually having to fire the person is a painful process. Psychometrics provides indicators to organizations to boost their ability to screen candidates prior to making hiring decisions. What we did not adequately calculate was organizational willingness to pay for this service. The product hence took longer than expected to gain traction.
This example clearly illustrates the principle of selecting a product or service to addresses critical pain points for clients together with their willingness to pay for it. When you get both these factors correct, you are better aligned to fulfill this need and make a success of your business.