Ep. 152- Play for Monopoly Control

[00:00:00] Welcome to Profit First Nation, the official podcast for entrepreneurs who are operating

[00:00:07] their businesses in the zone of permanent profitability.

[00:00:10] I'm Mike Michalowicz, the author of Profit First and now here is your Profit First Nation

[00:00:15] guide, Danielle Mulvey.

[00:00:19] Welcome back to another edition of Profit First Nation.

[00:00:24] Here we go with one of our special signature value building episodes.

[00:00:32] And when we talk about value building, what we're really talking about is diving into

[00:00:37] one of the eight key drivers that drives the valuation of your business.

[00:00:44] Listen, you might be just starting your business now.

[00:00:48] You may have been in business for five years, ten years, fifteen years.

[00:00:52] Maybe the thought of not working just is not a thought in your head and such.

[00:00:58] But it's so important that so many of us are putting our blood, sweat, tears into our

[00:01:04] business.

[00:01:06] And we're doing this not just for ourselves but for our family, for our loved ones.

[00:01:11] For most of us, our businesses support our families and provide the roof over the head,

[00:01:17] provide the food, the life that they lead and such.

[00:01:21] And when it comes to valuation and exiting your business, you may want to exit your

[00:01:27] business at a certain point.

[00:01:28] It's time to retire.

[00:01:29] It's time to sell one business, to start another business.

[00:01:34] Or sadly, the exit could come as a shock and a surprise and not on your terms but on

[00:01:42] God's terms.

[00:01:44] And so it's important that at all times you have that thought of, okay, what if I need

[00:01:52] to exit my business and what if the exit of my business means I'm no longer here and

[00:01:58] my family has to take over the business and do something with it, including sell the

[00:02:03] business.

[00:02:04] So the idea here is maximizing the valuation of your business always.

[00:02:11] And so that when that time comes, you are ready to get the most value for your business.

[00:02:17] And when we're talking about valuation of a business, most businesses sell at a multiple

[00:02:24] of about 3.5 times earnings.

[00:02:29] And ideally, you want to be selling at 7 plus earnings which is more than doubling the

[00:02:38] valuation of your business and more than doubling what you get when you sell your business

[00:02:43] and exit that business.

[00:02:45] So when we focus on these eight key drivers, you are increasing your value builder score,

[00:02:51] the score and the valuation that you can get from your business sale.

[00:02:58] So all that being said, everything that we do should be about driving the value of our

[00:03:05] business.

[00:03:06] And of course, the biggest value driver in your business is the multiple that you sell

[00:03:10] your business off of which is profitability, right?

[00:03:13] So you're here at profit first nation, you've implemented profit first and it's all about

[00:03:18] maximizing that profitability because that serves most times as the multiple that you use

[00:03:24] for the business valuation.

[00:03:26] But there's other things in your business that can add to increasing the value of your business.

[00:03:33] And so today in one of the eight value builder drivers, we're going to talk about monopoly

[00:03:40] control.

[00:03:41] So monopoly control is really about how you control the price of your product.

[00:03:49] It's like you're creating yourself to be in your business almost like a category

[00:03:55] of one where you have no competition, all right?

[00:04:01] And no matter what business you're in, you can create monopoly control in terms of what

[00:04:09] you do.

[00:04:10] I promise you.

[00:04:12] And so we're going to walk through today how you can achieve that, no matter if you're

[00:04:17] an HVHC supply business, if you restore and sell violin's whatever it is, the idea

[00:04:28] is that you are controlling your price.

[00:04:32] So when we talk about controlling your price, we're talking that you're moving yourself

[00:04:37] out from being considered commoditized.

[00:04:42] And you are unique and different in the marketplace.

[00:04:46] So unique that you have created yourself to become what many would consider a category

[00:04:52] of one.

[00:04:53] And when you're differentiated so much that you're in a category of one, you eliminate the

[00:05:01] noise and the competition who are all battling out about the same pricing range.

[00:05:11] So you are dictating your price, you are dictating who you are and how you show up in the marketplace

[00:05:17] and who you sell to.

[00:05:19] The beauty of this is when you have monopoly control, you are selling at a high margin.

[00:05:26] And when you have more margin, what does that mean?

[00:05:29] Well, that means that you're more profitable.

[00:05:31] But it also means that you have more to spend on sales, marketing and advertising.

[00:05:38] And when you can spend more on your advertising and marketing and getting that six X to 10X

[00:05:43] return minimum on that advertising and marketing spend, what do you get?

[00:05:49] You get more sales at higher margin in that category of one, which really is maximizing

[00:05:55] your valuation.

[00:05:57] So I know easier said than done right.

[00:06:01] So we're going to walk you through 10 different ideas about how you can really differentiate

[00:06:11] yourself enough in the marketplace.

[00:06:14] Make your marketing meaningful and your products and services so different that you do really

[00:06:21] stand out as that category of one.

[00:06:24] The first rule, however, in going down this path is that you aren't going to be pleasing

[00:06:33] everyone.

[00:06:34] All right?

