Startups need to understand their Unique Value Proposition
Identifying value in a startup is not a question of finding the next best thing. Instead, it is about ensuring there is a market for the product and that the market is large enough to support the business and make a profit. Most startups exist because they believe they have something that is going to be game-changing for a lot of people. They are not wrong here, but they forget that a game has already started, and for them to change the game, the new game needs to be a lot better than the existing one.
More startups choose to join an existing game and get points via market share than startups that create a new game altogether. Understanding all the current teams (organizations) that play the same game is critical. Each team will have its unique offering, but for a new team (startup) to become a fan (customer) favourite, it has to bring something others don’t have, a unique value proposition.
Although organizations don’t have the same degree of loyalty as regular sports teams, what they do have as their advantage is a working ecosystem that prevents customers from switching. The broader and deeper the ecosystem, the more work customers need to do when they decide to change systems. In addition, there’s also the comfort factor and critical value items. For customers to shift, a startup has to create something that is more comfortable to use and has all the same essential things of value.
To create value that can motivate a shift from ecosystems is tough, and every significant enterprise player in the market knows that; it’s also their Achilles heel. This is the opportunity that every startup capitalizes on.
Most startups are born because they are the users of a system with an entrepreneurial spirit. They see an opportunity to create a solution to a problem the author doesn’t address.
Startups use unique value to their advantage by creating products and services that fill the consumers’ specific needs. They do this by innovating and identifying market trends and acting early.
A unique value proposition is a core benefit that is different and better than the competitors. It is the value that potential customers care about and want. Without it, potential clients would not care about the solution.
The unique value proposition becomes the critical element when the problem is big enough and the solution has a product market fit. Value is determined by the saving a solution brings or the advantage that solution brings to an organization trying to compete for market share.
Understanding the value a solution brings to the market based on the size of the problem is vital. A solution only a few care about will not generate the revenue required to grow. However, if that solution saves a few companies millions and allows them to increase their value offering to their customers, then even one company would provide the revenue required through exclusive rights to grow a solution for future opportunities.
Value is the worth of something expressed in terms of what it will exchange for. Often expressed in monetary terms, it is an expression that defines the extent of a person’s, society’s, or a nation’s economic well-being.
How healthy a startup is, depends on its value.
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