Tag Archives: Target Market

How To Determine Market Traction For Your Startup

How To Determine Market Traction From The Startup Garage

How To Determine Market Traction For Your Startup

The major thing to know about the first few years of funding a startup business is that in order to attract investor capital you must accomplish certain milestones.

Accomplishing milestones helps to reduce the risk associated with the startup venture.

Investors are constantly assessing risk when evaluating a startup and obviously prefer those that assume less risk. Additionally, accomplishing milestones allows you to raise capital at a much higher valuation because you’ve thereby improved the risk-to-return ration (i.e. the riskier the business the more equity the investor will need to compensate the level of risk).

There are seven main categories of milestones that most investors assess when evaluating a startup
investment opportunity:

Business Planning

– Team Building

– Market Traction

– Legal

– Operations

– Product Development

– Founder Leadership

The specific milestones that you need to achieve within each categories varies depending on the type of business and the stage of capital that is being raised(startup round, seed round, series A, etc).

In this post, we’ll be focusing on the milestones that demonstrate market traction.

What is Market Traction?

According to Naval Ravikant, the Co-Founder of Angel List, market traction is simply defined as
“quantitative evidence of market demand.” Traction is proof that somebody wants your product, it communicated momentum in market adoption.

Why is Market Traction Important?

Per usual, it all boils down to risk for an investor. The more market traction you can demonstrate the less risk there is in the investment.

How Do You Demonstrate Market Traction?

Adequate market traction will vary at each round of capital simply because you have limited resources
to demonstrate it. Furthermore, one of the major reasons that you are raising capital is because you
want to grow your current traction.When raising capital from Friends, Family, and Founders in the Startup Round the amount of market traction that you can demonstrate is limited. You likely don’t have a product developed that is ready for market, so traction in the form of sales is not attainable. However, you can show potential traction by demonstrating the size of the market and trends that support your product claims and solutions.

Additionally, you can conduct primary research such as surveys and conversations with potential
customers and/or partners to help validate your value proposition. Lastly, you can put together a clear marketing plan to demonstrate how you will reach potential customers.

When raising Seed capital from Angel investors you will need to take your market traction to the next
level. This includes obtaining some Beta testers and ideally, some paying customers. You’ll need a full scale marketing plan that proves a significant market opportunity exists based on what you’ve learned about the market to date.

Ultimately, you need to prove that you understand the sales cycle for your business.

Lastly, when raising Series A capital and beyond from Venture Capitalists or institutional investors you need to show how you will scale the business. By this point, you want to deploy the capital raised in earlier rounds to not only show that there is a demand for your product but that you can scale the product. In order to demonstrate this you need to understand what it costs to acquire a new customer and what the lifetime value of that customer is.

If you have a question about your Startup or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

How To “Winterize” Your Startup For Success

How To “Winterize” Your Startup For Success

4 Tips To Get Your Startup Ready For Winter

Startups businesses, just like automobiles, require winterization in order to keep running smooth and stealth during the cold months ahead.

In this article, I’ll highlight the key components found in winterizing an automobile to help aid in Startup triumph.

    The Engine | The Motor of a Startup Machine

Behind every Startup business is the revving motor of an innovative product idea. A product or service, which solves problems and inefficiencies, while streamlining consumer inconveniences. It’s fair to say that outside “temperatures” like the stock market, banking institutions, and technology, influence the internal temperature of a Startups engine.

Is the motor of your Startup adjusting to the current and future market temperatures, or is your product sluggishly cruising down memory lane?

For automobiles driven in freezing temperatures, a thinner less viscous oil is recommended. What if the same holds true for Startups? In times of the “freezing” temperatures (whether in funding, manufacturing, or building a team) a thinner/leaner approach is taken.

The Lean Startup
movement pioneered by Eric Reis, a Silicon Valley entrepreneur, favors the #MVP or Minimum Viable Product. A product development approach, that places consumer interest first, in effort to eliminate risk and increase return on investment.

