What Can You Achieve Without Money?
Episode #1 of the course How to start a startup with zero budget by Dr. Donatas Jonikas
Welcome to the course!
My name is Donatas, and I’m a startup marketing expert who guides early-stage startups to become fundable and financially self-sustainable. In order to develop the methodology of my book, Startup Evolution Curve, I did the global research on startup development and bundled the experience of more than 1,000 successful startup founders. In this course, I will show you how to minimize the risk of failure and become much more interesting for potential investors.
Today, we will talk about value proposition, the main thing you as a startup founder could build, even without any money.
Let’s be realistic: Chances are low to build a profitable and scalable business without any investment, but you can do it with other people’s resources, money, and network. Yet there is much to be done before investors and business partners believe in your idea.
The very first step of what you should do (and it doesn’t require money) is to define what value you will deliver to your customers. This is a vital and most important step. The essence of a successful startup is not about the modern technologies, fancy innovations, venture capital investments, or large media coverage. If you can create real value to potential customers, it will be much easier for you to:
• attract investments that are needed to build a business
• earn consistent revenue and profit
• get viral word of mouth to grow your business faster
Levels of Value in Value Proposition
Usually, there are three levels of value emphasized in value proposition:
1. List of features. Though it’s not very effective, a list of features is the easiest way to construct a customer value proposition. You simply list all the features the offering might deliver to target customers. Some people mistakenly think that the more features that can be listed, the better, but that is not always the case. This approach requires the least knowledge about customers and competitors, and thus, it is the least effective.
2. Points of difference. Regardless of the product or solution, customers always have the option to buy a similar product at a competitor or solve the need in another way. Therefore, companies should focus on how to differentiate one product or service from another in the market by citing their points of difference. Listing the points of difference is a more efficient method to create a value proposition rather than just a list of benefits.
3. Customer-oriented value. Customers are more likely to buy from those providers who fully grasp critical issues and deliver a simple but powerful value proposition that is most appealing to customers’ current needs. The company can create a customer-oriented value proposition by making the offering superior on the few attributes that are most important to target customers.
Strategies for Building Value Propositions
Companies usually build value propositions on one of three main strategies:
1. Operational excellence. Customers just want a good product at the lowest possible price. In this case, companies are not trying to come up with new or better products, just trying to produce more volume at a lower cost. This strategy works only when there is a possibility of achieving economy of scale.
2. Product leadership. Customers care most about the product and want to get the best. Companies are dedicated to innovation and quality and are constantly working on improvements that can be brought to the market. Keeping an eye on competitors and trying to stay one step ahead is a requirement for this strategy to work.
3. Customer intimacy. The market is full of similar products and services at various quality and price points. But customers are not always satisfied with just a standard product. They want customized solutions. Companies are trying to learn as much as possible about customers’ needs so they can deliver the most compelling products, services, and solutions.
The customer-oriented value proposition and the customer intimacy strategy allow startups to achieve the greatest results. Therefore, startups should first take the customers’ perspective and define what value can be delivered. The best way to do that is to put yourself in your customer’s shoes and involve them in the creation of your value proposition. As Steve Blank and Bob Dorf (2014) noted: “In a startup, the founders define the product vision and then use customer discovery to find customers and a market for that vision.”
Key Takeaway
You should craft your value proposition at the very beginning and then test if it is meaningful and appealing for your customers. If it’s confirmed, you can build your business model around it. If not, you should go one step back and redo your value proposition.
In the next lesson, I will show you how to create a strong and innovative value proposition, focusing on your customers’ jobs, problems, and gains.
Recommended books
The Startup Owner’s Manual by Steve Blank and Bob Dorf
Startup Evolution Curve by Dr. Donatas Jonikas
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