Positioning
Increasing Business Value – Part 3 of 3

By Larry Mandelberg

In Part 1 of this series, we discussed focus and how focus is all about tuning your business to run as smoothly and consistently as a Swiss watch. We also discussed why a focused organization has greater value to a prospective buyer.  In Part 2 we discussed the impact of structure and the value of predictability, both of which are significant in allowing a business owner to increase the present value as well as the future earnings, and making certain that they are moving toward their ideal exit strategy.  In this last installment on Increasing Business Value, we discuss innovation in the context of positioning for the sale.

Innovate

Get creative with your products & services – look for new ways to sell them and new markets to sell.  Innovation was the subject of a recent thesis by Andrew Haradon, a PhD student at UC Davis.  According to Haradon, the concept of recombinant innovation takes existing products, services and strategies and uses them to cross multiple industries.  The end result is a transfer of tools and technologies from their original purpose to a new one, which in turns creates a new wave of demand and unique value in an otherwise saturated marketplace.  With this new demand also comes a new supply line that may put your products or services on the forefront in the marketplace.

What does all this mean?  What Haradon is talking about is what I like to call the pet rock concept.  Someone came up with the idea that an inanimate object, a rock, could act as a surrogate pet for those people without the time or energy to take care of a living animal.  Or, to use Haradon’s words, a rock was used for a purpose that it was never designed for; it was ‘recombined’ with a good story to cross the barrier from construction material to become a surrogate pet.  While the idea became a fad that quickly faded, huge amounts of money were generated which proves that innovative thinking can get blood out of a turnip, or cash out of a rock as the case may be.

New Markets, New Uses

When you first began you had a sense of need in the marketplace and perceived value for your products and services.  If you were on target back then, by now you will have been successful at penetrating those markets and creating a solid base of customers.  The first step towards innovative thinking is to go back to the beginning and re-evaluate by asking your-self a series of questions, such as: 

·      Since you started, what has changed in your marketplace?

·      What are some of the factors your customers are facing today that they did not have to deal with back then?

·      Are there any ways for you to add to your offerings to help your existing clients deal with them?

·      If you were starting over today, what markets would you choose and why?

·      How can you reposition your products and services to reach those untapped markets?

·      What are your competitors doing different then your company?

·      Do you still have the competitive advantage?

·      Can your industry be revolutionized?

One of the greatest ways to create value is by uncovering an untapped market.  While you may not be interested in launching any new products or services or tapping into new markets, the knowledge that new opportunities exist can be a powerful motivator to a prospective buyer.

This kind of thinking can help you find new and different ways to present your company to a prospective buyer and create excitement about potential growth and revenues regardless of industry or profession.

Sometimes a fresh perspective is needed to ignite your imagination.  As we all are bogged down in the day-to-day hustle and bustle of running a business, it may be difficult to think outside of the box on our own. 

A solution to this quandary may be to get off-site with a clear focus on what you want to accomplish or perhaps bring in a third party outside of your industry who may provide a fresh perspective that will propel your organization to the next level.

Larry Mandelberg is the founder and managing principal of Beyond Point B, which provides professional coaching, business assessment and management training to help individuals and organizations be more successful tomorrow than they are today.  He can be reached at (916) 787-9909 or via email at lmandelberg@beyondpointb.com.