How to find out if you should go ahead with a new launch idea or not.
In this episode, we will talk about the 3P diagram, that will help you to make a decision. It’s about passion, profitability, and problem-solving. Short: anything you do in your business needs to meet all three aspects – your idea has to sit in the middle.
If you want to find out more details about the 3P diagram, listen to the episode.
So you have a great idea and just don’t know how to decide if it’s really that great. You tell it to your friends and colleagues and some of them will say: “Wow this is fantastic. I will be the first one who will buy it. I know many others that would need it. Everybody talks about it now. It’s a huge trend.”
You’re totally enthusiastic and you’re just like: “Oh my god. Yeah, this would be good.”
And there is another group that will say: “Oh my god. Who will buy that? It’s a crazy idea. People don’t buy these things these days.”
So which one is correct?
I will show you these two tools, which will take you much closer to deciding whether or not to go ahead with your idea or not.
The first one is the 3P diagram for your decision. The 3Ps are passion, profitability, and problem-solving. Anything you do in your business has to have all these 3 aspects.
Let’s start with the first one. Is the new idea (that came up in your mind or you just heard it somewhere or somebody tells you to do it) – is it in line with your passion, with the mission of your company? It can be a great idea, a great profitable idea but if you just don’t feel it’s yours if it doesn’t match the goals that you have (not just profitability goals, not just business goals, but anything you’d like to achieve with your business) then don’t do it.
Just to give you an idea. If you’re not the type who would want to be in front of people, talk to people, meet people then even if training would be a great option for your business to do, you might say that this is not where we want to go.
Then the second one is profitability. Obviously whatever you do has to be profitable. This is an accounting exercise and math exercise that you simply have to see based on the costs you have to put into that new product or service and the needs – how many people would potentially buy it? Would it be profitable? Is there a chance? Is there a good potential that it’s profitable? Because business is really something we love doing it but at the end of the day it has to be profitable.
And the third P is the problem-solving aspect. Is there a problem out there that my service can solve? A problem is not only something that is a pain but basically what it means is that: Is there a need for that? Will there be a demand potentially? Will people buy it?
How to find it out? By market research.
So you have to find out if there’s a potential need for what you’re planning. Nothing is guaranteed but at least there is potential.
Let’s see the cross-sections for a while. When you love doing it and you make the pricing exercise, you go through the pricing strategies and then you see that it could be potentially profitable but then you have to see if there’s a potential need for that.
I give you a few examples of products that just appear as if I am a ski instructor. I love skiing and yes it’s profitable. I set prices that are profitable. But actually, in the summer there’s no need for that, right? So I wouldn’t be able to do that. So this is just an extreme example. But another example is: All in the events industry, unfortunately. Or providers just fell into this category because suddenly as events stopped being organised during the pandemic there was no need for their services, unfortunately. So it was not in this category in the middle where it used to be.
So you have to see that there’s a need. And again this is based on market research not simply by somebody saying: Oh my god. That is fantastic.“
Okay When it solves the problem and is profitable but you just hate doing it. This is what I already covered. You shouldn’t do it because even if you kind of give it to a colleague or outsource it you would not be happy to be identified with that and you should just say no. If you just hate events or you just don’t want to run events even if there is a need, it’s profitable you wouldn’t run it, right?
And when it solves a problem, when you love doing it and it’s not profitable like helping people in 1 to 1 who cannot afford consultation prices. Then it’s not business. Then it’s a hobby or CSR (corporate social responsibility). Obviously, do it but it’s not business then.
Again, sit down, be honest with yourself and decide. Look at all 3Ps and when a new idea matches all of them then it sits in the middle.