[00:06:35] You are going to get real specific about who you serve, how you serve and why you serve

[00:06:42] those people.

[00:06:43] And those are going to be exclusively the people that you serve.

[00:06:48] And it's going to be a very small subset of the potential people that you are probably

[00:06:54] serving right now.

[00:06:57] So I think the easiest example is if you are an HVAC repair company and you're based in

[00:07:08] a metropolitan area like Nashville, Tennessee, are you going to be serving all of Nashville?

[00:07:15] No.

[00:07:17] You are going to say that we service households with more than 3,000 square feet and are in

[00:07:27] the neighborhoods of Williamson County.

[00:07:31] And so you get really, really specific about who you serve and then you can get into

[00:07:38] in your marketing why you serve them and such.

[00:07:41] But now we've created a category of closer to being of one, people who exclusively serve

[00:07:49] the really ginormous mansions and I use 3,000 square feet.

[00:07:54] I mean, probably in this market that I'm talking about in Williamson County outside of Nashville,

[00:08:02] you could easily say that your minimum is 6,000 square feet and still have more business

[00:08:08] than you can handle.

[00:08:11] And when you're serving that category, you're serving people typically who are willing

[00:08:19] to pay more, who are wanting that service right away versus that person calling you and

[00:08:25] someone who has a more modest 1,200 square foot house who is struggling to get by operating

[00:08:36] a little bit more paycheck to paycheck in their household and such.

[00:08:40] So it's really shifting on being specific about who and how you want to serve them.

[00:08:46] So I'll also say that when it comes to this, it kind of doesn't matter what your logo

[00:08:52] is.

[00:08:53] It seems like people spend so much time on thinking that the logo makes or breaks them.

[00:09:00] The logo probably doesn't make or break you.

[00:09:03] And also what doesn't make or break you is something being so perfect.

[00:09:08] What's important is that you're doing something.

[00:09:12] And when you're doing something, you're doing a lot of that something.

[00:09:16] So it's really a volume game people.

[00:09:20] It's really about just doing things over and over and over and over and over and over and

[00:09:27] over and over and over and over and over not done yet over and over and over and over

[00:09:32] ever again so that you are standing out from the competition and not saying, oh, three's

[00:09:40] enough, four's enough.

[00:09:42] Oh, I don't want to overwhelm them in such.

[00:09:44] You got to be that person that people remember and the person that people are going to be

[00:09:50] remember are going to be the people that they heard from the most.

[00:09:55] Here we go into the ten different concepts or ideas that you can dive into in order

[00:10:04] to help you create that monopoly control, to be that so unique business that you're

[00:10:12] controlling your pricing and you're not commoditized and you're really not dealing with

[00:10:18] your competition.

[00:10:20] Let them fend it out.

[00:10:21] You've got your own niche that you're serving.

[00:10:24] So the first thing to look at are your unique features or technology that you've got going

[00:10:33] on in your operations.

[00:10:35] So is there innovation in terms of the way that you do things that can set you apart

[00:10:42] from your competitors?

[00:10:44] What's funny is in our business and our construction material supply business, I mean,

[00:10:51] tax machines were still working in the construction industry as a primary means of sharing numbers

[00:11:02] when it came to bid day up until I swear like five or six years ago.

[00:11:08] This was the last industry to retire the fax machine.

[00:11:12] And so construction has just never been very tech savvy.

[00:11:17] It's just been very old school, very manual.

[00:11:22] And one thing that we did in our business is we have implemented more technology and

[00:11:31] not very sophisticated technology.

[00:11:35] So here's the funny thing.

[00:11:40] When you sell concrete, most concrete orders from most concrete manufacturers and suppliers,

[00:11:49] the order is exclusively and only taken by a phone call.

[00:11:55] So like you're literally making a phone call and you're talking to someone and you're

[00:12:00] saying what you want this set together where you want it, blah, blah, blah.

[00:12:07] And then you hang up.

[00:12:08] And you just hope and pray that they got it right.

[00:12:12] You don't get a confirmation.

[00:12:15] You have really kind of no record unless you use your cell phone to call them when you

[00:12:19] have the cell phone record of the call and the duration.

[00:12:24] But that's it.

[00:12:25] Like how old school is this?

[00:12:26] And this is how, this is how right now like in 2024, people are ordering concrete in

[00:12:34] the construction industry.

[00:12:35] And we're talking, not like mom and mom concrete but the concrete that builds ginormous parking

[00:12:42] structures and ginormous buildings.

[00:12:46] So what we did is we implemented an online ordering portal that leverages basically very

[00:12:57] simple coding and has a spreadsheet as the back end.

[00:13:04] I mean, I think we're using access possibly if that's but I'm not the tech person.

[00:13:11] And it has revolutionized and made our clients want to order from us because they can do

[00:13:20] it whenever they want.

[00:13:22] They can decide to do it on Sunday night at five o'clock or they can do it Wednesday night

[00:13:29] at eight o'clock at night.

[00:13:31] They're not beholden to someone sitting at our competitors who have to man the phones

[00:13:37] and are only manning the phones during limited business hours.

