No matter how well you plan or how much you test, there will always be problems that come up when you start a small business or launch a startup. As an entrepreneur, it’s important to know how to effectively solve these business problems.
What Is Problem Solving in Business?
Businesses need to find ways to solve the problems that are preventing them from reaching their goals. These problems are often complex and have no obvious solution. They may be present in one team, in an operational process, or throughout the entire organization.
If you want to be successful at problem-solving, you need to have reliable processes in place that will help you assess the situation, come up with solutions, figure out what needs to be done first, and measure how successful your efforts have been. This is similar to the way you would go about reviewing your business’s performance every month. You would look at the same documentation, see what needs to be improved, identify the root cause of the problem, and brainstorm potential solutions. Without this process, you will not be able to solve problems in a efficient or effective manner.
Why It’s Important for Your Business
Some believe that problem-solving is a natural ability, while others think it is a skill that can be improved over time. Problem-solving skills are essential in addressing critical issues and conflicts as they come up. The ability to problem-solve starts with the leader of a company. As the business owner or CEO, you need to set the example for the level-headed problem solving that you want to see from your employees.
If you want to be a successful business leader, you need to find a way to deal with issues quickly, establish and refine a problem-solving process, turn challenges into opportunities, and keep a level head. You can do this by building processes and leveraging tools.
Process for Effective Business Problem Solving
This process can help you develop your problem-solving skills so that you can approach any issue with confidence.
Define the Problem
When a problem comes up, it can be tempting to immediately start planning a solution. However, if you don’t take the time to look at what caused the problem in the first place, you might come up with a strategy that doesn’t actually fix it. You might just be treating the symptoms.
Conduct a SWOT Analysis
A SWOT analysis is a great way to determine if your business problem is actually an opportunity or strength.
Identify Multiple Solutions With Design Thinking
Design thinking is an iterative process that can be used to tackle big, complex problems. It involves bringing together a wide range of people with different perspectives to come up with innovative solutions.
Conduct Market Research and Customer Outreach
You can’t just do market research or customer outreach once and then forget about it. If you’re having trouble, think back to when you last did a thorough market research or looked into the competition.
Seek Input From Your Team and Your Mentors
It is beneficial to involve others in your SWOT analysis or design thinking process so that diverse perspectives can be considered. This will help you to identify potential problems and solutions more effectively. If you have a team, make use of their expertise and involve them in the discussion.
Apply Lean Planning for Nimble Execution
lean business planning method refers to the process of constantly revising your business strategy. This allows you to be more flexible with your strategies and not get fixated on one particular idea. However, you shouldn’t change your plans too frequently or you’ll never make any progress.
Model Different Financial Scenarios
If you want to solve a business problem, it is helpful to create a few different financial forecasts. This way you can explore different potential outcomes. You may realize that the idea that initially seemed the best option will take longer than anticipated to improve a negative financial trend. Even if this is the case, you will have gained a better understanding of the financial repercussions of going in a different direction.
Watch Your Cash Flow
While trying to solve a difficult business problem, you should focus on your cash flow and your forecasted cash flow. Knowing when your company is in danger of not having any money in the bank can help you take proactive measures. It is much easier to get a line of credit when your financials still look good than when you are about to go bankrupt.
Use a Decision-Making Framework
Even if you have all the information you need and have generated several ideas, you might still feel uncertain. This is normal – you are not a fortune teller. You are trying to make the best decision you can with the information available.
Identify Key Metrics to Track
What does success look like to you? How will you know when your problem is solved and you’ve addressed the underlying issues? Make sure you know before you dive into enacting the solution.
Choose a few key performance indicators to focus on, and take a measurement of where you are starting from. Set a goal and a timeframe for yourself, so that you can track your progress. Having specific goals and milestones makes your plan more concrete and achievable.
5 Diagrams That Explain Product-led Growth
Diagram 1 – A Better Payoff in Less Time
Sales-driven growth requires significant initial investments, such as building a sales team, developing sales materials, and investing time in leads qualification. It can take some time to see a return on these investments.
In John Cutler’s diagram on the trade-offs between investing and receiving value from those investments over time, it is clear that there are more immediate outcomes in a product-led growth model. In a product-led growth model, you must still figure out how to drive activation, engagement, and loyalty with your product, but in the time spent doing this work to improve the product, you will already be seeing the benefits of customer acquisition. In a sales-led growth model, you may only just be about to get paid users ramped up on the product in the same amount of time that they would likely already become loyal advocates through product-led growth.
