It’s perhaps the most commonly asked question of entrepreneurs: “What business are you in?” How many of us think carefully about the answer? Some answers I’ve heard lately include “I’m in consulting”, “we make and sell replacement parts for earthmovers”, “we are the leading on-line retailer of golf accessories”. These descriptions and most of those we hear describe what the business activity is, not what it does. What your business does is provide a solution or answer to a customer’s need. We often hear the phrase “point of pain”. What is the point of pain that you resolve for your customer?

Over an amazing lunch at Sparks in New York, I had a conversation with a man who is a major developer of industrial properties in the tri-state area. We were discussing his relationship with a well-known discount book chain. He told me, “I know what business I’m in. I’m not in the warehouse business. I’m not in the real estate business. I’m in the ‘lowest unit cost quickest on the shelf’ business”. He understood exactly what point of pain he solved for his client. Books are heavy and take up space. It can take a long time to move books from the printer to a warehouse and then to a store. Books are sold today like fresh produce – they have a short shelf life. So the retailer needs to be able to restock big sellers quickly but not crowd their shelves with slow movers. My host worked at solving that problem and built a long term profitable relationship with the solution.

What business are you in? Look at your market and customers as abstractly as possible. Which of their points of pain do you touch in your business? How do you resolve the pain? That is what business you are in. Have you resolved it as completely and inexpensively as you possibly can? If so, congratulations; if not, you need to do better because if you don’t someone else will.