Find Your Customer Before Your Product If You Want to Profit
  • Reading time:6 mins read

The purpose of business is to solve people’s problems for a profit.

If that is the case, then before we build our product or develop our next great idea, we need to know the customers we will be helping. 

Many entrepreneurs spend excessive time building and developing their businesses. Sometimes for years, only to come to the market and realise that they have no customers.

Sometimes the product and the entrepreneur are flexible enough to pivot to what the customers want, but often enough, they aren’t.

The first question we have to ask ourselves is whose problem do we want to solve. 

Who do you want to help?

Do you want to help rich people find new ways to spend their money?

Do you want to help small businesses get access to capital?

Do you want to help single parents give their children a better upbringing?

Do you want to make people laugh or cry?

There is no shame in helping rich people build mega yachts. Your product doesn’t have to save the world, but it has to be something people want.

Ask yourself who are your customers and how will you help them.

The next question is whether it is profitable.

Can you make a profit?

Your product has a cost. However, there is also an amount of value that someone would place on your solution.

Let’s say you go down to the local business district in your town. You see many businessmen and businesswomen, of course, who seem to have a lot of money.

You decide these will be your customers.

You decide that most of these people should need coffee every morning. So you have an idea to open a coffee shop in that area.

You can figure out after rent, staff etc., that each cup will cost you $1. People may find the convenience and enjoyment of a fresh gourmet coffee to be $2. In that case, you have a business. But if they only find 50c of value, then it isn’t going to work.

But how will you know what they want and how much they will pay for it?

Test before you build

Now the real question is how you find out if the above is true.

You will find that many people go about this in a very different and highly risky way.

Entrepreneurship is already very risky; why make it even more so.

Most people would think it is now time to spend a small fortune setting up a store and selling coffee.

The coffee shop is a simplified example, but the principles can be taken to any business idea in the real world or online.

There are a lot of entrepreneurs with solutions. These entrepreneurs often spend a ridiculous amount of time and money building this solution. Nowadays it’s often someone else’s money.

After they fully developed their solution, they then go out and look for customers.

Sure this may work sometimes, and in fact, there a probably hundreds of examples of this working. The only problem is that there are millions of times that this doesn’t work, and the entrepreneur ends up losing everything.

Instead, we need to figure out what is the quickest and cheapest way to test your solution.

The first thing you have to do is decide who your customer will be, what their problem is, and finally try to sell them a solution.

So now that we have decided that our customers will be rich business people, let’s make sure we understand their problem

What’s the problem?

Let’s go back to the coffee shop in the business district.

You may believe that the problem is that people don’t have a good cup of coffee to start the day.

You can simply stop someone in the street and ask them if they want to buy a coffee at a local coffee shop.

You might get an answer like this “yes, sure, but I don’t have the time to stand in line and the coffee in my office is not great, but it will do.”

Now that you have spoken to your customer before building anything, you have saved yourself a fortune in time and money.

You may then realise that a coffee shop is not a great idea, but a delivery service to their desk would work better.

You now better understand your customer’s problem. The problem is actually long queues or lack of time, and the solution may be delivery.

Every solution comes at a cost, and that’s the next thing you need to figure out.

What’s the price?

The next day you hit the streets again and ask if anyone would be happy to have their coffee delivered to their desk for maybe $5. They might tell you, “sure, but not for that much.”

The following day you try at $3 and get some bites. You go and stand in line and buy the coffees somewhere for $2 and deliver them for $3.

You also might instead find that there are not enough customers or that they would only pay you $2. In that case, you will have to find a cheaper source if the business will work or a new problem to solve.

Now compare this to someone who decided to open a coffee shop in the same area only to realise that no one has the time to stand in line and buy coffee.

They will now have to start asking people why they aren’t coming in only to realise that people don’t have the time.

They will then have to try and sublet half their business premises and buy scooters to deliver coffee. All the while teaching their wait staff how to ride the scooters.

Seems like tricky business. If they already haven’t run out of money and can afford to pivot and invest in the new model, they may be lucky enough to have a business.

By finding your customer first, you saved all the time and money by having the answers upfront.

If you see that people are more interested in delivery, you can hand out flyers at the local businesses with your WhatsApp number. Customers can then order their coffee and send you their address while still in a meeting.

It will cost you almost nothing to start. Once you start bringing in revenue, you can build your smaller, more efficient store with space for delivery scooters instead of people.

Start with the end in mind

These same principles can be applied to other businesses as well, whether online or brick and mortar.

If you want to increase your odds of success significantly, find your customers first, then build your business for them.

Never forget that a business is there to solve your customer’s problems, not build cool toys.

If you create something you enjoy but can’t sell, it’s a hobby, not a business.