Recent growth in the number of business crashes has seen old-school business leaders throwing in the towel. The numbers of struggling businesses coming up for sale is at a new height. So how can you add value to your business in the digital economy and attract investors or inquirers?

We know that over 60% of businesses recognise the need for change yet only 21% of these has a plan. Frankly, there is a deeply ingrained inertia, worsened in markets like the UK, paralysed by Brexit. Increasingly, business leaders are reading the writing on the wall. It’s not just a case of them not understanding or not knowing how to approach transformation. This may sometimes be the case, but frequently they just don’t have the appetite. 

It’s estimated that a third of the businesses we know today will be gone in the next two or three years because they failed to keep up with the changes taking place in the business world. Digital disrupters are moving into every sector and once they arrive they can “own” that sector in a matter of weeks. Business leaders who’ve settled into a daily routine that allows them to jog along comfortably are unlikely be enthralled at the prospect of having to pull on your running shoes for a Bolt-like sprint to the end of their working life.

Many business leaders have avoided the issue, believing they will introduce the changes they need to compete once the disrupters arrive. This has only revealed their failure to understand the pace we are moving at and what digital transformation really means. The outcome of this is their organisations shift from the category of “struggling” to that of “collapse”.

Understanding transformation.

Transformation in the digital age doesn’t mean using technology to streamline your processes. Businesses that have done just that and believed their transformation was complete are now realising how deluded they were. In fact, what they have done is greased the slippery pole by increasing the efficiency of models and processes that were already taking them in the wrong direction.

Transformation is about starting from scratch, matching you resources to the needs of a new breed of consumers. These are the digital natives, who now represent over sixty per-cent of the economically active population. They have completely different needs to their predecessors. Nothing is the same in the digital economy, including business models and management philosophy.

Make better use of the assets you have.

However, before you throw the baby out with the bathwater it’s important to note there are elements of most traditional businesses that are salvageable. The process of transformation starts as any other marketing strategy process, by assessing market needs and business resources and seeing how close a match there is. The transformation process then becomes one of filling the gaps in skills, processes, structures and other resources using digital tools. Often, you will already own assets around which you can build your new model.

Introducing the “business renovator”.

I can’t pretend this isn’t complicated. It certainly requires many skills not found in traditional businesses, which is why you won’t manage this without external help. This realisation alone causes many traditional business leaders to call it a day and sell out to someone with more energy and know-how. Hence the emergence of a new phenomenon – The business renovator.

Around the world, businesses that might be described as “fixer-uppers” are being acquired by enthusiastic entrepreneurs with a plan. For sellers though this isn’t ideal. Selling a distressed business “as seen” usually means “settling for scrap value”, but what if I told you there was a way to add value to your wreck and attract investors and acquirers? Well, there is.

Sometimes all it takes to increase the attractiveness of your business is to give prospective purchasers a hint of what the future might hold were it to be developed. If you want investors or acquirers to view your business as desirable rather than a demolition job you need to think of them in the same way as the crazy DIY’ers who buy derelict houses and renovate them. Often the way to get people to see the potential, and so enhance the value of a business, is to sell it with a plan. 

In the past I’ve worked with investment groups and advisors in this way, creating plans or strategies for businesses that are looking to sell up. The agents or advisors approach their investor clients with what is basically a kit of parts. The main components of the offer are the assets of a business and a plan, which, with appropriate investment, the investor can activate to create a business that’s right for the digital economy. 

Woo investors and acquirers with your potential.

A package like this certainly improves the attractiveness of the distressed business and will often increase its perceived value. I have created these plans or strategies using the basics of the process enshrined in my Brand-Led Business Transformation programme. This way, if the acquirer wants to activate the plan and chooses to engage me to manage it for them, my programme and resources are a plug-and-play solution. This speeds things up and minimises cost.

The idea of selling up and retiring may look attractive, but it’s a buyers market and it’s hard to secure a worthwhile deal. So, consider how you might add the sparkle to your proposition that will attract the investor who will take your business forward. Such buyers are far more likely to pay a fair price. Don’t let agents convince you that scrap value is the best you’ll get. There’s often a better way.

Phil Darby
March 12, 2019

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