While most businesses fail because they ultimately run out of cash, we should be most concerned with why they run out of cash. When I ran Barkeeper in Ireland in the mid-2000s, there was a point where we didn’t know if we could afford to continue. Our burn rate was unsustainable, mostly because we had maxed out all our credit cards, and until we received an investment, it looked like we were going to run out of cash and fade into oblivion.
Looking back on it now, it’s clear to me what our problem was and the more businesses we work with at Storyforge, the more we see the same issue. We lacked a clear value proposition. It wasn’t obvious to our audience why they should hand over cash to us and it wasn’t obvious to other investors why they should bet on us. We were the only online toolkit for bar and restaurant owners in Ireland at the time and our tools were helping those businesses who subscribed, yet every time we marketed, we talked about our tools, our website, and our content. The value, of course, was in the time saved by using our tools, the increases in margin by using our systems and the revenue generated by implementing our promotions. All for a low monthly fee that could be made back the first day of membership.
Businesses all too often focus on their product and their service rather than their differentiated value and their true purpose. It took us years of running Barkeeper to realize that the medium was not the message. Had we focused on the right thing (our purpose) early on, we would have appealed to more customers, possibly raised more money and I could have reduced the number of years it took me to pay down my credit card debt!
A differentiated value proposition can only come from a clear purpose. A purpose makes it clear what business you are in, who you serve and what products you need to provide to live up to your purpose, whatever it may be. In a sea of sameness and increasing consumer choice, the ability to offer a differentiated value may be the difference between a sale or a pass.
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Barry Chandler is the co-founder of Storyforge, a brand strategy company focused on helping companies discover their purpose to allow them achieve their vision, build preference and drive margin. Barry has been building award-winning businesses since launching his first company in Ireland in 2003. His last company, a digital marketing agency, was acquired in 2012 by a California-based publicly traded entertainment company which then hired him as Chief Marketing Officer. It is his belief that the greatest brands seek to change the world, improving the lives of their associates, partners and customers.