Are you having a problem defining your business? You realize it is important but you simply cannot seem to get your arms around it. Here is a place to start.

First, why do you need to define your business? Defining your business purpose is necessary to set company objectives, stay focused, and use resources wisely. Further, if you were asked what your company does, it provides the ready answer. Actually, once you have your company definition, you probably should memorize it.

Maybe it would be useful to understand what is not a definition of a business. For instance, “We shampoo carpets,” is not a definition. “We install fences or I am a plumber,” is not a definition. There are at least three things wrong with each of these. First and foremost it does not address to whom the services are to be rendered. You may be thinking, well it is to the population generally. That is not good enough. You need to pare that down to a more specific population. There are several ways of defining a population (market segment) such as by location, demographic, and life style, for instance. Secondly, the problem is not addressed. If you install fences what problems are you solving for the buyer? If you mow grass, what problems are you solving for the business or homeowner? Trust me, if you are not solving a problem, your product/service is not going to sell. Finally the product is largely undefined as well. What kind of fence? Is it a privacy, security, wood, chain-link, chicken wire or what? And what about quality? Is the quality state of the art, durable, long-lasting, attractive, flexible or what? And as you think about these qualities or attributes of the product or service, you should come to recognize that each is solving a particularly different problem. Fence is simply not just fence. Privacy fence is clearly not the same as a wood farm fence. It has a different purpose. You must consider the benefits as part of the description. It is not simply a fence; it is a high quality, long lasting privacy fence. Or it could be a long lasting, rot resistant, fence for farm applications.

Models are frequently useful to answering the big definition question because they help us structure our thinking. However, complicated models simply confuse and bewilder the reader. Here’s a simple model that is easy to understand and remember. Bear with me as we look at this more closely. Once we are finished, you should be able to define your own business.

Market Segment < = > Problem < = > Product/Service

What this model says is that a market segment has a problem that a product/service can solve. You can start with any part of the model. For instance you could start with the market segment and ask, what problems does this segment have and what products/services would alleviate/solve that problem? Or you might start with the problem and ask, who would like to see this problem solved and what products/services would solve the problem? And finally, you could start with the products/services and ask, what problem does it solve and who would be interested in solving it?

Let’s take a look at the components of this model. The market segment is the population you expect to service. As mentioned earlier you can define this in any number of ways. Just some thinking on your part will help you choose the best one. Consider who your customers are right now or who have been your customers. What do they have in common? Are they local business people? Are they local homeowners? Are they people who own expensive sports cars? Are they people who own swimming pools? Are they people age 65 and over? Are they people who do not currently have health insurance? Who are they?

The problem to be solved is critical. Recall too, that product or service attributes (characteristics) will likely play a role in defining the problem to be solved. What is the problem? Is the problem wet, mildewed basements? Is it overgrown weeds? Is it an education fund for a child? Is it a retirement fund? Is it getting more clients/customers? Is it cost control over manufacturing cost? Is it unaffordable health insurance? Is it termites eating the floor joists?

The solution is the product or service you are promoting. It is the thing that the market segment wants (or should want) to solve the problem it has (or should be aware of or made aware of).

Now for a simple template:

Your company definition relates to the model. You serve (your answer to the market segment definition here), with products/services that (benefits of this or these) that alleviates/eliminates/forestalls the (description of problem here).

XYZ Company serves busy homeowners with swimming pools with high quality products and services that alleviate the tiresome chore of pool maintenance.

Note that the business definition has three elements. It addresses who is to be served (busy homeowners with swimming pools), it indicates that the products/services used (with high quality products and services) and that solve the problem (tiresome chore of pool maintenance) will be solved.

This helps keep the business focused. This business is not about walking pets, or building lead systems, or cleaning skyscraper windows. This business is about pool products and maintenance. Further, XYZ carries only high quality products – no seconds, no cheat substitutes. This company solves a real problem for those who are too busy or otherwise occupied to do it themselves.

Now here is another benefit. Once you have adequately defined (at least a good draft) you can begin to focus on the market specifically. Returning to our example of the pool maintenance company, it now is reasonable to ask, where is the highest concentration of individuals who have swimming pools and would otherwise be to busy to clean and care for one? Obviously the answer is the area where the well to do live. That immediately sharpens your advertising focus. If you plan to do flyers, that’s the area to canvas. By defining your business you have sharpened your advertising focus and consequently saved money. Clearly, a business definition saves resources (time, money, and effort).

A company definition also assists in setting goals or objectives. If the market segment is adequately defined then it becomes reasonable to ask how large it is. You could further ask what the competition is like (those with similar definitions, even if they don’t know it.) You could pose the question as to what degree of market penetration you might experience. You might also realize how your company differs from that of your competitor and what you can do better. The definition then helps in setting an appropriate goal.

Defining your business is not easy. As Henry Ford once said, “Thinking is hard work. That is why so few people do it.” Do not be among those that do not. Defining your business will make it more successful and make you wealthier.

A final example: Gray Fox Consulting and Investments serves the US Small Business community with insightful educational materials, training and business consulting that bring positive results to the bottom line.