Make winter a time to flush out Startup ideas into form, inviting and encouraging direct feedback from prospective customers.

    The Battery | The Energy Supplier of a Startup

Don’t get left out in the cold. A thriving business’s greatest power source is the startup team, which supplies invaluable knowledge and resources. It’s true, teams like car batteries; need to be reliable, dependable, and have the ability to start and deliver regardless season or circumstances.

Winter is the prefect opportunity to check in with team members to review how energy/time are being “spent,” to ensure each team members input and output are firing in alignment for the common good of the Startup business.

The fate of your Startup Company depends a large part on your team. Evaluate and examine what inspires, motivates, and increases the voltage for your team members.
Perhaps it’s a monthly happy hour? A weekly creative brainstorming session? Working remotely once per week?

Hit on the power switch, and get your team is wired for success.

    The Tires |Startup Traction

The road to success for your Startup business is full of twists, turns, and various terrains. When a business is moving at Startup speed, proper traction is required.
Snow tires like Market Traction grip the startup roadside to increase performance and eliminate the risks and uncertainty involved in slippery startup slopes.

Market traction is a safeguard for both founders and potential investor, in communicating evidence of market demand and the future momentum of the company.

Winterize your Startup by researching, documenting, and analyzing the following:
• Profitability
• Revenue
• Active Customers
• Registered users
• Engagement
• Partnerships/clients
• Traffic

    Emergency Kit | Tools for Startup Survival

No one enjoys getting stranded in the cold, but when you have a well-equipped emergency kit, the situation becomes more bearable.

A Startup business survival kit should include the following 3 items:

• An air-tight business plan
• An Investor pitch deck
• A strong Entrepreneurial network

Cheers to your continued success regardless of the season!

 

Whether you have a question about your Startup or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

The Importance of Differentiation

Standout Competitive Advantage from The Startup Garage

The Importance of Differentiation

When asked about their product or service, most entrepreneurs could go on and on with the various features and advantages.  However, once you ask them, “what makes your product or service desirably different?” their pitch begins to flounder.  They begin to fall back on their key features or advantages over their competition.  But, the question remains, while your product may have an advantage over the competition, is that enough to make it desirably differentiated?  When determining how you can differentiate your product or service, consider the following:

Core Competencies

Too many entrepreneurs and startups get caught trying to be everything to everyone.  Identify a problem that is not be solved and determine how you can best apply your core competencies to solve that problem.  It doesn’t take endless features and nuances to solve a problem well.

Know Your Customer

Know the fears of your customer.  Determine the reasons that they either avoid a purchase or run towards it.  Continue to narrow your target market until you can identify the crux of the problem for a segment of the population.  The better you know this segments pain points, the better able you will be to create a product that solves a unique problem in the market.

Write a Positioning Statement

A positioning statement is a one or two sentence statement that articulates your product or service’s unique value to your customers in relation to your direct competition.  It explains why your customers should purchase your product or service over that of your competitors.

 

A Note On Intellectual Property

If your product or service truly is well-differentiated and one-of-a-kind you may be able to acquire some intellectual property to help secure your idea from competitor theft.  Discuss your product, service, processes, etc with a startup lawyer to determine if you can obtain any trademarks, patents or copyrights. 

 

Whether you have a question about Differentiation, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

 

Narrowing Your Addressable Market Down To Your Target Market

Narrow Target Market with The Startup Garage

Narrowing Your Addressable Market Down To Your Target Market

Before we go over some tips for narrowing your addressable market into a concise target market, lets first define these terms.

Addressable Market

The addressable market is the group of people (or businesses) whom might be interested in what you are selling.  It is the broadest umbrella of potential customers that your target or service may be suited for.

Target Market

The target market are those people (or businesses) within your addressable market whom are most likely to buy from you.  Typically, they are the lowest hanging fruits and therefore the cheapest to acquire.

