Submitted by Cathy Musselman, Entrepreneur Specialist/Trainer
So you have a business idea and want to move forward with your business plans. Great! The first steps are NOT to determine your corporation registration or even obtain your federal employer identification number (I’m sure this was in the forefront of your thoughts), and it’s NOT to start writing your business plan or creating a website! The first steps are to determine your value proposition.
A value proposition is the value that your product or service delivers to your customers. It is identifying the “pain/need” that your customer has and the “how” you are going to fix it. The value proposition should be customer-focused and NOT focused on you.
Steve Blank, entrepreneur, educator and co-author of The Startup Owner’s Manual, emphasizes that you need to “get out of the building” and research your customers as a process to creating a value proposition. He suggests that you put together focus groups of potential customers, (not your friends and family) and knock on doors to ask those important questions as to whether your idea is viable and are customers willing to pay for it.
Do your research first. You may find that you have a great idea but you might need to make a change here or there to make it more viable. Or you may find that the market is currently over saturated with that particular type of business. You may have to come up with a more unique way of going to market or decide to drop the idea and go on to the next.
To help you get started, here a few key steps to creating a compelling value proposition.
1) Know your customer and target market. Define your customers and how you will reach them.
2) Identify and position the problem with your solution.
3) Know your competition. Is the market saturated? What are the barriers? How will you penetrate that market?
4) Clearly communicate the key benefits to the customer and how you are unique/better than your competition.
5) Be aware of the climate trends that will determine the life of your product/service as it is today. Will you have to pivot in 5 years?
It’s better to put in the time upfront rather than after you have spent a lot of time and money only to find out more time is needed to develop the idea. I highly recommend taking the entrepreneurial training offered by Steve Blank on http://www.udacity.com/. The program is free and emphasizes lean startup processes.