Every good business plan has a good business model with a clear, strong customer value proposition at its core. A customer value proposition shows that your product or service either delivers a solution to a problem or it offers a real benefit of some sort. For example, America's Best Companies provide small businesses with the tools to help them stay in business, grow their business, and make more money in their business. There is the value right there. You can see that a customer value proposition does not need to be complex. In fact, the simpler it is, the better since it will keep you focused. If you can explain why your business has real and lasting value to the consumers that you want to reach, and you can do it in a single, pithy sentence, you are on the right track.
You can break your customer value proposition down into three building blocks—customer adoption, differentiation and pricing. Alone, these are merely aspects of your value proposition, but together they can create something powerful that can help drive business and attract investment.
Break the mold. Unless you have invented something utterly unique, you can count on there being a lot of businesses like yours out there. This is especially true on the Web. So, what are you going to do? You need to set your business apart. What do the others do? Can you do that better? What don't they do? Can you fill that gap? Remember, it is the service and the treatment that most people will remember about their experience with a business, not the price. If they are treated well—better than by other, similar businesses—then you have differentiated your business in a most powerful way.
Find your niche. We know you want the whole world to be your customer base, but for a startup, that can be very difficult and very expensive. It means that on some level you will have to be all things to all people, and from the experience of those who have gone down that thorny path, no one comes up happy. Instead, stick to your core values and try serving a niche market. By going this route, you trade the potential of a wider customer base for a greater level of loyalty and interest from the customers that do come in. More than that, these folks are more likely to spread the word about you, a great source of advertising that you can spur through the use of social media outlets like Facebook and Twitter. Then, once you have a good following, you can think about tackling the rest of the world.
Price and price structure. You cannot really compete only on price, but you can compete on how your prices are structured. You might offer credit, flexible payment options, or go against established practice in your industry and structure your prices in a way that offers a better alternative. This, of course, goes back to the idea of breaking the mold. We saw this when Software as a Service first emerged as an alternative to traditional software licensing. The key here is to find a way for your products to be affordable to the widest variety of people possible. If you can do this, it will not be lost on consumers who are trying to save money in today's economy.
Your business model is a central component to your business plan, the main tool that you will use to both guide you as your business grows and convince investors that your business is the one they have been searching for, but without a strong customer value proposition, none of that can happen. Maybe its time to sit down and write one, or, if you have one but haven't seen it in a while, it's time to dust it off and see if you are living up to it. Either way, the value you offer your customers should be first and foremost in your mind.