With a PLG model, the product itself works to draw in customers the way that a sales team would through free trials or premium products. Customers are able to experience the product for themselves and to develop a fondness for it this way.
A product-led growth strategy doesn’t require much investment upfront–you just need to create a free or Freemium plan and get new users signed up. You’ll start to see results immediately as people start using your product. Once you have a base of users, you can invest in improving your product to keep them engaged and build customer loyalty.
You will see an immediate improvement in user experience with each small investment you make. This also means that you can make investments and improvements more frequently than a sales-led team.
Diagram 2 – The B2B SaaS Customer Journey
To better understand product-led growth, it is helpful to look at a typical journey that a B2B SaaS customer takes.
At first, a user signs up for your free plan. They use it by themselves at first. The more they use it, the more they integrate it into their workflows.
The more a user integrates your product into their workflow, the more comfortable and reliant on it they become. This increases the likelihood that they will share it with their colleagues for collaboration. For example, a Canva user might create a design for a social media campaign and share it with their team for feedback and further edits.
Inviting more users to the product creates a need for more features which the company will pay for, resulting in a cyclical relationship.
Even if you’re a SaaS company with multimillion-dollar deals and years’ long sales cycles, PLG has enormous benefits:
- Product-led growth drives retention. Those multimillion-dollar deals won’t stick around if employees aren’t using the product. So PLG continues driving growth after an account has become a paying customer.
- You can automate SMB and mid-market customer relationships that don’t require as much hand-holding in the sales process.
- With active free users in your product, it’s easier for leadership to continue investing in the product because the impact is clear.
Diagram 3 – Amplitude’s Growth Model
Here’s how Amplitude’s product-led growth makes it easier for customers to understand what’s going on.
The text describes two different but related expansion cycles. The first is expansion through word-of-mouth, which happens when people tell others about the product. The second is expansion through continued use, which happens when people keep using the product themselves. Both of these cycles happen at the same time.
First, someone signs up for Amplitude’s free starter plan. As an event-based analytics platform, Amplitude requires users to add a few events to their website or app to track how users interact with their product.
As free Amplitude users share new insights with colleagues, they are encouraged to use Amplitude as well.
As free users continue to use Amplitude, the generated insights help to improve the product. The product updates are then tracked with Amplitude to see how effective they are. This leads to further insights that make the product even better.
The more users share insights and use the Amplitude product, the more likely people in their company will start using it too. This is especially true for the features that are only available on the more expensive versions of Amplitude.
Diagram 4 – Product-Led Growth Is Cyclical
The loop goes like this: A company creates a thing A company sells the thing People use the thing People have a good experience with the thing A company improves the thing This growth model can be condensed into a five-part continuous loop that would work for most businesses, whether they are B2B or B2C. The loop goes as follows: A company creates a product A company sells the product People use the product People have a good experience with the product A company improves the product
The journey to becoming a paying customer starts when someone becomes curious about your product. They may hear about it through word-of-mouth or see it in a ad. Then they become a free user.
When people use your product, they see the value it provides them with and become customers who pay for the product.
You can keep customers engaged by using triggers that remind them to come back to your product.
Customers who are engaged with the product and invested in it are more likely to share it with others, often because they have created something within the product that they want to share.
When more people are interested in the product, it creates a cycle that reinforces the product.
Diagram 5 – A Hypothetical Plg Model for Spotify
Spotify is a good example of the five-part cycle of customer experience. It does a great job with in-product experiences.
This is hypothetical, but you can see how product-led growth might develop in these stages for a B2C brand like Spotify:
- Curiosity: Marketing sparks interest with, say, an ad promoting Lil Nas X. A user makes a free Spotify account with more limited features and ads that play while streaming.
- Aha! moment: The customer starts to use Spotify and discovers unique value—like user-created playlists and Spotify’s personalized mixes.
- Value exchange: The user finds Spotify valuable enough to become a regular listener. They don’t want the ads, so they purchase a subscription.
- Trigger: Spotify keeps users engaged by suggesting recommended music. At this point, the user doesn’t need to interact with marketing at all. It’s all product-led.
- Virality: Spotify users want to share a playlist with their friends or start a group-listening session.
- Curiosity: When Spotify users share with their friends, that sparks curiosity for them to join too, which starts the cycle again.
This cycle refers to the fact that people who have great experiences with music listening are more likely to come back, and that social sharing features attract more users, reducing the need for marketing initiatives.
THE PROBLEM: YOUR BUSINESS ISN’T GROWING AS FAST AS IT SHOULD!
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