Photograph by Robert Galbraith — Reuters
By Art Papas
June 21, 2016

The Leadership Insiders network is an online community where the most thoughtful and influential people in business contribute answers to timely questions about careers and leadership. Today’s answer to the question: What do you need to know before starting a business? is by Art Papas, founder and CEO of Bullhorn.

Know who your customers are, and know what problem they’re trying to solve.

Over the last 10 years of leading Bullhorn as founder and CEO, I’ve had a lot of entrepreneurs seek me out for advice, and very few of them have gone on to create highly successful businesses. The ones who have succeeded have all had one thing in common: They knew who their customers were, and were intimately aware of the problem those customers faced.

Way too many businesses start with an idea for a product. It seems like a legitimate impetus for launching a company, but believe me when I tell you it’s not. You need to identify your target customers and, more importantly, identify a problem that actually needs solving— not a problem that already has dozens of solutions that aren’t quite up to snuff. Until you really understand that critical need, your business won’t go anywhere.

I know this from experience. I founded Bullhorn in 1999 as an online freelance marketplace because my co-founders and I thought that “a freelance online marketplace” sounded like a cool idea, and everything cloud-based was revolutionary at the time. Ironically, it wasn’t until we had a customer actually approach us with a real problem that we were able to pivot the business to do something that would eventually lead us to where we are today. That first customer told us, “I have four offices around the world, and they can’t communicate effectively with each other.” So we decided to put customer relationship management, or CRM, in the cloud and enable communication tracking that would lay the foundation for our Pulse technology and CRM platform. Until we identified a real problem—organizational silos—we were just floundering and celebrating our cool technology that had no buyers and was generating no revenue.

Don’t waste the time I wasted. Solve a problem that needs solving, and solve it for someone real. Also, know what other solutions your target customer might try so that you know where the sand traps are. For instance, Taxi Magic was a company that created an app that made it easier for people to hail taxicabs. It sounds like a cool technology, and it was, but it didn’t fundamentally solve a real problem that many people faced. It just provided an incremental improvement on an existing solution: taxi dispatch. Uber, on the other hand, solved a very real and completely unaddressed problem: the lack of transparency and accountability in the taxi industry. Uber enabled customers to hold taxi drivers accountable for service levels (and vice versa), and also provided much-needed visibility on where a driver actually was instead of relying simply on the nebulous assurance that they were “on their way.”

 

When you understand your problem (“I want easy visibility into where my taxi is and the ability to ensure good service”), and you understand your audience (people in urban areas who are accustomed to the “sharing” economy facilitated by mobile phones), then and only then do you have an opportunity for your solution to really take hold.

Steve Jobs understood this philosophy acutely, which is why he once said not to start a business unless there’s “a wrong that you want to right.”

Before you start your business, ask yourself what wrong you are righting.

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