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Real Businesses Solve Problems

30 Mar Real Businesses Solve Problems

Being an entrepreneur is not easy. We work with quite a number who, of their own determination have eventually built successful companies which they have sold for great returns. Some entrepreneurs could be called serial while others spend their entire lifetimes on their baby, nursing it to grandiose proportions. Regardless of the type of business or managerial mentality these executives hold, they all have at least one thing in common: their businesses solve a real need or problem. Not all businesses solve real problems, but those that don’t are greater subject to market risks. Pure-play internet businesses, for instance, run such risks. Successful legacy companies are very good at doing things better than others or solving real business problems.

Many start-up businesses seeking funding in today’s marketplace focus on business models based on gathering traffic first and profiting somewhere later. It is likely that such flimsy business models will become less and less attractive, especially if our current tepid market conditions become the eventual status quo. Such businesses personally reminds me of the Underpant Gnomes–a Southpark episode with no true business model whose sole purpose is to collect underpants and somehow gain a profit.

The truly most successful businesses in any industry, or newly formed industry, focus on at least one of the following:

  • They solve a real pain point in a current product or service. Something annoying is turned into opportunity
  • They innovate, make things better and are always focused on innovating
  • They execute quickly and effectively
  • Competitive advantage is made sustainable through patents, copyrights or a holistic combination of highly-skilled processes and business management
  • Willingness to pay is elevated by some increase in product/service quality, speed, innovation or other efficiency boost
  • Cost savings are consistently sought so as to decrease COGS and improve profit margins

Each industry behaves as its own beast, but there are underlying key factors which separate the successful companies from the run-of-the-mill businesses. Those who’re truly successful often think on a different plane, but in the most simple test they solve personal and business problems in a cheaper and more efficient way than the competition. It’s that simple. Find a pain point, start a business and execute a plan efficiently and you’ll build a business that will be worth an eventual exit.

 

 

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Nate Nead
Nate Nead is a licensed investment banker and Principal at Deal Capital Partners, LLC which includes InvestmentBank.com and Crowdfund.co. Nate works works with middle-market corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. He is the chief evangelist of the company's growing digital investment banking platform. Reliance Worldwide Investments, LLC a member of FINRA and SIPC and registered with the SEC and MSRB. Nate resides in Seattle, Washington.
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