How to tell if you have a real value proposition and viable business!

value prop

Have you ever had what you thought was a great product idea and then put a business plan together only to find you could not get the idea funded? Worse yet, have you ever spent many days, months or years of work to develop that product only to find you can’t seem to sell it enough to survive?

In this post I’m going to show you the way to make sure you have a viable product and a viable long term viable business. 

As we all know the most important indicator for a companies success is sales. In the absence of sales, or at the beginning of a product development cycle, the way to be sure you will have future sales is with a strong value proposition. After over 30 years of experience, I can tell you most people do not understand how to define a real value proposition. It’s like the term “root-cause” in quality. Most people, even quality engineers can’t seem to get that one right. Let’s leave that one for a future post however.

In an effort to keep this post short and to the point, let’s look at the different questions you need to answer to be certain of your future success. These are also the main things a venture capital firm or Investor will look for when determining whether you are fundable.

Do you have a true value proposition?

The Easiest Way to Win!

You need to have a powerful value proposition. The way to tell if you truly have a very powerful value proposition is if you have solid answers to ALL of the following:

  1. Are you serving a market that is large enough to sustain your business long term even if you only acquire a small piece of that market?
  2. Are you solving a real problem or filling a real need within that market? Does the problem currently cause the customer pain and will your solution relieve that pain?
  3. Does your customer “want” this solution to their problem? They don’t necessarily “need” the solution as long as they “want” it.
  4. Do you know what sets your solution apart from your competitors? Why would it be a no-brainer to buy your solution instead of all of your competitors solutions?
  5. Can you defend your solution? Is your solution believable to the customer, your claims about value can be backed by real data and is your solution sustainable and protected through patents and copyrights to prevent someone else from knocking it off?

In Summary:

Is your product or solution “Desirable” to the customer? Is it “Different and Better” than other solutions available? Is it “Defensible” through protection or a high barrier of entry to other competitors?

The best value propositions are where you have the only solution available for a hungry market with a pressing problem and you have your solution protected with patents and copyrights. If you have this, you have a winner!

The Second Way to Win:

If you don’t have the above covered, and I mean really covered, you can still win, but it will be more difficult! The second way you can win is if your product or service is truly disruptive. What this means is does it really change how things are done? Tesla is a good example of this method, as is Uber and even Facebook.

As stated above, disruptive can be changing the way things are done – “In a very big way”, or it can simply be the art of bringing two worlds together. When I say, bringing two worlds together, an example would be the smart phone. The smart phone brings computers and phones together into one device. Bringing two worlds together typically makes the solution to a problem or task more efficient. By efficient, I mean simpler, more cost effective or with better performance. (i.e a better value)

The Third Way to Win  (Temporarily until you create one of the solutions above):

You can “buy time” by creating a more elegant solution to an existing product / market and you are making sales, showing you are in fact grabbing market share. The key statement here is “making sales”. If your whole business plan is based on grabbing existing market share from an existing market with a similar existing solution available, you will have a tough road ahead. Think of products like the toothbrush, windshield wipers and even computers. The only way to stay alive is with constant changes and stellar marketing.

In my opinion, if you are just another player in an existing market with a number of similar solutions, you should be working towards one of the two methods above to assure your long term viability. One could argue, you could jump in and make a fast profit, but is that really the path you want to take?

So I Ask You…

What product or service do you have that a large market wants, that they can’t get anywhere else while it solves a real problem and you can protect others from copying it?

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