What makes your company unique?
It’s crucial that your business plan states your business concept and value proposition. Since this part of the business plan follows the executive summary and company history, readers already should have a general idea of your company.
The business concept, however, comprises your vision of the company, explaining the value your product or service will bring to the customer, why you are especially qualified to offer it, as well describing your offering’s uniqueness and growth potential.
This in turn enables you, as well as interested parties and potential investors to research and analyze the concept for feasibility, both from a market and financial perspective. Keep in mind, however, that everything in your business plan must clearly relate back to the value and benefits your product or service provides for your target customers.
The Feasibility Test
Think of a feasibility test as a reality check for your business idea. The goal of conducting a feasibility test, is to provide yourself (and your team or investors) that there’s relative certainty of your product or service being successful within your industry. A feasibility test should be designed to be as low-cost as possible, and should revolve around creating a Minimum Viable Product (MVP), that communicates the most simple, basic value propositions of your future product or service.
According to Entrepreneurship For Dummies by Kathleen Allen, a feasibility test weighs the validity of your business concept by examining four main points:
1.The product your firm will offer
2.The customer you will target
3.Your value proposition
4.How you will get the product to its intended users
By this stage you should have a firm grasp on what product or service you intend to offer, as well as who you believe will be your primary customer. The final item requires weighing various distribution channels, but, again, should be answerable with a little leg work.
The Value Proposition
In essence, your value proposition is what makes customers choose you, instead of the competition. It’s part marketing, part operations and part strategy. In other words, your value proposition is the foundation of your competitive advantage. What can you do to make your product or service higher quality, more useful, lower cost, or supported by something else within your business, that your competitors can’t replicate?
On a subconscious level, customers will compare the value proposition of your company against those of your competitors when deciding where to take their business. With that in mind, here are a few things to remember when writing your value proposition:
Keep it short and uncluttered. Your value proposition explains why customers should buy from you. If you can’t sum it up in 10 words or less, chances are you won’t be able to execute it, either.
Be precise. Your customers have specific needs; your value proposition should offer targeted solutions
This is about your customer, not you. Your value proposition should discuss only what matters to your customers and the value you can bring to them.
Value comes in numerous forms. Money, time, convenience and superior service are a few of the ways you can help deliver value to your customers.
The last part of the business concept is how you will deliver your product to your customers. Are you going to sell directly to consumers? Through strategic partnerships? Retail distributors?
There are several factors to consider when planning the distribution strategy for your business:
Will you set up a brick-and-mortar shop or office, sell online or both?
What unique obstacles exist for your company in these two different channels?
If your company sells a product, will you have the space to keep enough inventory on hand, or will customers have to agree to waiting periods?
Can you strike exclusive deals with any particular distributor or retailer? Do your competitors have any such deals that hinder your operation?
Remember, vision is important if your business is going to grow. The more focused your business concept is, the greater the likelihood that you’ll attract investors and customers.
By Daniel Richards|Thebalance