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Profit in a Page
September 1, 2008 By: Ben Markens Paperboard PackagingStep by Step – Part 2
Last issue, I started a series of articles designed to address your emails asking me what I feel are the most important steps in creating a good business plan. In the first article, I addressed the first two steps: 1) Developing your next ACT (Achievable Concrete Target) and 2) Choosing your underlying strategies to achieve your target.
Step 3. Your Value Proposition
Who is your target customer and why do they prefer to buy from you rather than a competitor? Express this as a benefit to the customer rather than as a description of your output or product.
 Ben Markens |
An example of a bad value proposition would be "We make boxes to help our customer ship their product." This is neither unique nor valuable.
Some examples of value propositions are:
- 1. We help clients increase market share.
- 2. We solve our customer's supply chain problems.
- 3. We solve clients' unsolvable problems.
- 4. We help clients overcome obstacles.
- 5. We help clients eliminate waste.
- 6. Using our methods, a typical client makes more money in the first year than in any two previous years combined.
- 7. We help clients hire and retain motivated employees leading to improved productivity and profits.
Ask yourself, "Will the value proposition help the organization achieve its next ACT?" If not, it's back to the proposition drawing board.
Also ask yourself, is this value proposition interesting enough to excite the people who work in our organization? It must motivate and inspire action. If not, it's back to square one.
In his book Good to Great, Jim Collins says about his version of a value proposition, that it should be the intersection of three concepts:
1. What can your organization do better than anyone else?
2. What inspires your passion?
3. Will it drive your economic engine?
Does your value proposition satisfy all three? If it does, don't keep it a secret — let the people you work with know about it: employees, customers and vendors.
Step 4. Customer Perspective
In this section you need to assume that your customer wants what they want, when they want it, at a competitive price. While they might even sympathize with your situation, assume that they don't care about your capabilities, your challenges, what you want them to buy, or your need to make a reasonable return on assets.
Consider the following possible things a customer might want: timeliness, ease of doing business, price, quality, success, innovation, and solutions.
Organize this section into three to five major objectives. Objectives should be continuous improvement projects — the quest for never-ending improvement on your organization's part.
The difference between and objective and an initiative is that an initiative has a finite, time-limited end result. An objective is never reached, always strived for. An example of an objective would be zero defects. While you might achieve it, you must always remain vigilant or you will slide back. A comparable initiative might be to create a training program for your quality assurance staff to improve defect capture.
For each customer objective, ask the question, "if we are successful in this category, will it help us to succeed with the value proposition? Then ask, "is any critical component needed to achieve the value proposition lacking (from the customer's perspective)?"
Remember, when you are finished, you should have at most five objectives from the customer's perspective, plus the value proposition.
Ben Markens is president of The Markens Group Inc., a boutique consulting firm guiding business toward excellence. He can be reached at 413-562-8405 or ben@markens.com . Sign up to hear his weekly audio tips about business at www.markens.com/tipoftheweek.php
