By: Billy Vrbensky, RIC Centre Communications Intern
Meet Tony. After graduating from university and achieving his designation in accounting, Clarkson Gordon, now Ernst and Young, hired Tony as a junior auditor. After only one month of being employed, the accounting firm forced Tony to take on a more advanced role. He didn’t accept the position because he wanted to gain more experience first and the firm laid him off as a result. Tony knew long before he had started his accounting career that he didn’t want to crunch numbers forever. He wanted to be his own boss and follow his passion of helping others. Tony then found a problem that needed to be solved. He invested in the security monitoring business due to the rise in the burglary rate across Southern Ontario. Tony produced a compelling value proposition before taking the company to market, a critical part of the business plan and a key factor to the success of his startup.
Source: SCOW Software
What do you mean value proposition? A value proposition is a statement containing the unique benefits delivered by your offering to the target customer. It explains the unique value of your product and offers a compelling reason for customers to buy. Your value proposition statement should include:
- What you are offering,
- Who you are creating value for,
- The problem you are trying to solve,
- Why your product is distinctively better than the competition.
For example, Tony’s value proposition stated:
“Safegard Security is a security-monitoring provider with 24/7, affordable and peace of mind monitoring services to protect residential and commercial properties from the growing burglary rate.”
Let’s build yours, together. Here are the four steps to building a compelling value proposition for your startup:
1) Define your problem to understand if it’s worth solving
Charles Kettering, inventor of the electric start engine and owner of 186 patents, once said that, “A problem well stated is a problem half solved.” People tend to dive into the solution well before really understanding the problem at hand. Be sure to do your due diligence on the problem prior to perfecting your solution and you will surely understand the issue to a much higher degree.
2) Evaluate the uniqueness of your startup
Ask yourself what is truly unique and compelling about your breakthrough. How do you differ from what’s currently available? Does your startup have a disruptive innovation or business model that may offer you a competitive advantage?
3) Measure your potential consumer base
Conduct a market intelligence report to make sure demand still exists for your type of solution and be sure to evaluate market size and its potential for growth. Some entrepreneurs get so caught up in advancing product features that they forget about how difficult their technology could be for the consumer to adopt. Be sure to produce a gain and pain comparison to measure the gain you will deliver to your customer and the cost of them adopting it.
4) Build a compelling value proposition for your startup
After going through the first three steps, you are ready to build a value proposition for your startup. Take into consideration your target market, the value you will provide and how it’s better than the competition. Remember that YOU need to be truthful to your startup and its value proposition in order for it to succeed!
Do you need help developing your value proposition? Sign up for the RIC Centre’s Entrepreneur’s Toolkit Workshop on August 11th and August 18th to learn more about crafting a compelling value proposition for your startup.