Step 1 in starting a business
ANOTHER DAY—ANOTHER STARTUP INSIGHT
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If you’re building something awesome and want to share your story with a startup-savvy audience (including potential users, partners, and investors), we’d love to help.
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🔗 WHAT A STARTUP SPONSORSHIP INFORMATION
Starting a business isn’t as complicated as many people make it seem.
In fact, the core principles of business—creating value and solving problems—are surprisingly straightforward.
Yet, many entrepreneurs get caught up in the complexity of business jargon, as if sophistication equals success.
But at the heart of every successful startup is a simple, powerful question:
How are you going to create value that someone else in the world wants or needs?
Let’s break this down, using a real-world example. Imagine you’ve come up with a brilliant idea: You want to sell candles.
But before you jump into manufacturing, branding, and marketing, there’s one critical first step you need to take — the value creation component.
What is value creation?
At its core, value creation is about figuring out what your customers want and delivering it in a way that makes their lives better or easier.
It's not just about selling a product.
It's about solving a problem or fulfilling a need.
And this principle applies to every business, from tech startups to simple consumer goods. When you start with value creation, you're setting the foundation for everything that follows.
In the case of our candle business, your customers are likely looking for a few key things:
A pleasant scent
Aesthetic appeal (candles that look beautiful in their homes)
Long-lasting burn time
Affordability (without sacrificing quality)
The question you need to ask is:
What specific value are you offering through your candles?
Step 1: Identify the value you’re creating
The first step in building a successful business is understanding why people buy candles in the first place.
At its most basic level, customers buy candles because:
They want a sensory experience—a pleasant fragrance that enhances the atmosphere in their homes.
They also want candles that look beautiful, adding a touch of decor to their space.
On top of that, they want them to last for a reasonable amount of time.
And of course, the price has to be right.
The question is:
What will you focus on?
Will you prioritize creating the best-smelling candle?
Will you focus on long-lasting quality?
Or perhaps will you focus on lower price point for affordability?
This is where the magic of value creation happens.
It’s about making trade-offs between competing priorities.
The perfect candle would deliver all the benefits: amazing scent, long-lasting burn time, beautiful appearance, and affordable price.
But the reality is, most successful businesses pick one or two of these aspects to focus on and then dial them up to 11.
The trade-offs of value creation
As you dive deeper into value creation, you’ll realize that it often comes down to making trade-offs between competing priorities.
Let’s look at how this applies to our candle example:
Scent vs. Price: You could make a candle with the best scent by using premium ingredients and complex fragrance chemistry. However, this process could make the candle more expensive. Your customers might love the smell, but you’ll need to decide if they’ll pay a higher price for it.
Longevity vs. Cost: Another approach might be to focus on creating a candle that lasts longer than most others. This could involve using specific wax types or a special manufacturing process. However, making the candle last longer might raise the production cost, which would affect pricing. Will your customers pay a premium for longevity?
Affordability vs. Ubiquity: Or you could go in the opposite direction — focus on making cheap, mass-market candles and distribute them widely, making them accessible to a broader audience. In this case, your value creation would be about affordable luxury — offering something that looks and smells good at a reasonable price, but with a large-scale distribution strategy to reach as many customers as possible.
Finding the sweet spot
Most successful businesses don’t try to solve every problem or deliver every possible benefit to the customer. They focus on the one or two key aspects that will set them apart and excel in those areas.
In the candle example, you might decide that your value creation strategy is to make the best-smelling, long-lasting candles. To do this, you would likely need to invest in premium ingredients and a more sophisticated manufacturing process. As a result, your candles may be more expensive than mass-market options. But the trade-off here is that your candles will stand out because they deliver the highest quality experience for those who care about scent and longevity.
Alternatively, if you focus on creating affordable candles with wide availability, your value will come from mass production and distribution. In this case, your value proposition isn’t about premium quality—it’s about affordability and convenience.
How to apply this to your business
Whether you're starting a candle business or a tech startup, the principles of value creation are universal. The process looks something like this:
1. Identify the need:
What problem are you solving? What value are you creating for your customers?
Every successful business starts with a clear problem.
It could be something as big as improving healthcare access or as small as offering a better way to organize your closet.
The problem needs to be specific, relevant, and painful enough that your target audience feels compelled to seek out a solution.
2. Understand your audience:
Who are they? What are their pain points? What are they willing to pay for?
Understanding your customers' needs, desires, and frustrations is essential for crafting a solution that resonates with them.
Conduct surveys, interviews, and research to get a deeper understanding of your audience’s behaviors and preferences.
3. Focus on one or two core aspects and create your unique solution
You CAN NOT be everything to everyone.
Choose what your business will excel in and prioritize those aspects.
Your solution doesn’t have to be revolutionary, but it must offer value in a way no one else does. This could mean a better price point, faster service, more convenience, or a more personalized experience.
Think about what makes your solution different and better.
4. Test and iterate:
Once you have a concept for your value creation, test it with real customers.
Does it resonate with them? What could be improved? Are they willing to pay for it? Is your solution solving their problem in a meaningful way?
Early validation helps you avoid building something people don’t actually want.
5. Scale wisely:
As your business grows, continue to refine and expand on the aspects of your value creation that matter most to your customers.
Examples of value creation in action
To help put this into perspective, let’s look at a few startup examples that nailed the value creation component:
Airbnb: Before Airbnb, travelers struggled to find affordable, authentic places to stay in cities worldwide. Airbnb created value by offering unique lodging options at a lower cost than traditional hotels, solving the problem of overpriced, impersonal accommodations.
Dropbox: In the early days, Dropbox recognized that people needed a way to easily store and share files online. Their solution offered value by simplifying file storage and making it accessible from any device, meeting the need for seamless, cloud-based file sharing.
Uber: Uber transformed the taxi industry by offering a quicker, more convenient way to get a ride. It created value by addressing pain points like unreliable service, high fares, and long wait times, ultimately changing the way people think about urban transportation.
MORE INSIGHTS AND STORIES:
Why is value creation the first step?
When starting a business, focusing on value creation is the first step for several key reasons:`
It clarifies your purpose
Before you start developing products, marketing plans, or securing funding, you need to be crystal clear on why your business exists. Customers don’t buy products; they buy solutions.It drives customer loyalty
Businesses that focus on value creation are not just selling products; they’re building relationships. When customers feel like your product is a true solution to their needs, they’ll stick with you. This creates loyalty and trust — two of the most important ingredients for long-term success.It influences everything else
Every decision you make — from marketing strategies to pricing models — should be guided by the value you're providing. If you create value that resonates with your audience, everything else will fall into place more naturally. This clarity helps you align your resources and efforts efficiently.
The takeaway
The value creation component is the first step in every business journey.
Whether you’re selling candles, launching a software company, or starting a fashion brand, understanding what you’re offering and why it matters is crucial to long-term success.
By focusing on delivering exceptional value in a specific area, you’ll give your business the best chance to thrive.
So, as you embark on your entrepreneurial journey, start by asking yourself these fundamental questions:
What value are you creating, and how will you make it stand out?
This clarity will guide every decision you make — from pricing to marketing to scaling — and will lay the groundwork for a successful business.
Now, it’s time to turn your idea into something people can’t live without.
THANKS FOR READING!
- Gracie from What A Startup
Hi Gracie, I am building something that will change the way of thinking and operating in the workplace.