In This Chapter

What are your business objectives, and what is the guiding strategy you will use to meet those objectives? Without a strategy, you really have nothing to move toward—no end goal in sight. What is that goal? How will you convey what your business is all about to employees and to the rest of the world? What is the purpose of your business?

Businesses succeed only when they are focused on the customer. The customer makes or breaks your business. To that end, your value proposition, vision statement, and mission should be focused on your customers and what you can do for them rather than on your business per se. This chapter helps you to get started in creating these important components.

Your value proposition must tell your customers the value (benefits) you bring to them based on what they want and need. A value proposition is not a list of the services and products you offer your customers. Rather, it concisely summarizes the problems you can solve for your customers and how you will solve them.

For example, if your business provides meals to go for busy professionals, the problem you solve for customers is lack of time for cooking good, healthy meals. Your value proposition might sound like this: Healthy-Meals-To-Go, Inc. provides healthy, affordable, quality home-cooked meals for your family without the “having to cook at home” part.

Your value proposition should help you to differentiate yourself from your competitors by communicating to your customers how you will meet their needs (solve their problems). Henry Gregor, Founder and CEO of StrategicVisions, a small consulting company based on the West Coast (www.strategicvisions.com) has developed the following value proposition:

In this example, if you were a customer of StrategicVisions, you would know exactly how the company can help your business.

The value proposition is part of a discovery process and should involve multiple people in your organization. The better you understand your customers’ needs and the various ways your organization meets those needs, the clearer you will be about your value proposition. Developing it is the responsibility of the entire business.

A value proposition that is clear and concise provides your customers with an obvious differentiator between you and the competition. A strong value proposition is also useful in selecting the right partners, vendors, and suppliers for your business. You might also use your value proposition to educate new hires about the benefit you provide to the customers so they can better serve those customers.

Start developing your value proposition by focusing on the unique benefits you deliver to the customer. If your business designs and sells jewelry, your value may be providing jewelry that is unique in design and uses a variety of semi-precious and precious stones and metals. Additionally, you allow your customers to bring you their designs that you will recreate in a piece of jewelry. The overall value to the customer is unique jewelry that they will find nowhere else, designed to their specifications, at a price they can afford. This differentiates you from your competitors, who may sell the same jewelry that the next shop sells. Your value proposition might start to take this shape:

As a best practice, take these steps to understand the value you bring to the customer:

Until you understand your customers—what they want, what they need, why they buy from you rather than the business down the street—you cannot develop your value proposition. Don’t rush this process.

And now, a reality check. If you are in the process of starting your business, you will not be able to fully develop your value proposition. You should certainly think about the value you will bring your customers since you know what your product or service will be and you have an idea why you are starting your business. But until you begin to secure customers, you can’t finalize your value proposition.

For instance, let’s say you have just started a bakery in your town. You sell freshly baked breads, pastries, and cookies. You started this bakery because you like freshly baked items and the closest bakery was 10 miles away. As you start to get to know your customers, you learn what they find valuable in a bakery—in other words, what services you can bring to them to increase the value you provide them. You learn this through conversations with them as they come into your bakery and through a survey you conduct via e-mail.

Here is what you add to your bakery business based on the needs and wants of your customers:

You are beginning to learn the value you bring to your customers based on their needs and wants. Use this data to begin to develop your value proposition which, in the preceding bakery example, might begin to take shape as follows:

You have solved a problem!

Think of the value proposition as your differentiator. What do you bring to the customer that your competitors do not? What makes you so special?

Many businesses mention excellent customer service in their value propositions. But because everyone claims to offer excellent customer service, this doesn’t differentiate your business from the rest of the pack. Break it down further: what kind of customer service makes you unique to your customers?

Suppose you own a bookstore in New Hampshire that sells books written by New England–based authors. You want to provide your customers with a reason to keep coming in to your bookstore that differentiates you from the big chain bookstores. You decide to offer the following excellent customer service options to your customers—all at no charge—to distinguish yourself from the chain bookstores:

All of these ideas provide a benefit to your customers and give them a reason to come to your store other than to just shop for books, although they will likely buy when they are there—and that is exactly what you are trying to accomplish!

Some businesses are more difficult to differentiate than others. For instance, most day spas and salons offer the same services, so simply telling customers that you provide massages, facials, and manicures isn’t going to do the job. You need to be more creative in your approach.

Let’s look at the day spa and salon example. There are already numerous day spas and salons in your immediate area (within 10 miles), so you need to come up with value-added services that make you stand out from the crowd. You might consider offering the following value-added benefits for your customers:

All of these are options for enhancing the value you deliver to your customers—in addition to a great haircut or manicure! As you build your business and begin to know your customers, you’ll learn what products or services to add to increase the value you bring to them—thereby making your business the one they purchase from and the one they recommend to others!

Often, entrepreneurs have many wonderful ideas of what they want to do for their business and the variety of customers they will serve. But to be successful, it is important to stay focused. Find what you do well and do it better than any of your competitors. Don’t try to be all things to all people. You can’t serve every customer well. Some customers are just not good for your business because you can’t solve their problems.

We know of an ice cream shop that was doing quite well. However, a deli moved in next door and the ice cream shop owner felt the need to compete with it. The ice cream shop began to offer pastries and sandwiches to his customers. He lost focus. That part of the business didn’t do well. Customers wanted ice cream from him—that is why they come to his shop. He soon realized the sandwiches and pastries added no value to his business and actually detracted from the ice cream component of his business because he stopped concentrating on developing new and different ice cream flavors. Within a few months, he stopped providing pastries and sandwiches and went back to his core strength—ice cream.

