Becoming self-employed? Here’s the #1 critical question you MUST be able to answer

By Neil Patrick

Whether you are setting up business as a sole trader or a company, there's one critical question you must be able to answer.

Last week, I was contacted by a former colleague from the financial sector. She had just lost her job in the latest corporate reorganization. Her reaction to job loss was positive. She was embracing it as an opportunity to convert all those years’ experience and acquisition of skills into a self-employed variant of her former job. I immediately agreed to help her anyway I could.

About the same time, I was sent a business plan for a start-up financial business. I was asked to provide my reactions and suggestions as to how the plan might be improved. The plan was ambitious and innovative. It embraced and aimed to capitalise on the financial, technology and media changes that are transforming the world.

At first, these two events might appear to have nothing in common. But as I examined both situations I realised that both were dependent upon getting to grips with exactly the same question.

It’s a very simple question to ask but a very hard one to answer perfectly. In a single sentence though, it frames the challenge for every new business venture. Being able to answer it clearly and precisely sets you up for success. Even if you cannot answer it precisely, trying to do so will instantly reveal the weaknesses in any business plan.

So what is the question?

It’s this:

“What problem do we solve for whom, and how?”

That’s it.

Time and time again when I see new business proposals, whether they are corporations or individuals, they fall apart when examined with this question.

Often it’s a variation of the age old business failure that arises because the business owner is looking to sell what they want to make or do, rather than making what people want to buy.

Today, attention spans are getting ever shorter. If you cannot articulate what problem you solve in a couple of sentences, you will struggle to get attention. And no attention means no sales. And no sales means your business is dead.

So not only must you be able to answer the question, you also have to be able to express it in a way which demands attention and interest from the people you seek as customers.

In a start-up, this can be the difference between getting investment and withering on the vine. In the case of sole traders, it’s the difference between having a queue of eager customers and an empty diary.

Why do so many people get this wrong? 

Employers don’t teach us how to be entrepreneurs

Experience of working for a large corporation provides plenty of experience and learning. But it’s not usually the sort of learning that equips you to be successful in your own business venture. Suddenly your specialist expertise itself is less important than your ability to get others to pay for it. 

When you are self-employed, before you can start work, you must obtain it

In a normal job, our employer provides a regular pay cheque. And depending on its size, we cut our cloth accordingly. When we have a job, the work is just there. We normally don’t have to actually create it. In a normal job, what’s critical is the quality of our work. When you work for yourself, how much you earn depends on how much work or business you attract. What’s critical is the quantity and frequency of our work. 

Problem solving for others is different to problem solving for an employer

In a normal job, we may very well require problem-solving skills. But these problems are internal to our employer. The problems are given to us to tackle. When we work for ourselves, the problems are not given to us. We have to identify them in other people’s lives. So these problems are external. And before we can solve them, we have to have a solution that our customers find more attractive than the alternatives.

Knowing the answer to the number one question helps us focus our actions on doing the right things to drive business success. It means you have a business proposition which people actually want and are willing to pay for.

Not being able to answer the question means your business isn’t going anywhere, until you can…

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