Protect your offering

Most business owners want to protect their product or service offering. That’s probably how they decided to go into business in the first place. They either identified a niche in the market that nobody else was servicing, an area that a common service wasn’t available in, or bought a franchise.

When you commit to a product, service or bundle that does one thing really well, you create an offering so unique that it gives you a protected niche. Customers find you, refer you, or seek out your offering because of how unique you are. Better than that, because you have a unique offering, customers are unable to peg your pricing to a competitor.

The obvious benefits to this are that you have a lot more control over your margins and it insulates those margins from would-be competitors. With healthy margins you can ramp up your sales and marketing and build a moat that insulates you even more from competition as they become unable to mimic you.

Many founders will do the exact opposite in an attempt to quickly grow their revenue and company size. It’s very tempting to leverage your original success and try to increase your revenue per customer by cross-selling additional products. Unfortunately, the irresistibility of your offering then gets watered down with generic products and services.

The same thing also can impact what an acquiring company values in your business – when they look to buy your company its very likely for the niche offering you started with. All the other goods/services used to cross sell are just things they must buy, that they probably won’t use. I remember when I had basic cable and wanted to add the SciFi channel, they wanted me to get the top tier package because all the other add-ons didn’t come with it. I ended up going with two streaming services instead of buying those packages.

When an acquirer looks to purchase your business, they want to buy something that would take too long, or cost too much, to compete with directly. So, if you want to build the value of your company up as much as possible, focus your limited resources on becoming so amazing in your niche that instead of someone competing with you, they buy you!

Here are some questions for you to think through with respect to each product and service you offer:

  • Do you have a competitive advantage?
  • How durable is that point of difference?
  • Does your competitive advantage grow or become diluted as you grow?

Lastly, if you aren’t already, consider committing to focus on the products and services that make YOU unique.