A playbook for Generating Business Ideas

Business Idea Critical Ingredients
a. Meets Demand
If no one wants the product or service that a business is offering, they will not
use it or pay for it. Even if a product is free, people might not use it. You can not
force people to use or pay for your product. Name one successful company that
doesn’t offer a product or service that people want. The government is the only
entity that is permitted to force people to pay for their services.
Entrepreneurs that supply goods or services that are not in demand fail because
they will not receive any goods or services in exchange. No one would
voluntarily engage in a transaction with someone offering something they don’t
want.
b. Solves a Problem
Often times the products and services that are of most value to people are the
products and services that solve problems they have. Problems can be defined as
processes that are uncomfortable or challenging. “Uncomfortable” and
“challenging” are of course subject to opinion.
When a customer has a “strong pain,” they may be more motivated to alleviate it
than something that is just “slightly uncomfortable.” Per Maslow's hierarchy of
needs, people often strive to solve basic needs such as food and shelter before
striving for needs like self-actualization.
For example, if someone has the flu, they may be more motivated to buy
medicine than to buy a nice leather jacket. In other words, people are often more
motivated to buy “need-to-haves” than “nice-to-haves.” If someone’s job is to
clean, and their compensation is based on their ability to clean, they would
probably be more motivated to buy something that will help them clean than
something that wouldn’t help them clean.
c. Customers, Users and/or Partners

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Per the definition of business stated above, there must be a trade or exchange of
value between two or more people. In order for a business to earn revenue, it
must serve one or more sets of customers.
The customers will vary depending on the business. For example, Facebook has
users that do not pay to use Facebook, but it sells advertisements to brands. A
marketplace such as Airbnb connects housing owners with housing renters and
collects a fee. Many companies, such as Dropbox, build a product and get paid
buy one group of customers. Other companies, such as magazines, sell their
product to readers, but also sell advertisements to brands.
There many different ways that companies can make money and many different
ways companies can partner. For the purposes of this book, just understand that
a business idea must serve one or more people.
d. Revenue
The goal of most businesses is to earn a profit. A business does not just have
customers, users and/or partners as described above; it must receive currency
from one of these entities. The amount people are willing to pay is typically
directly proportional to the amount of value it provides to them. As discussed
above, the business could provide a product or service to a given customer
without charging them or earning revenue, but it would need to find a way to
make money either from a different customer, such as an advertiser, or at a later
date (for example, a “freemium” business model).

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