Narrowing Your Addressable Market Down to Your Target Market(s)

It is important to have both an addressable market and a target market when writing a business plan.  Your addressable market will give the reader (potentially investors) a good understanding of the potential market opportunity should this business take off.  However, do not stop here.  Many entrepreneurs make the mistake of only looking at the big picture when defining their market.  Investors know – and so should you – that a start-up cannot be everything to everyone.  Startsups have a lot going up against them: no market awareness, tight sales and marketing budgets, steep competition, etc.

As a result, you will want to target a strategic set of market segments within your addressable market.  The low hanging fruits – those most likely and able to buy – will probably want to be your initial focus as these will cost the least amount of money to acquire, thereby leaving sales and marketing dollars for other segments.

A Note on Core Competencies

When determining both your addressable and target markets, keep your core competencies in mind.  You may be able to make moderate tweaks to your product or service to make yourself attractive to a new segment.  This may or may not be in your best interest.  Just be sure to stay focused on what it is you do best and determine the audience that most needs your solution to their problem.
 

Whether you have a question about your Addressable vs Target Market, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Value Propositions vs. Positioning Statements

Position vs Value Proposition from The Startup Garage

Value Propositions vs. Positioning Statements

The main objective of a company’s marketing strategy is to define and reach the target customer demographic while differentiating itself from the competition.  Value propositions and positioning statements stem from this marketing strategy and help the company to accomplish its marketing goals.  Many people use these terms interchangeably when writing a business plan or discussing their marketing strategy, but there are some key distinctions.

Value Propositions

A company’s value proposition describes the key functional and emotional benefits of its products, services and brand. Typically, functional benefits refer to key product/service features and advantages.  Meanwhile, emotional benefits refer to the positive feelings and emotions that customers experience when engaging with the company’s product, service or brand.  Whether the benefit is functional or emotional, the key is to create value and to convince customers that they are getting value for their money.  With this in mind, the main idea of a value proposition is to convince the customer that your product or service creates “value for their money.”  In other words, the benefits of your product or service minus the cost of your product or service results in value that is greater than the cost of the service

Positioning Statements

Positioning statements flow from your value propositions and a single value proposition may contain several positioning statements.  They are more focused messages that form the basis of advertising campaigns.  Positioning statements describe why a set of customers should use one product over another.  The positioning statement includes the target audience, product name, category, benefit and competitive differentiation.

Similarities

Value propositions and positioning statements share the following similarities:

  • Directed to a specific target market
  • Focused on the customer
  • Identify unique points of differentiation
  • Declare key benefits

Key Differences

 

Whether you have a question about Value Propositions vs Positioning Statements, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

How to Write a Positioning Statement

How To Write a Positioning Statement from The Startup Garage

How to Write a Positioning Statement

Many first time entrepreneurs get tripped up on the positioning statement portion of their business plan and how it differentiates from their value proposition.  In this blog post, we will tell you just how to write a positioning statement.  Please refer to the following links for instructions on how to write a value proposition and the difference between a value proposition and positioning statement.

What is a Positioning Statement?

Let’s start by making sure we all understand what a positioning statement actually is.   A positioning statement is a one or two sentence statement that articulates your product or service’s unique value to your customers in relation to your direct competition.  It explains why your customers should purchase your product or service over that of your competitors.

How to Write a Value Proposition?

A good positioning statement includes five primary components:

  1. Your target customer – a clear description of the core group to whom you want to appeal
  2. The frame of reference – the category in which you compete
  3. The key benefit – often the feature that differentiates you from the competition
  4. The reason to believe – your ability to deliver on your promise.

For (target customer) that seek (frame of reference of product category), (product or service name) offers (key benefit) that/because (reason to ).

For example: “For entrepreneurs that seek a professional business plan writer, The Startup Garage offers customized, investor-ready packages because our consultative approach, business experience and industry knowledge allow us to identify your goals and put together a plan to accomplish them.”

