Why Solving a Real Problem Isn't Enough to Grow a Successful Startup

?? Hey! Before we get into this week’s newsletter, I wanted to let you know that on August 29, I’m hosting a free webinar with Mike Wilson, a veteran business coach and owner of Lead On Purpose Coaching, titled “Accelerate Your Startup: Strategies for Sustainable Growth and Fulfillment. ” We’d love to have you join us. Hope you can make it!

You've identified a legitimate problem. You've built a good solution. But then...crickets. No sales, no traction, no growth. Your startup still isn't taking off. Sound familiar?

It's a scenario I see play out all too often.

Last year, I stumbled upon an eye-opening article by Jason Cohen , founder of WP Engine and Smart Bear, that explains why so many promising startups struggle to gain traction––even when they have a great product that solves a real problem.?

The truth is, solving a problem isn't enough—your business needs to clear six critical hurdles for a shot at success.

These hidden barriers could be the difference between your startup's growth or failure. Ready to uncover what's really holding you back? Let's dive into these six barriers:

1. Plausible Market Size?

Is your target market big enough to support the type of business you want to build?

Cohen suggests you need at least 100,000 potential customers for a B2B play. Any smaller, you'll struggle to get the volume necessary to build a sustainable business. This ties into the 95/5 rule : Typically, only 5% of your market is ready to buy at any given time.

However, there's a caveat for professional services. Many consultants opt for higher prices and fewer clients instead of building a large agency. This approach can work with a smaller market size but requires a different growth strategy.

2. Self-Aware Customers

Do your potential customers actually know they have the problem you're solving?

If not, you're in for an uphill battle. I recently spoke with a home services business owner who faced this challenge. Despite having a superior duct cleaning method, most homeowners don't realize they need this service every 3-5 years. Many go 20+ years without noticing issues.

In the B2B world, this often manifests as potential clients who don't recognize inefficiencies in their current processes or the potential impact of your solution. Focusing on a self-aware audience is infinitely easier than an unaware one.

3. Lucrative Market

Even if customers know they have a problem, do they have budget allocated to solve it?

I often see startups targeting real problems that are perpetually at the bottom of priority lists. If it's not important enough to warrant budget, you'll struggle. This is where the advice to "sell a painkiller, not a vitamin" comes in. Your solution must address a pressing, painful problem that customers will allocate resources to solve.

This has been particularly challenging recently, as many tech companies have been cutting budgets and focusing on efficiency. Your solution needs to be seen as essential, not just beneficial.

4. Liquid Market

How often are customers actually in a position to buy?

Some products solve occasional problems or have high switching costs that limit purchases. For SaaS companies, this often relates to contract renewal periods or migration pain. For professional services, it might be tied to fiscal year budgets or project cycles.

If your target audience loves your solution but can only buy it once their existing contract expires or if they only need it occasionally, it will take a lot of work to sell it.

5. Eager Market:?

Are customers excited to buy from you specifically?

Even if you check all other boxes, you need to stand out and give customers compelling reasons to choose you. Your unique value proposition must be clear. Are you offering superior technology, exceptional service, a unique methodology, or deep niche expertise?

Remember, you're competing not just against other companies but also the status quo. Many customers might prefer their current imperfect solution over risking change. Developing an "eager market" requires continuous refinement of your offering and messaging based on feedback and market dynamics.

6. Enduring Market

Will customers stick around and continue paying you?

High churn is a silent killer for many startups. For SaaS businesses, this means ensuring ongoing value justifying recurring subscriptions. For professional services without recurring pricing, it means creating significant value that clients return for more projects or refer others.

Cohen shares how even a 7% monthly churn can stall growth for an early-stage company. If customers aren't getting ongoing value, you don't have a viable business.

The B2B Startup Challenge

One challenge specific to B2B companies is the disconnect between problem-haver and decision-maker. Often, the person experiencing the pain point your product solves is different from the one with purchasing power. If you're solving a problem for someone who lacks both budget and a direct line to those who control the purse strings, closing deals becomes exponentially more difficult.

Evaluating Your Business

To help visualize how these factors interact, Cohen provides a helpful flowchart:

This chart illustrates the path from identifying a problem to building a viable business model. Each step represents one of the hurdles we've discussed, and failing at any point can derail your startup's growth.

The Takeaway

Understanding these hurdles gives you a framework for evaluating your market and business model. Instead of mindlessly pursuing your current strategy, you can pressure test your assumptions and iterate until you find that magic combination of problem, solution, and market dynamics.

Here's my challenge to you: Take some time this week to evaluate your current business against these six criteria. Be honest with yourself about where you're falling short. This exercise could be the key to identifying the tweaks needed to achieve healthy, sustainable growth for your startup.

Remember, there is always time to adjust your strategy. Many successful businesses have succeeded by niching down, changing their business model, or realigning their value proposition to better meet these criteria.

It's important to note that figuring out these components takes time. I'm 1.5 years into my company, and I'm still working on adjusting many of these for my business. This process is about finding a viable business model or "product-market fit." You should only invest deeply into growing or scaling your company by putting significant resources into marketing and sales once you're confident about your viable business model. Too many founders scale prematurely and run out of money.

By understanding and addressing these hidden hurdles, you'll be well on your way to unlocking sustainable growth for your startup. It's a journey, but with patience and persistence, you can navigate these challenges and build a thriving business. Good luck!

This post originally appeared on Substack. Subscribe to GTM Foundations on Substack and be notified as soon as new posts are live.