What makes you different?

How do you distinguish your business from your competitors? The correct question is, “What is your unique selling point?”

Contributed by BL

“A dream with courage is innovation…A dream without courage is a delusion”
– Anonymous

You see things; and you say, ‘Why?’ But I dream things that never were; and I say, “Why not?”
– George Bernard Shaw

Whether you are an entrepreneur or investor, you will always end up in networking and presentation events when you hear other entrepreneurs pitching their ideas whether they want to create presence or raise funds. After sitting in these events for a long time, you will end up setting up your own criteria to what constitutes a good idea. Yes, The simple question for all of us is: What makes you different?. To paraphrase into business jargon, you will often hear an investor saying, “What’s your unique selling point?”.

An entrepreneur differs from a businessman in a very simple aspect. The difference lies in the ability to come up with an innovation that will change the world or redefine how the business is traditionally done. Let me demonstrate this with two examples. For the former case, it will be some invention which changes the world, for example, the cure for cancer and AIDS or commercial spaceflight at the price of your current airflight ticket. It is pretty straightforward for an entrepreneur to get involved. Either he is the inventor himself or he teams up with the inventor to commercialize the product for market consumption. The second case is slightly different. You need to change the way how traditional markets operate, for example, MacDonalds is in the food and beverages business, but if you have read the story behind the corporation, you will know that the way how MacDonald expands is not by the number of restaurants, by how many prime locations that it can secure to have its restaurant there. In this situation, you reinvent a different way of distributing and expanding your business.

Didn’t I hear about someone with the same idea last week?

I have been through many business plan competition bootcamps in different roles: starting from being a business plan competition organizer, upgrading later to become a participant and now finally become a mentor for various business ideas. In all three roles, I have acquired some wisdom from the investors who are present in these events. One of them is the ability to differentiate what is truly an unique idea, and the other is to know what kind of ideas will definitely fail. That comes to the point on why I am writing about this here.

Every investor loves to ask this question. “I have heard about your kind of ideas many times in many meetings last week. Can you tell me what’s so special about yours?” In Asia, the entrepreneur is dumbfounded for 95% of the time, and he provided the free ammunition for the investor to literally tear him to pieces with the following, “I have seen many companies of your type and they all crash and burn. So, my conclusion is that your idea just fails and there is no way that I want to invest in you.” There are a few things which you notice here.

Let’s take two perspectives, both the entrepreneur and the investor. In such a situation, the entrepreneur has to ensure that he must be fully prepared for the onslaught. In his mind, he must have the list of all his potential competitors and how their business model operate. In case, when a question like this is being asked, he will be able to differentiate himself from the rest. Most of the time, the entrepreneur I see here in Singapore tries to rely his defence on technology. The problem with the defence by technology is that it only appeals to the academia or research community and not to the investor community. At the end of the day, the investor does not care whether your technology is far superior because of the features it possess. He or she only cares whether you have a sound business model that can sell your product to the customers you claim you have. The most successful cases I have seen is that the entrepreneur does not highlight the superior technology but on how the technology can redefine the business model. There is the other possibility that the investor has made up the following claim, “I have seen this idea done by a group of Indian (or Chinese companies) during my visit to Bangalore (or Shanghai) a week ago.” Usually, the entrepreneur will counter attack by asking him for the names of the company. Using this counter attack strategy can result in the investor having a less favourable opinion of you. Of course, as I have said before, investors come in all shapes and sizes. Some investors are more forgiving and frank by telling you more than what you already know.

From the angle of the investor, he might want to use this to test the entrepreneur, whether the latter really knows his stuff. He is also concerned whether the entrepreneur is able to position himself correctly in the market with the idea. There are a lot of great ideas out there, but very few made it big. One primary reason is the ability to position your idea on the right spot.

Perhaps, it’s the way how the media has influenced most young entrepreneurs here. A lot of them seem to think that the idea is very important and forget about the other crucial aspects in making a startup work. In my own ranking table, I looked at the team first, followed by the ability to handle cashflow and then come to the idea. To get the business right, you need to have good people who are able to stand by you and work together with you, and not having dodgy people who might embezzle or run away with your money. The real difference between a good and bad entrepreneur lies in the following: the good entrepreneur has a good team and understands the cashflow process well to position the idea to make money. A bad entrepreneur can have the most brilliant idea but failed to execute because of mismanagement of people and money.

Making the Unique Selling Point mark

Here is a checklist which I always ask myself whether an idea will succeed into a business:

1. What is the idea about? Is it a product or a service?
2. What makes this idea different from the rest? Can anyone easily replicate this and do what I do? How can I protect myself against that kind of competition? Can I name 5 companies on my mind who are doing this currently?
3. Who will buy it?
4. How do I start the business? Can I do it by fundraising or by organic growth?