Understanding Business Fundamentals: Distinguishing Between a ‘Want’ and a ‘Need’

How do you tell the difference between what a business "wants" and what it "needs"? Here are some strategies shared by members of the YEC community:

1. Is it essential for the business? In his book "Profit First", Mike Michalowicz talks about how startups are frugal and avoid unnecessary expenses while still managing to grow. If a business can operate without it, it’s more of a "want" than a "need".

2. Does it align with your strategy? At our B2B marketing agency, we differentiate between a business "want" and a "need" by focusing on strategic alignment and impact assessment. We first understand the client’s overall goals and operational needs. "Needs" are critical investments that directly contribute to achieving these objectives, while "wants" are enhancements that may not be immediately essential but could provide additional value when resources allow.

3. Use the MoSCoW Method This method (Must have, Should have, Could have, and Won’t have) helps to determine business needs versus wants. Must-haves are essential for the business to function and meet its goals, indicating needs. Should-haves and could-haves are beneficial but not critical, often categorized as wants.

4. Evaluate the impact To distinguish between a business "want" and a "need," focus on evaluating impact and necessity. If an action is crucial for meeting these goals, it’s typically a need; if it enhances or adds value without being critical, it’s more likely a want.

5. Consider the strategic vision When distinguishing between business "wants" and "needs," it’s crucial to consider the overarching strategic vision of the company and its immediate operational requirements.

6. Use a decision-making framework Distinguishing between business "wants" and "needs" is crucial for effective resource allocation. Here’s a framework I use: Impact vs. Cost, Necessity vs. Discretionary, and Urgency vs. Timeline.

7. Use the Eisenhower Matrix This matrix categorizes tasks based on urgency and importance. Needs are typically tasks that are both urgent and important, directly affecting the business’s functionality and strategic objectives.

8. Evaluate ROI Assess the potential impact or ROI. Consider if an investment will yield higher efficiency, reduced costs, or improvements to sales. Weigh that against the projected spend and then see if it’s ultimately something you need or want.

9. Prioritize needs for long-term success It’s important for businesses to differentiate between initiatives that are a "want" and those that are a "need," as prioritizing the latter can make a significant impact on the company’s long-term success.