Value Builder Driver #6: Monopoly Control

Episode Summary:
Pete Mohr shares game-changing insights into the power of monopoly control and how it can significantly boost your business valuation. Learn how to position your business as the go-to leader in your niche market, create unique offerings, and build barriers to entry that keep competitors at bay. From proprietary products to strong branding, this episode offers actionable steps to help you dominate your market and increase the perceived value of your business.

Key Takeaways:
→ The importance of being "five-mile famous" in your niche
→ How monopoly control creates defensible market positions
→ Steps to define your niche and build unique offerings
→ Why strong branding and barriers to entry matter to buyers

Resources Mentioned:
→ Take the Value Builder Assessment: TheExitReadyBusiness.com

About the Host:
Pete Mohr is a Certified Exit Planning Associate and Accredited Value Guide helping business owners build valuable companies that work without them. Through the Business Owner Breakthrough Podcast, Pete offers actionable strategies to increase business worth and create financial freedom.

Are you looking to make some changes in your business and your life in 2024?  Head over to speaktopete.com and book a chat with me to see if we're the right fit!

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Don’t leave your business’s future to chance. Click here to take the Value Builder Assessment and start building a more valuable, resilient business today!

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Pete's Websites:

Pete-Mohr.com
The Exit Ready Business
Kolbe Coach
Simplifying Entrepreneurship

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Transcript

0:00

Welcome back to the Business Owner Breakthrough podcast. It's the Value Builder series and today we're talking about Monopoly Control. It is Value builder number six. And as the message says, as the name says, monopoly control, you could probably guess what it's all about. But we're really going to dive into this because it's all about establishing your business as the dominant player in a niche market in your territory and it can really significantly increase the perceived value of your business. One of my coaches, my marketing, marketing coach and mentor around that, I love one of the concepts that he came up with many, many years ago. His name is Dean Jackson and I don't know whether it was his, I'm pretty sure it was though. But he calls it five mile Famous. And you know, outside of that sort of category, whether that's one mile, if you're in a densely populated area, maybe it's one mile famous. And if you're in small towns like our businesses are, maybe it's 5 or 10 mile famous or whatever the case may be. But it's this idea of drawing a circle around and being the dominant for in that area, whatever that area is, and I like that term, five mile famous. But whatever that area is for you and your business, be the dominant force in that area. Because outside of that area, with all the stuff that's going on on the Internet these days and the worldwide economy and everything that's so easy to do, you're really competing against every single other person out there. Very few people will drive 30, 40, 50, 60 minutes anymore to get a good or a service. They will ship it to their door or they'll hop on a zoom call, whatever the case is, but they will drive that within that five mile famous to have that personal face to face meeting with you as a service provider or as a retailer or potentially whatever it may be, if you can go over to their place as an insurance salesperson or a realtor, whatever the case is, be that dominant force in your radius. That's the importance of monopoly control. So there's lots of different ways really to have monopoly control. Obviously if you own a franchise, let's say a McDonald's franchise, and you're the only one in town, you own the monopoly for that particular town of the McDonald's hamburger and system and fries and all that kind of stuff. But some of the other ways it could be a particular service, it could be having proprietary products, trademark products, all of that sort of thing, it could be building a brand that's unmatched in your space from your own personal knowledge, information and learnings in your particular industry, it really doesn't matter. But think of it with different lenses. It's not just saying, hey, we're the only one in town, but why are you the only one in town? Or why are you the place to go when there's other people out there? What makes you different when you have monopoly control? Buyers are willing to pay more because your business isn't fighting in a crowded market, it's leading. One of the biggest things around monopoly control is that businesses with monopoly control really are less vulnerable to the competition and pricing wars, which is really very appealing to banks and buyers because buyers really want to see that your business has a defensible position in the market. Because what that really means is that competitors can't easily replicate what you do. As I often do, I'll flip it back into our shoe stores. And if we think about the brands within our stores, a lot of the time times we'll ask for a given territory for that particular brand as the local supplier, specifically if it's one of our more dominant brands, so that we can, that we can be the place to go and get Birkenstock or Blundstone or whatever the case may be in our particular stores. So what