Welcome to Trep Tip! These are quick but informative tips that entrepreneurs (i.e. treps) can reap benefits from if implemented correctly. A great idea poorly implemented gets you nothing. A really good idea, skillfully implemented gets you everything.
Let’s jump in.
Since this is our inaugural tip, let’s start at the beginning with something any entrepreneur must do. A value proposition – it is a critical step in taking your good idea and developing it into a successful venture.
In simple terms, a value proposition is made up of three components:
- A problem or opportunity that your venture is addressing
- The promise (product or service) that the venture is making, and
- The price.
The moment you add price you go from a free promise to a value proposition. But is it the right value proposition? Does it present your product or service in a compelling way that customers will want? Like a basic algebra equation, you need to get every variable correct in order to balance the equation.
Common Mistakes and Solutions
- The problem or opportunity is not clearly articulated.
- You want to present your case in such a way that you will get agreement from the customer. The presentation needs to be clearly and succinctly shown so that the customer will agree that this is indeed a problem or an opportunity.
- The promise fails to excite the customer and he or she doesn’t see the value.
- You must structure the promise in a compelling and believable manner, so that the price is justified or even expected.
- The price is not aligned with the problem or promise.
- Make sure you take a long objective look at the first two parts of the equation –problem/opportunity and promise – when you are determining price and do your research. If there are competitors in your field, find out what they are charging for a similar service or product. Below is a diagram showing quality from low to high; and price from low to high. You want to land in the bolded boxes (i.e. premium, fair or disrupts market).
Questions to Consider
- What problem/opportunity are you addressing?
- What promise are you making?
- What is your pricing strategy versus the quality you are providing?
- Are you in a ‘bolded box’ or do you need to rethink a portion of your value proposition?
So that’s a value proposition. It is a simple formula, but it requires a lot of thought work and can’t be overlooked. It is a vital step for any entrepreneur to make before taking the next steps towards a successful venture.
Good Luck Treps!
About the author: Kevin Wilkins is the founder and Managing Director of trepwise, an impact consulting firm whose mission is to use entrepreneurial thinking and approaches to grow and sustain for-profit and non-profit organizations by providing innovative and practical solutions.