 

Whether you have a question about your positioning statement, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

 

How to Write a Value Proposition

How to Write a Value Proposition from the Startup Garage

How to Write a Value Proposition

When writing a business plan, many entrepreneurs get confused about value propositions and positioning statements. In this blog post, we will tell you just how to write a value proposition.
Please refer to the following links for instructions on how to write a positioning statement and the difference between a value proposition and positioning statement.

What is a Value Proposition?

Let’s start by making sure we all understand what a value proposition really is. A value proposition is focused directly on your target market.  It tells them exactly what your product or service is and why they should purchase it. Value propositions reflect your brand promise along with all the primary benefits offered and value received.  This helps differentiate yourself from your competition while spreading word-of-mouth.

How to Write a Value Proposition?

Now that you know what a value proposition is, let’s look at a few ways to write a value proposition. Any strong value proposition contains the following key elements:

  • The target customer
  • The statement of need
  • The frame of reference or product category
  • The key benefit
  • The major competitor(s)
  • The key differentiator(s)
  • The price

Now that you have they key elements to your value proposition, try plugging them into the following template:

For (target customer) who (statement of need), our (product/service name) is (frame of reference of product category) that (key benefit) because unlike (major competitor) our (product/service name) offers (key differentiator) at a price (less than, equal to or higher than competitor).

 

Whether you have a question about your Value Proposition, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

What Is Your Core Competency?

What Is Your Core Competency? From The Startup Garage

What Is Your Core Competency?

Too many entrepreneurs and startups get caught up trying to be everything for everyone. You can always add features or sub-products down the road, but don’t lost sight of your mission and your core competencies.  Focus on one problem that your target customers have and solve it.

Get Focused

Once you start throwing in every decent idea that can be added to your product and service offering, you will find yourself with a disjointed solution that only partially solves your customers problems.  As a startup, you need to determine your core competencies and stick to what’s truly essential.

Exercise: Trimming the Fat

No matter how refined you think your product or service is, cut it in half.  Pare down the features until you are left with the most essential ones, and then do it again.  By doing this process, you’ll avoid over-engineering, you’ll be much more efficient, you’ll spend far less on product development and employee costs and you’ll wind up with a much more narrowed target market to focus your limited sales and marketing budget on.  Furthermore, you’ll end up with a product/service that truly solves your customer’s core problem.
 

Whether you have a question about Core Competency, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

What is in a Business Plan: Marketing Plan (Part 8 of 11)

The Marketing Plan from the Startup Garage

What is in a Business Plan: Marketing Plan (Part 8 of 11)

Time For Completion: Approximately 20-30 hours

Your Marketing Plan gives a complete picture of your marketing goals, strategies and tactics.

By answering many questions that will help your product reach your potential customers.

Some of the processes that you will go through when writing a Marketing Plan include: setting goals, creating your company’s brand, and choosing the marketing strategies that you will use to generate potential customers.

Whats in it?

A Marketing Plan contains many different parts. The first section of the Marketing Plan focuses includes sales goals, marketing goals, and creating a detailed a sales forecast that shows how you will reach your goals.

Then, you will use your research from previous sections of the plan to summarize your market position, as well as a list of your company’s strengths, weaknesses, opportunities, and threats. This information is then used to create your marketing strategy.

This includes a branding strategy, a list of distribution channels, a pricing and marketing strategy, and a customer service plan. Your branding strategy includes your current and ideal customer profile, your core message, your company name, and tag line.

Why its important

You may have a great product or service, but no product sells itself. In order to be successful, you need to create a well informed strategy for how to generate potential customers and sales.

Investors will analyze this section carefully to determine several things: Are your sales and marketing goals attainable? Is your budget large enough to fund your marketing strategies? Is your sales forecast calculated realistically and conservatively?

If these attributes check out, along with the other marketing fundamentals such as branding and positioning, you stand to gain a lot of confidence from investors.

After the Marketing Plan is complete, the next step is to create an Operations Plan. Remember, you can take a look at one of our sample business plans at any time.

 

Whether you have a question about your Marketing Plan or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!