Why You Need a Solid Value Proposition

If you’re planning a business, create a solid value proposition. Without it, you’ll go nowhere. Since I’ve been conducting business analysis for BCBusiness for more than five years – yikes, how did that happen? – I tend to have a high profile in the business media.

By Tony Wanless / April 12, 2011

If you’re planning a business, create a solid value proposition. Without it, you’ll go nowhere.

Since I’ve been conducting business analysis for BCBusiness for more than five years – yikes, how did that happen? – I tend to have a high profile in the business media.

This makes me the sometimes reluctant receiver of business ideas pitched by entrepreneurs who are certain they have found the next big thing and are looking for either some promotional ink, or (b) a connection to someone with money who will fund their idea (or, preferably, both).

Sometimes, however, these promoters are pitching half-thought-out business ideas and plans.

It usually goes along these lines: “Our research shows there is a great niche market for this product (or service) because no one is currently providing it. So we’ve developed this widget to fill that gap. It’s revolutionary. It’s innovative. It’s going to be a hit! We’re getting all kinds of notice in the blogosphere.”

The same thing is pitched to me to a lesser or higher degree when I judge business ideas for operations like New Ventures BC, or at universities and colleges.

And then when I am a little skeptical, the anger begins. “You just don’t understand it,” is the answer when the idea is very complex and scientific (the kind I like, by the way). Or, “You’re kind of old school, aren’t you?,” when the idea is so obvious as to be ridiculous.

So, to save some time let’s go through a few basics that not only am I going to ask, but so will anybody with a dollar who’s being asked to invest in an idea.

1. Ideas are a dime a dozen

I have several every day, but they go nowhere because I don’t have the time for them or they’re too inconsequential to bother with. So, have you thought beyond the idea and actually developed this?

2. Will anybody care?

Did you talk to anyone in the target market (i.e. conducted primary research) while you were developing this product or service to see if they needed or wanted it? If they indicated no, was it because it’s so new they didn’t understand it, or was it because it just wasn’t … um … needed or wanted? In other words, is it just a tweak instead of a real innovation?

3. Have you tested it in the market?

Has somebody actually paid money for this? If you’re not there yet, have you stepped out of the cozy and safe development lab and found a few beta customers who have provided useful feedback that led to changes?

4. Have you sat down and savaged your own idea?

Have you taken a real hard line and developed answers that will lead to an understandable value proposition?

This last one is the biggie. If you can’t answer the “Why should I care?” customer question in a succinct and enticing manner, you’d better get back to the workbench.

If you don’t have a solid value proposition, you’re going nowhere.