Pitching Value
It’s become a habit of mine to pitch my ideas to anyone that will listen. There was a point where I was afraid to share the crumbled, back-of-a-napkin scribbles that I called “business ideas” with anyone.
We’ve all been there. I wasn’t afraid to share because my ideas were “that good,” but because I thought if I told people about them, they would execute and I wouldn’t.
Entrepreneurs tend to be paranoid.
The thing is, we often forget how cheap ideas actually are. Most intelligent people have ideas. These ideas accumulate value when you receive feedback, and then actually do something about it. So, sharing is usually good.
But, in order to receive quality feedback, it’s best to have your value proposition in line. An idea becomes a value proposition when it’s extremely well thought out. The messy, abstract strokes thrown on the blank canvas like “my site is like Facebook, but WAY more niche” or “my site is classifieds ONLY for college students, but not really like Craiglist, but sort of like eBay” not only make you sound like an idiot, but they are proof how little thought an idea has received.
Remember: investors fund pain killers, not vitamins. If you aren’t solving a problem, then what are you doing? If you can’t think through an idea completely, how will you ever manage a business?
From my experience, the best way to develop an idea into a value proposition is to carefully think through these three steps:
1. What’s your idea?
This is the step most people approach, but never move past.
What is your idea, exactly? Is it a product? Fine. What type? Is it a web platform? Great. For who?
Be as specific as possible. It’s more important to be super specific now, and expand as necessary down the road.
2. Why do people need this?
This step is typically the biggest hurdle. Your idea may sound good to you, but will anyone actually care besides you and your dorky buddies? Think about it.
Why will your idea be embraced in opposition to the ideas that already exist on the market? Saying “it’s better” isn’t a good answer. Explaining why it’s better, and being specific, can be a good answer.
The way to do this is to point out the flaws in your competition, and explain why this presents an opportunity for you to attack. Exploiting weakness can be an entrepreneurial strategy, but don’t be evil.
Keep in mind, competition is healthy. If you can’t find any, you aren’t looking hard enough.
3. What economic value will it create?
After you’ve figured out exactly what your idea is, and why people will care, you need to put some thought into the economics behind the idea. Will this save people money? Will this allow people to generate more money? Will this save people time? Will this make people’s lives easier or more efficient? If so, by how much?
The difference between 2. and 3. is that you’re applying dollars-to-ideas. If you’ve established that you are solving a problem, and that people need this idea, then how much will they be willing to give up to use it? It doesn’t necessarily need to be how much money they are willing to give up, because it’s possible to have a revenue model built around a freemium service (ad driven, etc.).
The best way to establish potential economic value, or estimate it at least, is to create a case study. For your given product or service, pick a situation where your idea would be solving a problem from the past, and estimate the money gained or money saved on the part of your customer. Your value proposition will be established if you can back up your pitch with an economic back test. This will also prove you are resourceful.
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