Why Clear Competitive Advantage and a Unique Value Proposition will Turbocharge Your Company’s Value

Do you have a competitive advantage?

Competitive advantage can come in many forms. If you want the highest possible valuation when the time comes to sell your business, then your aim as a business owner is to prove that your competitive advantage will continue in the future and that the business cannot be easily copied by others.

For example, if you’ve developed unique technology or intellectual property (IP), and even better, if it’s protected by a patent or trademark, then it will be very difficult to copy your business and you will receive a higher valuation.

Likewise, if your business model relies on the quality of your people – like a professional services firm or a software house – and you have assembled a crack team of expert employees who want to work with you, then a competitor will struggle to compete with you and the buyer will make you a higher offer.

One final warning, your competitive advantage should never come from low prices.

This will inevitably create a race to the bottom which no company should want to win.

And one thing’s for sure, an investor or buyer will never want to enter that race with you.

How to build your competitive advantage

To build the value of your business you should focus on:

–What you do consistently better than your competitors – How you are different to competitors who look like they do the same thing – Identifying the parts of your business that could easily be copied and protecting against this – Getting patents, trademarks or contracts in place to protect your technology, IP, products, and services – Ensuring your products and services are not just seen as commodities

Do you have a Unique Value Proposition?

Linked to competitive advantage, to increase the value of your business, you need to be clear on why your customers buy from you, what perceived value they get from you, and make it clear to a buyer why your customers couldn’t get this value anywhere else.

This is known as your unique value proposition.

As an Owner/Director you must ensure that there’s a reason for your customers to buy from you rather than your competitors and that this is clearly communicated to your customers so that they can always recognise the value of your products and services over others.

If your value proposition is truly compelling, not only will you have an advantage over your competitors, but you will be often able to charge higher prices for your products and services.

You may also get a reputation in the industry, and sometimes you will get buyers seeking you out – which clearly puts you in a strong position to achieve a higher valuation!

To develop a unique value proposition you must have a deep understanding of your customers, and a commitment to monitoring, maintaining, and constantly improving customer service.

You need to be clear on the problem you solve for your customers and show that you truly understand the value they get from you. In our experience, we often find that the value your clients actually get from you can be different to what you thought it was!

We also urge every member of your leadership team to regularly get out of the boardroom to speak to your customers.

A buyer is likely to ask how your customers’ needs have changed over time, and you need to show that you have a plan to meet their changing needs into the future.

Understanding and demonstrating a clear and unique value proposition to a potential buyer will make your business significantly more desirable and greatly increase its value.

Download our Free 54-Page Guide: “How to Seriously Increase the Value of Your Business”

This article is taken from our free 54-Page Guide for Business Owners and Directors: How to Seriously Increase the Value of Your Business.

The guide will help you to get the sale value you want and deserve, and ensure that when the time comes to sell your business, your guts, drive, commitment and sacrifice will be worth it – literally.

You will also get a Valuation Scorecard to use in your own business to start increasing your business’s value today.

Find out more about the guide and download it here.

Alternatively, contact us today and speak to our advisors to tell us about your exit plans (in confidence) and to find out how we can help you to grow the value of your business from day 1 and maximise your business valuation when the time comes to sell.