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Online business registration in the Philippines skyrocketed to 75,876 as of September 2 from 1,753 recorded in January to March 15, as more and more entrepreneurs conduct business over the Internet due to strict blocking restrictions imposed to stop the spread. of COVID-19, according to the Department of Commerce and Industry.
These online businesses mainly sell and market essential products, such as food and household items. Even celebrities and businessmen jumped on the bandwagon of launching food delivery apps to take advantage of quarantine and work-from-home settings.
But just like my usual questions to any newbie entrepreneur looking for advice to start a new business, I always ask: What is your value proposition? What is your Unique Selling Proposition (USP)? Sometimes I get good responses, but most newbie entrepreneurs respond with responses like “my price is competitive,” “my burger is more delicious,” or “we offer more selection.”
When you are an aspiring entrepreneur, you are more often subject to genitive biases that cloud your judgment about your new company. One is the overconfidence bias, which is the tendency for people to become more confident in their own abilities, such as starting and growing a business. Another is the optimism bias, a cognitive bias that causes someone to believe that they themselves are less likely to experience a negative event, such as business failure due to external factors.
These biases cause inexperienced entrepreneurs to ignore planning and preparation, instead following their instincts and experience, and adopting a “me too” strategy. This is why many startups fail after a few years of operation, a testament to the often-cited statistic that 9 out of 10 startups fail. Business failures can be even bigger.
Think of the ‘me-too’ business ventures people jumped into and failed: lechon manok (roast chicken), beauty salon, internet store, milk tea shop, coffee shop, and now potentially online businesses.
A critical doorway you must go through when starting a business is clearly identifying the value proposition and unique selling proposition of your offering. People confuse these two and often treat them as one; and they are not.
A value proposition is a promise of value that will be delivered and recognized, and the customer’s belief that the value will be experienced. It is a clear statement of the tangible results a customer gets from using your products or services. It’s what will make your target customer ‘consider’ your offer.
A great example of a value proposition statement is that of the iPhone. It says: ‘Every iPhone we’ve ever made, and we mean each and every one of them, was based on the same belief. That a phone should be more than a collection of functions. That, above all, a phone must be absolutely simple, beautiful and magical to use. “
The value proposition is based on the needs, wants and fears of the target customer. Needs are the rational drivers of purchase or use; Desires are the emotional drivers for buying and using your product; And fears are the target customer’s risks of switching to your product or service.
These are then translated into the features and benefits of your product or service for your customers and the experience they will go through using the product.
A value proposition statement guide that I use is as follows: “To [target customer] who [statement of need, want, or how to address fear], our
en]product category]that [statement of benefit & experience]. ”
USP, on the other hand, is part of the value proposition. It’s what sets your offering apart from the competition. It’s what will make your customer decide to ‘buy’ your product. An example of a great USP is Domino’s Pizza: “” Get hot, freshly baked pizza delivered to your door in 30 minutes or less, or it’s free. “A USP statement includes the unique solution your offering provides to a specific problem. It involves identifying your competition, why they are known and identifying what can make your offer unique from the competition.
A USP statement guide that I use is as follows: “We at [Business name] help you[resolve the consumer’s need]by / with alone / without [unique benefit]. “
Once you have your value proposition and PVU statements, you can word them to make them more attractive. These are also your bases for crafting your elevator pitch or main message that you can use to promote on social media and other communication channels.
The value proposition and the PVU are only the first doors to a successful business venture. You also need a solid business plan that includes how to scale your business.
The author is CEO of Hungry Workhorse Consulting, a digital and cultural transformation consulting firm. He is the Chairman of the Information and Communications Technology Committee of the Institute of Financial Executives of the Philippines (FINEX) He is the Country Representative of the Institute of Change and Transformation Professionals of Asia (ICTPA) and Member of the Institute of Digital Transformation based in the USA He is professor of strategic management in the MBA Program at De La Salle University. The author can be emailed to [email protected]
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