does that mean for you? It's that relationship with your suppliers. Maybe it's a relationship with a franchise or it's a relationship with your innovations and that you're trademarking so that no one else can come in and steal them. All of these different things, things give you more monopoly control. Businesses that can really demonstrate market leadership receive higher multiples on their sale price because they're offering something unique that customers can't easily get elsewhere. So how can you build on strategies to build monopoly control? Well, step one would be to define your own niche. Find it that specific area of your industry that's underserved or where you can create a clear point of differentiation. Narrowing the focus allows you to become the go to expert in that given area. Right. Here's an example. Maybe a general IT services company could focus exclusively on cybersecurity for small businesses, becoming the specialist in that field in that given market. Right. As opposed to being the jack of all trades to everyone. It's hard to be the place to go when you're the jack of all trades to everyone, unless you're in a very small market. Another way to do it would be to develop proprietary services or products. Not everyone can do this. But if you're an innovator, if you've Got the opportunity to do this, create something unique that can't be easily copied by competitors. It might be a process, could be a technology or maybe even a product. A third way to do it is just build that strong brand. And that's one of the things around franchising, that a lot of franchisors spend a lot of time building that brand. So if you bought that franchise, you don't have to go through all the pain and aggravation and everything building that brand. And that's one of the benefits of buying a franchise. That being said, if you're not interested in franchises, that's okay too. You need to start investing in building the brand that stands out and becomes synonymous with that niche, with that monopoly. Right. Strong branding not only makes you the leader in your market, but it also builds loyalty and trust with your customers. And the fourth step is really to think about creating barriers to entry. The harder it is for your competitors to copy or replicate your success, the more control you have. This could be through patents, it could be through exclusive supplier agreements, it could be through significant brands recognition. There's all sorts of ways to create barriers to entry. But the thing is, is you have to be able to clearly show that, dictate it, outline it. People want confidence that there truly is barriers to entry. If they're thinking about looking at your business and thinking, hmm, how easy would it be for someone else to come in the market when I own this business. So if you haven't really thought of how this might happen in your business, think about a given market and I'll use our shoe stores again. You know, there are several different point of sale systems that help us as retailers operate our stores. But really if you become the software company that's built in an industry specific solution, making it indispensable to that niche market, that gets pretty interesting. And you'd think that that niche market really wants to go and use that, right? I think Shopify has done a really good job of really penetrating a different niche markets and showing how their system can do that. A service based business with exclusive contracts in a region is also such a great way to do it, making it the only option for certain clients. And if we take that, we had used a little bit earlier idea around cleaning carpets as recurring revenue in last week's episode. But think of the outlay of money with all the trucks, with all the carpets, with all the cleaning mechanisms and tools and everything. That is a very big business and would probably be very hard to replicate and duplicate the salesforce, the service team, all of these different things. That's why you probably only have two or three people that are doing that carpet business for your stores or for your entrance ways. Wherever the case is, there's not a whole lot of competition in that market. It's very hard to get in because of the limitations of cash and service and all the different things. But it makes it become more lucrative from a monopoly control perspective. So where do you stand in monopoly control? Are you five mile famous in your business, in your niche? If you're not got some work to do, that's okay. It takes time to build value in your business and one of the best ways to do it is to take the value builder assessment. We've been talking about it all through this little mini series here. All you have to do is head over to the exitreadybusiness.com and click that green blue button that says value builder assessment. Take you about half an hour to do that. We'll hop on a call and I'll give you some ideas. We'll spend about half an hour together, completely free to you. I want to see your growth and your value in your business and we'll start developing a little bit of plan that you can take action on to build the value in your business that you deserve as the business owner. Creating value to have a better life. Next week we're going to chat about customer satisfaction. I know you understand that one, but we're going to dig deeper in how you can prove customer satisfaction because that's what people want to see when they look at the value of your business. So until then, make it a great day.