BOOST YOUR BUSINESS VALUE THROUGH MONOPOLY CONTROL
Remember playing Monopoly? Whether you were collecting properties, houses, or hotels, winning or losing boiled down to your ability to see the big picture, capitalize on opportunities that presented themselves and build a distinct competitive advantage.
That same mindset can help your business create real value in the eyes of potential investors. At Raincatcher, we call it monopoly control. Let’s take a closer look:
- On average, research shows that companies receive offers that are 3.55 times their earnings.
- Businesses with a monopoly control (which directly correlates to the uniqueness of products or services offered) generate a multiple of 5.43—more than 50% higher.
The pandemic we’re all facing means it’s time to double down on the things that make your business unique. To paraphrase a term coined by economist Warren Buffet, create a moat.
Generally, four types of moats can help you develop a sustainable competitive advantage to protect yourself and your business:
- The network effect: Each additional user of your particular service makes it more valuable. One obvious example of this is Facebook.
- High switching costs: When consumers rely heavily upon one of your particular products or services for their daily needs, the perception is that it will be too costly or too painful for them to move their business elsewhere.
- Low-cost production. If you can offer an identical (or better) product or service at a lower cost, you will win more business. Take Amazon, for example. Thanks to its massive network of fulfillment centers, Amazon delivers a wide array of goods to anyone in the world in one day—with lower internal costs than anyone else.
- Intangible assets: These include patents, brand value, and government-protected industries. Examples include pharmaceutical companies, Apple, and utility companies.
One great example of an organization that thrives through monopoly control is Ethos3—one of America’s 25,000+ graphic design firms. Rather than compete with every other firm for a general design business, founder Scott Schwertly decided to differentiate, focusing Ethos3’s efforts into creating extraordinary, award-winning presentations.
It’s a tiny, sleepy, unglamorous corner of the design business—but one in which few designers specialize (and even less do well.) Today, Scott and Ethos 3 have a competitive advantage—a moat—which has enabled him to scale up into a multi-million dollar firm with clients like Coke, Google, and NBC.
This approach works today—even during a pandemic. So, if you’re looking to rebuild, retool, and revive your small business, I’d encourage you to check out my latest webinar, Value Revival.
At Raincatcher, our goal is to help your small business succeed. That’s why there’s no sales pitch in Value Revival —it’s 22 minutes of research, information, and insight that we hope helps you build value and attract investors.
If you have any questions, feel free to contact us at any time. We’d love to help you prepare for the value revival.