The foundation of a venture that engages in business activities is the transactions it does on a repeated basis. A transaction is where the exchange of value happens. You provide your end customer with the product they desire and receive monetary compensation in return. Despite being so intuitive in the foundation for setting up a business, as entrepreneurs, we find it hard to get to our first transaction!
Part of this problem lies in not identifying and framing the problem appropriately. However, the other part of it lies in not being able to communicate the value clearly. A reason for not being able to communicate the value clearly is the dearth of our being embedded in the world of the customer.
We often think from an offering perspective and try to communicate it in terms of features that the offering provides. This is like telling the other person; this is a car; it has a steering wheel which guides the four wheels. You also have a gear to drive it at a different pace. When we think of this from the customers’ perspective, we realize that these are only your car’s features. But the car by itself solves something that the customer really cares for – being able to travel from point A to point B. Further, it is in a relatively safer environment as compared to a two-wheeler!
One way to break this issue is to think of the connection with the customer. We should be able to relate to the customer the way the customer sees the problem. An excellent book on this aspect of relating to the problem is “The world’s greatest salesman.” If you do not relate to the situation, if you are not able to see the problem and challenges your customer/user/consumer sees, you are more likely watching from an ivory tower. It’s only the transactions that you are going to observe as a metric.
The preceding step in realizing these transactions is relating and building relationships. The relationship-based approach has another benefit, given its connectedness to the context. As an entrepreneur, you are getting information that is significantly related to your offering, that you already sold. This opens more avenues for you to identify new offerings to be built. Further, relationships allow the customers to reach back to you and use the trust developed between the humans involved, acting as a lubricant. Also, the information is filtered and accurate.
As a takeaway, this means to invest in relationship building, your investment in this would give you more avenues to create your business. Once you scale, you could focus on the key elements and make them into offerings that operate on a transaction. The more the number of transactions of significant value, the higher your valuation would be!
Ask yourself:
Can I make relationships the base of venture building?
Am I focusing only on the transactions and missing out on the rich information relationships would have provided? Do these relationships continue to show me new pastures for the new development of offerings as growth drivers for the future?