I love how business lingo is super clear and non-jargony… said no one ever. Thankfully, knowing your way around the business alphabet soup isn’t just useful for putting Uncle Charlie in his place at thanksgiving dinner. Nope, now you can put those annoying acronyms to work, analyzing your investments to make sure you’re placing solid bets on small businesses and local startups.
So the USP. No, I didn’t misspell your local shipping and printing office and my apologies island lovers, I’m not here to transport you to the University of the South Pacific. USP stands for Unique Selling Proposition, also known as the “unique value proposition” or just “value prop” if you’re really cool. Simply put, it answers the timeless question: “Why should your customers pick you?”. And since Momma can’t be your only customer, most businesses will need a USP to explain why they’re special.
What if the business is SO unique that they don’t have any competitors to compare with a USP? That’s great, but just remember, the only 2 reasons your idea isn’t already a business: 1 – It’s brilliant and no one has thought of it, or 2 – it’s a bad idea (or the timing is off). If no one has tried it before, It might be worth asking why not.
Now you may not need to do a detailed market analysis to determine if a business has a strong USP. Just try putting yourself in their customer’s shoes… ah but wait. Who is their customer? We need to trek an acronym deeper and tackle ICP or Ideal Customer Profile. If you want to get technical (why else would you still be reading?) ICP describes the business your company is selling into, but buyer personas make up the specific individuals who influence or make purchase decisions. In short, what does your customer look, act, and think like?
Again, don’t go down a psychoanalysis black hole. But do think practically about who the business is targeting and how successfully they’re positioned to solve the customer’s problem.
If you can effectively pinpoint these first two, you’ll have a better idea on our final and most important acronym: PMF or “Product-Market Fit”. PMF takes abstract ideas about whether or not the product is unique and is the business good at describing their perfect customer, then brings it all back to reality. Ie: Do people want the stuff you’re making.
Understanding a company’s ICP, USP & PMF can help you determine if you’re tapping into a unique opportunity or if just buying another can off the shelf. Of course, you’ll still want to check out the financials and read up on the risks to get a holistic view of the opportunity. When combined with other key factors though, the acronym carousel can go a long way in making more calculated decisions about your local investments.