How do you acquire a new business for no cost? Can it really be done?
The answer is a definite “yes”, and to prove it, let me share with you a methodology that I have successfully used in the past…
The first step is to look at what you have already; determine exactly what it is you do, how you do it and who you do it for.
The best way to do this is to carry out at a business model review, where you would consider your business in the following terms:
- the current business offering
- the environment in which you are operating
- your existing and target customers
- an assessment of the organisation’s resources and capabilities
You can, of course, do a simple and quick review in a spare couple of hours to give yourself a feel of what this methodology is all about, but we would strongly recommend that a fuller review was undertaken to gain the maximum benefit. Dependent on the complexity of the business – or, if you decide not to go for a full business model review – the first three items menioned could be completed in a relatively short space of time.
However, for this methodology to work optimally, it is very important that you undertake a proper review of the business’ resources and capabilities. I have based this methodology on work by Robert M Grant and his book Contemporary Strategy Analysis. The model suggests that “resources” are categorised as follows:
Tangible
Financial – for example balance sheet strength, working capital availability or even cash flow
Physical – for example premises, plant and machinery or specialist equipment
Intangible
Technology – for example, IT, bespoke software
Reputation – a genuine assessment of your reputation, both in and out of your market place
Culture – “the way things are done around here” and the work environment
Human
Skills/Know-how – an assessment of the skills and experience of the entire workforce
Communication and collaboration – an assessment of the level of interaction and knowledge sharing
Motivation – an assessment of the levels of motivation at all levels and the motivating factors
Once this has been completed, the model goes on to analyse how the above resources ‘club’ together to create the organisation’s unique “capabilities”. These capabilities will be the cornerstone of the operation and, hopefully, facilitate a competitive advantage that equates to a healthy turnover and profit.
Once you have assessed both these areas, you will be in a position to judge if you have surplus resources and/or capabilities, over and above those needed to run your current business, which you might then be able to maximise to new ends. If you do have surplus here, and many businesses do, you have three choices open to you:
- Determine the scale and scope of these excess resources and/or capabilities, and put your mind to how these could be used to create a new business offering. For example, a Recruitment business specialising in Automotive Engineers may find they have an employees with 10 years’ experience and numerous potential customers in the Oil and gas sector. This could very quickly become a new business with no additional cost.
- As above, but instead of a completely new business, the excess resources or capabilities could be used to create a value added service or product for your existing customers. This could either be an additional income stream or offered “free of charge” as part of the overall package to create additional loyalty. For example, an electrical contractor finds that they have extensive knowledge of every job they have ever completed on file. Lifetime access to this information could be offered to customers as a value added service at the time of the sale. There is also the potential to set up a ‘service desk’ providing additional comfort and support to both new and existing customers.
- You could decide that you don’t want to do either of the above, and simply choose to stop paying for the additional resource that isn’t necessary for your business to function. This could give you a potentially significant reduction in fixed cost and/or overheads.
This post offers you very much a quick run-through of what can be a complex and highly rewarding methodology. For maximum benefit, it is sensible to undertake the following, detailed approach:
- A full business model review
- An analysis of the current and future business environment
- An analysis of your specific market
- A full resources and capabilities audit
Finally, it is worth re-emphasing that I have successfully used this review methodology in the past to develop both new value-added services for existing customers, and also, completely new businesses. It is a review well worth undertaking.
If you have any comments on this article or would like to discuss the methodology and whether you can create a new business or service from your existing resources and capabilities please contact me at john.thompson@transcapital.co.uk or on 0845 689 8750.