Point 1. Determine Your Product Value
You know the focus of your business [from a previous post].
Now we're going to focus on aligning your product as a problem-solving feature your target audience needs.
In determining your product value, the next 4 factors need to be clearly defined.
A What are the top 3 problems your customers [would] face?
Sure, customers will spontaneously buy things for no reason. Sometimes.
As someone who loves to shop, I get that.
But there's usually an underlying reason for a purchase, even if the customer doesn't directly acknowledge it.
One of the biggest no-nos that most salespeople
commit is that they rattle on about their product
without ever asking how they can help the customer.
They'll either never ask or will wait until they've finished their sales-vomiting to ask questions.
You know, by the time the customer is completely turned off to what you have to offer; even if it's the most amazing solution on the market.
We've all done it, I'm sure. I certainly have.
You have to engage your customers in conversation about their challenges or needs to understand their pain.
The pain you have the custom-made bandage for.
You need to determine how severe your customers pains are.
The more intense your client's pain, the more willing they are to spend more money on a solution.
And when you tackle their top 3 problems, you've not only narrowed the niche down successfully, but you've also become the answer for your target client.
B How do your products solve their problems?
List the top 3 features that your product provides as solutions to your clients' problems.
For example, let's say your target client is a woman looking for a new eye makeup remover. Sounds simple enough, right?
Well, Becky—our target client—has bought just about every eye makeup remover on the market. And she's yet to find the perfect solution.
She's obsessed with waterproof mascara. Why? She has eye allergies so she'd prefer not to make the leaking, salted streams from her eyes leave gray trickle-paths down her cheeks.
Problem is, waterproof mascara doesn't come off.
All the eye makeup removers she's tried have either been too oily, not gotten all of the mascara off—even after scrubbing her eyelids—weakened her eyelashes causing breakage, or irritated her allergy eyes.
There's Target Client Becky's top 3 problems.
Waterproof mascara doesn't come off easily.
She needs a mascara that won't cause breakage, but also won't leave an oily residue.
She needs something that won't irritate her sensitive eyes.
How does your product solve Becky's problem?
Well, your product not only provides everything Becky needs, but it even throws in an additional feature that will make Becky fall in love with your eye makeup remover and has given you an unfair advantage over your competitors: as soon as the eye makeup remover dries, Becky can immediately re-apply mascara without worry of it running, smearing or smudging.
You just got a lifetime eye makeup remover customer. Now, she's also very interested in seeing what other miracle products you have to offer.
So, how does your product solve your target client's problem?
C What key metrics will you track?
A business metric is a quantifiable measure that is used to track and estimate the status of a specific business process.
These key business metrics should be addressed to important audiences—investors, customers, and executive employees.
A few quick examples of business metrics you may want to track are:
Customer loyalty and retention
Cost of customer procurement (cost of marketing and sales to attract new customers)
Operating productivity (staff productivity, your own productivity)
Size of gross margin (total sales minus the cost of goods sold)
Monthly profit or loss
Variable cost percentage
Hours worked per process
To read the detailed list by Martin Zwilling, please check out 10 Metrics Every Growing Business Must Keep an Eye On.
D How much will it cost?
In 2009 the Ewing Marion Kauffman Foundation estimated that the average business startup cost is around $30,000. However many direct sales, micro-businesses, at-home franchises and more average around $1,000 to $5,000 for startup costs.
That aside, it's very important to calculate up front how much your specific venture will cost you.
I'm sad to tell you that the biggest business failures [among my social circle] have been restaurants.
A friend went into business with minimal funds, a weak business plan, and nearly zero research into their direct competitors, the locale, market nor industry, and went under in less than four months.
"By failing to prepare, you are preparing to fail."
— Benjamin Franklin
Understand your costs. Attorney, accountant, training, advertising, workspace, wages, consultants, inventory, property, vehicle(s), and more.
Since I'm not a financial planner, I'll leave this subject to the pros for you to explore further:
How to Estimate Startup Expenses Without Screwing Up by Aaron Roberts
Estimating Realistic Startup Costs by Tim Berry
Startup Cost Calculator from Entrepreneur.com