What do entrepreneurs do? As in, what really is their purpose? You may have an amorphous idea but when really pressed I bet you have a hard time explain what an entrepreneur actually does.
This is not a purely philosophical question. Instead it’s vitally important to understand what entrepreneurs and business do in general and what your business specifically does.
Having an idea of what entrepreneurs actually do is vitally important as a grounding principle when working on your online business.
Entrepreneurs solve problems
Businesses exist to solve problems. Businesses provide solutions. Entrepreneurs create businesses to solve problems.
Think of a very basic business like a bakery. Some of the earliest businesses in history were related to food. Food is an extremely basic necessity and therefore many early businesses dealt with solving the problem of how to get food.
There was a point in history where it was simply not possible to do all the functions of society by yourself.
Adam Smith most memorably talks about this when he discusses how a match is made.
Adam Smith, writing even before the industrial revolution, saw the complexities of the modern economy and the necessity for entrepreneurial specialisation for products as simple as a match to be created.
Think about it for a moment.
A match seems like one of the most simple things one could ever make. But in reality requires a complex chain of production.
First a potassium deposit needs to be found by prospector. Somebody needs to collect the potassium chrolide (slyvite). Somebody needs to chop the tree to provide the wood that is in whittled and shaped into the matchstick. Someone else will be responsible for shipping and making sure that the rawmaterials all arrive in the same location for assembly. Yet another person or coat the head of the match stick with the magnesium solution. Finally someone might provide the packaging and the striker on the side of the Matchbox to turn it into the final product that we now know today.
Here’s a diagram of a modern match making process from the endlessly fascinating MadeHow.
Adam Smith asked how is it possible for any single individual human being to complete all of these tasks all for the purpose of creating a simple match.
And this was the 18th century! When people were MUCH less lazy than we are now. I just stuck some pre-cut vegetables in the oven to roast. I couldn’t even cut my own vegetables. Think I could make a match? Nope – sundown = bedtime for 18th century me.
And Adam Smith asked his question hundreds of years ago.
Extrapolate this to right now. Imagine a single person building a PlayStation or a television set or an iPhone. A few hundred years ago it was hard enough for human being to create a simple product: a match. Nowadays it is simply impossible to produce the necessities for living oneself.
What do entrepreneurs do? They do this, do do do
Despite (or perhaps because of) the growing complexity of modern life we humans still have requirements, we have problems we need solved on a day-to-day basis.
Many of these problems cannot be solved by us alone or even with the help of the local community. Whenever a problem exists that cannot be easily solved entrepreneurs generally step in to provide a solution.
Entrepreneurs are in the business of solving problems. This is the essence of what they do. Whether it is creating a simple product like a matchstick. Or contracting thousands of workers to together create the next world’s tallest skyscraper. Where there is a problem nowadays in modern life generally entrepreneurs will step in with the solution.
What about luxury?
A common push back here (and one which I fully understand) would be to ask “well what about luxury products?”
Luxury products aren’t necessarily solving a problem. In fact by definition they almost unnecessary!
First of all realise that one person’s luxury is maybe another persons basic requirement. It’s very hard nowadays to determine what is truly luxurious and what is a base commodity. That said, there are certain luxury products (for example a Gucci handbag) that we can safely label as luxury products.
Even in the case of luxury goods and services a problem is being solved. You may not personally understand that problem but that does not mean the problem does not exist.
Often luxury goods and services will solve the problem of not fitting into a social strata, wanting to belong, needing to display wealth in a physical manner or simply wanting to have beautiful objects around you on a day-to-day basis. These are as, far as the customer is concerned, “problems” that need to be solved.
And before you start whining think of the luxuries you take for granted like…you know running water, WiFi and the sweet arse phone/computer you are reading this on. It’s all relative. Except for Faberge Eggs. That shit is dumb.
Morality: good problems and bad problems to solve
The same goes for what could be considered immoral companies. For example a company that makes weaponry is still technically solving a problem. It’s just that the “problems” that they solve are shitty.
A weapon that is more efficient at killing solves “a problem” for an army or a maniac. Unfortunately, entrepreneurs step in and fill these gaps to and solve these problems just as well as they solve the problems of people who need food and shelter.
