14 November, 2013

1-1-5 value creation: play it safe !

so, you will sacrifice almost everything, quit your job/s, sell your wife and kids, kill your pet (and I don't know why!) and take all the money to throw in that brilliant new idea of yours

at least make sure that have a descent chance to succeed, you don't want to kill your dog in vein

10 Qs to ask yourself, some are subjective and some are not, just be as fair as you can and put a number from 0-10 for each question:

1- urgency

how badly people need your "value"?
are you inventing a cure for cancer, or a spray cleaner for phonograph needles?

tip; look and search for frustrations, complaints in the voices of your targeted market to recognize their needs

2- market size

the larger, the better
are you targeting students, or astronauts' wives ?

tip; do not fall for percentage numbers, they are always deceiving
1% of most markets is a huge number, you'd be more than lucky if you find a "value" to target it

3- price potential

what is the highest average price your customers would pay for it?
try to get an approximate number from a business lying in the same category

tip; the more urgent and attractive the "value" is, the higher the price you will get

4- customer price

or cost to customer acquisition
how much will it cost you to have a customer, to make him pay for what you offer
of course, the lower, the better

5- value delivery price

or cost to value delivery
how much will it cost you to deliver the "value" to the customer
as previous, the lower, the better

6- uniqueness

are you inventing the wheel ??
the more original and new your "value" is, the more chances you have to succeed

7- speed to market

time spent from the birth of the idea to the paying of the 1st real customer
the shorter the better

8- cost of upfront sell

money spent from the birth of the idea to the paying of the 1st customer
the less, the more awesome

9- upsell potential

how many products, services and values surround your original value
can you sell accessories , deliver services, offer updates, provide premium features
it is called selling the back-end sell, what you can sell them on top of the initial one

10- the evergreen potential 

are you playing in a field that is changing everyday, or a field that will not be changed for the next 100 years?
think of e-learning vs mobile phones
think of weddings vs record studios

the more you tend to invest in an evergreen field, the less money and effort you need to spend to keep your business current

sooooo, think very well about theses questions, crunch some numbers and get a result in %

  • if your result is less than 50%, you have very little chance to succeed, and I think you already know that. If I were you, I wouldn't take the risk, but also life is full of surprises, just have a little faith :)
  • if is ts between 50% and 75% then your chances are good, but it won't be a home run 
  • if is is more than 75%, then you have a pretty good chance to be a real businessman with a couple of 100s of 10000s in the next few years. LUCKY YOU !