Every business benefits from vision and mission statements. Your vision statement is your long-term view of your business—where you want to be in the future. It is the reason for your business’s existence. The vision and mission statements enable you to keep sight of what is and is not your business as you grow. Vision statements focus on far-reaching goals with the intent of showing the ideal future state of your business. James Collins and Jerry Porras first introduced the term BHAG—Big Hairy Audacious Goal—in the late 1990s. Many vision statements incorporate such goals.

For example, if your business rescues animals that are hurt or in need, your vision statement may be:

This would be considered a BHAG vision statement given its scope of the entire world. It’s certainly a Big Hairy Audacious Goal, but a good goal to strive toward.

Google’s vision statement is:

That’s a big job!

Your vision statement is the reason you wanted to start your business in the first place. It describes, in just a few words, what you want your business to be, and achieve, in the future. It should be positive and inspire others to want to be a part of your business—either as an employee or a customer.

Without a vision for your business, you really don’t know where you want it to go in the future. You have no direction.

Another great example for a vision statement comes from Ben & Jerry’s Ice Cream, which sets out a three-part vision that has outlasted the company’s founders, who sold their interest in the firm years ago. This triple vision statement reads:

Your vision statement also should provide the foundation for developing your mission statement. The vision statement is the future; the longer mission statement is what you are going to do in the present to meet the goals of the vision statement. Your mission statement helps you to determine how to run your business—what employees to hire, what to produce, and how to market and sell to your customers.

Your business mission statement is the purpose for your business, and it should clearly convey …

Looking back at our bakery example from earlier in this chapter, your mission statement might be:

Breaking down the example, you can see this mission statement conveys the three primary points:

The mission statement is clear and concise and lets the customer know what the bakery does for them and why they should buy from that bakery.

It’s also a good idea to include in your mission statement information about your values and beliefs about your customers and employees. For customers, these might be:

And for your employees:

The mission statement enables customers to understand how you work with those around you and what they should expect from you. Most larger organizations post their mission statement on their websites and in public areas for all to see. You should do the same.

As a best practice, take the following steps in developing the vision and mission statements for your business.

For your vision statement:

For the mission statement:

While your vision and mission statements should help to guide your business and its direction and growth, they should not be written in stone. Changes in the economy, in the customer base that you serve, and in your competitors may require you to re-evaluate your business vision and mission.

Use the vision and mission statements as a guide to how you will make decisions about your business, including the kinds of products and services you will offer and the kinds of customers to whom you will offer those products and services.

You’ll also need to start setting some goals for your business in the following key areas:

As a best practice for your business, set specific major goals and supporting goals in each of these areas. Pick shorter timelines for the supporting goals to help keep you moving your business forward in both the short and long term. For example, set quarterly goals and then measure against those goals on a monthly basis.

Let’s look at an example. Suppose you just started your business, which is focused on producing door mats made of organic materials. Your goal is to start marketing your business via the Internet using social media outlets. Let’s break the goal down into smaller objectives and then into strategies to meet those objectives.

Overall goal: Market business via social media channels

Objective #1: Learn about options for social media marketing

Strategies:

Objective #2: Set up accounts on Twitter and Facebook

Strategies:

Objective #3: Use Twitter and Facebook to build brand and promote products

Strategies:

Set benchmarks to evaluate how you are doing. Your benchmarks, for this example, may be as shown in the following figure.

Since you know nothing about using social media, your first benchmark is learning about it. You give yourself one month to accomplish this goal.

You probably have lots of goals you want to accomplish running through your head. Make a list of all those goals for each of the key areas of your business, then start to pare down the list by prioritizing what should be done within 3 months, 6 months, 9 months, and 12 months. Determine what is required in terms of resources (internal and external), amount of money, and time to accomplish the goal.

Certainly one important set of goals will relate to bringing in revenue. After all, you need to pay your bills!

Let’s assume you are starting off your consulting business with two customers who are purchasing your services already. You need to gain more customers in a short time in order to continue to develop your business and bring in revenue. You may set a goal to obtain one new customer per month. Set objectives to meet that goal of obtaining one new customer a month, with written strategies for each of the objectives and weekly benchmarks to measure your progress against the goal.

Let’s get into a bit more detail about best practices around goal-setting. When setting objectives around the goals to be achieved, set objectives that are SMART:

Ensure that all objectives you set to reach your business goals follow the SMART formula above. Well-written, SMART objectives increase your chances of reaching your business goals. SMART objectives are easily shared with your employees and provide them with specifics on how to reach the ultimate goal.

Let’s look at an example. Your goal is to increase your revenue for your business. An objective to do that is to find new customers. Here is the objective written as a SMART objective:

Now, let’s look at what makes this a SMART objective:

When writing SMART objectives, include in the process the employee(s) who will be necessary to carry out the tasks involved in meeting that objective. If they are not comfortable with the objective and the timeline for meeting it, they will be unlikely to complete the task.

Your strategy is going to change over time. Changes in the economy, changes in your customers’ needs and wants, new competitors entering the marketplace, and competitors leaving the marketplace will cause you to change your strategy for doing business with your customers.

Suppose you own an IT recruiting business and your current mission statement is as follows:

However, you find the current economic environment challenging, and you notice that your customers are hiring far more part-time contractors than full-time employees, and when they do hire personnel, they want your company to handle the entire hiring process. Additionally, you are expanding your company to service application development and desktop support personnel. In response to these changing conditions, you revise your mission statement to more accurately reflect your current business:

You have used what you learned from conversations with customers and employees as well as indications in the economic marketplace to change your business’s strategy in how it supports customers’ needs.