Therefore I prefer not to talk about “good” and “bad” businesses. Good and bad should be reserved for moral judgement. Instead it makes more sense to talk about efficient and inefficient businesses.
Businesses are efficient or inefficient depending on how well they solve the problem of their customers.
I could be a bad business like a tobacco company who is very efficient at solving the problems of my customers.
Equally I could be a good company like a sustainable clothing line who is very inefficient at solving my customers problems. Morality and efficiency are independent in this case.
Size of the problem = Size of the Business
When it comes down to it how we judge businesses has to be on how efficient they are at solving the problem that their market and customers have.
When an entrepreneur solves the problems of many many people they have the potential to build a large company. By solving problems for many people the entrepreneur can produce huge amounts of value and their business will grow in terms of revenues and profits.
Likewise if an entrepreneur focuses on a problem but it turns out that not that many people have this problem then this automatically puts limits on the size to which the business can grow.
When starting out in business it is vitally important to do a market sizing. A market sizing looks at the potential size of the market that you can serve. And what do we mean by serving? How many people have this problem and how many of those people can you help to solve their problem?
The rest really is trappings. Your brand, your website, your customer service, your packaging, your social media accounts, your e-commerce channels, your reviews, your latest TikTok video… These are small and unimportant compared to the answer to this question:
How well do you solve your market’s problems?
If you are the best at solving your market’s problems you will be able to beat your competitors. It’s a simple as that.
So here is the obvious and often an answered question:
What problem does your business solve?
Often when asked this directly many entrepreneurs do not have a ready answer. They will start to talk about specifics. They start talk about specific clients, specific projects, specific results, specific reviews, specific products and services that they offer… All without answering the real question “what problem do you solve?”
One of the most important early exercises you can take for your business is to be able to formulate an answer to this sentence:
I help people to X
If you can answer the X in the above sentence you have to basis and foundation of a strong business. If you spend five minutes telling me all the different facets of X I will ask you to go back to the drawing board and really think about what problems you, as an entrepreneur, solve.
Problem Solving becomes your marketing message
Once you’ve nailed down what problems your business solves you can build this into your marketing.
Too many businesses focus solely on the solution. This is what we do. Here is what we provide. Here’s what we are good at.
Notice that we rather than you.
Ever met a guy (and it’s a guy, let’s be honest) at a party who just talks about himself? Don’t be that guy. Don’t be Kenneth.
An entrepreneur that understands that business is about solving problems will tend to talk about you, the customer. Not about themselves.
Compare “we provide expert led 12 week weight loss plans” to “you will lose 10lb”.
Or even better: “you will look good naked”.
How to get your customers naked
This leads us to our next useful exercise: finding out what actual problems your customers have.
The best way to do this is to ask questions like a five-year-old.
Talk to your customers and ask them why they have purchased your product.
They will give you initially a superficial answer like “it had good reviews” or “it comes in my favourite colour”.
Instead each time you receive an answer ask “why is that important?”
This forces customers down a level each time, closer and closer to the true problem that they are trying to solve.
I purchased it because it’s in a useful PDF format.
And why is that important?
Because I want to be able to check the exercise guide wherever I am.
And why is it important?
Because sometimes when I’m at the gym I don’t understand how to do certain exercises.
And why is it important?
Because I don’t want to look stupid at the gym in front of all the fit muscular people
And why is it important?
Because I was a fat kid and was laughed at in gym class.
And so on.
Obviously this is an exaggerated and much faster questioning process reaching a human truth than we would normally see you when asking customers this sort of question! But you understand the process.
Continue to delve and find out why what they are saying is important and eventually you will begin to reach the true problems that they face.
In my experience it takes about seven or eight questions asking why that’s important in order to reach a more root level problem.
If you talk to enough customers in this way and start to see patternsIn their route level problems then you know exactly how to tailor your products and services in order to provide a solution for your market.
What do entrepreneurs do then?
Entrepreneurs create businesses to solve problems. Entrepreneurs are problems solvers first and foremost.
If you solve your market’s problem efficiently your business will do well.
Solve big problems and you’ll have a big business.
To truly solve your market’s problems you need to get to the root problem and not just the superficial reasons that people give.
Use iterative questioning to find the root cause. Then hone in on your market’s true problems and solve their problems for them.
By doing so, your business will grow beyond your wildest dreams and you will be able to help more and more people on this earth.