[00:13:44] But it can be so simple.

[00:13:46] It doesn't have to be expensive and it doesn't have to be hard.

[00:13:50] So what unique features and technology can you introduce into how and why people are

[00:13:57] using what you're using?

[00:13:58] And I'm going to be honest too, like if someone's texting me, that's who gets the business

[00:14:03] with me.

[00:14:04] That's my personal preference.

[00:14:05] If you're going to call me, if you're going to email me, so find out really how your

[00:14:13] ideal customer wants to communicate and then how can you deliver features and technology

[00:14:20] that serve how they want to be marketed to, sold to, serviced by?

[00:14:27] The second one is customization and personalization.

[00:14:32] So how can you offer customizable options to meet individual needs?

[00:14:39] Now there is value in not being all things to all people.

[00:14:47] But what kind of little things can you do that adds a level of customization to this?

[00:14:54] I'm going to go back to our portal.

[00:14:56] So we customize the portal to each client.

[00:15:02] It takes us maybe 30 minutes to customize the portal that will translate into hundreds

[00:15:09] of thousands of dollars of business for us to spend 30 minutes customizing something.

[00:15:15] So little things can go a long way in terms of that feeling of customization and personalization

[00:15:23] to your ideal client.

[00:15:27] And then what can you do also in the experience?

[00:15:34] And how do you go about that?

[00:15:36] And such, again, in that personalization, in making them feel like a real person that

[00:15:43] you care about them, that the time and place.

[00:15:46] I love places that wish me a happy birthday.

[00:15:50] Who doesn't love to get birthday wishes from their dry cleaners on their birthday?

[00:15:56] But really paying attention to the customer and finding opportunities to provide that

[00:16:04] personalized and customized experience.

[00:16:06] Okay, number three on the list is providing exceptional customer service.

[00:16:12] So how can you make it positive and a memorable experience when your customers interact with

[00:16:21] you or individuals in your organization?

[00:16:25] And then can you leverage things that give people that on demand when they want to do

[00:16:32] it?

[00:16:33] So for us, again, going back to the concrete portal, I didn't realize I'd be using this

[00:16:38] for all these examples, but our concrete ordering portal is amazing because they can do

[00:16:45] it whenever they want.

[00:16:47] They don't need to talk to anyone.

[00:16:48] We've already customized the portal so it has what they need in it and they're not going

[00:16:55] to need something different because we have to follow the specs of the plan on the job

[00:16:59] and blah, blah, blah.

[00:17:02] But it's on demand.

[00:17:04] So what can you do in a way that is getting people the service that they want exceptionally

[00:17:12] how and where and when they want it?

[00:17:16] Number four.

[00:17:17] Now this one's a fun one.

[00:17:19] So this is when you think about price and value, and how can you uncommoditize your offering?

[00:17:27] How can you package what you're offering so that it can't be price-shopped?

[00:17:34] It really doesn't compare with your competitors in terms of what they offer.

[00:17:40] A lot of times this can also be done in terms of done for use services.

[00:17:46] So how much more can you do some heavy lifting?

[00:17:50] How much more of a burden can you take off of your clients and your customers by offering

[00:17:56] done for use services?

[00:17:58] So coming back to the construction portal again, or the concrete portal, what we do is by

[00:18:06] having them enter their own orders, start creating reporting for them that they were having

[00:18:15] to manually track with their other concrete vendors.

[00:18:21] So they would call in an order, place the order and then they're having to like create

[00:18:25] their own spreadsheet and track things themselves.

[00:18:28] Well, by them entering their order into our portal, it's actually capturing it in the

[00:18:34] portal and they can pull that report at any time to see where they are in terms of the

[00:18:43] number of trucks that have been delivered, the cubic yards that have been poured etc.

[00:18:51] And so we've created more done for use services for them because they're not having to do that

[00:19:03] burden anymore of the tracking and the reporting and all of that.

[00:19:09] Can you create bundles and packages that offer a better deal than purchasing individually?

[00:19:18] Then you put something together that says, hey, we're going to service your 10,000 square

[00:19:26] foot house in Franklin, Tennessee.

[00:19:30] But then we're going to come back at each quarter and we're going to change the filters for

[00:19:35] you.

[00:19:36] That's going to really help you make sure that your unit is always running properly.

[00:19:44] It's going to make the quality of the air better in your home etc.

[00:19:49] And so we're going to automatically do that for you and such where you don't have to think

[00:19:53] about it.

[00:19:54] You know, most people are having to go out and buy and find the right size filters and

[00:20:03] then go buy them, come back and do them, put them in etc.

[00:20:07] So that could be a way that you could incorporate and more bundle in the done for use services

[00:20:13] when you give someone like a whole year of service.

[00:20:18] Number five is branding and storytelling.

[00:20:23] Everyone loves the story, everyone remembers a story.

[00:20:26] So can you develop strong brand identity by telling stories that resonate with your target

[00:20:33] audience?

[00:20:34] I'm sure you've got the stories in your business.

[00:20:38] It's now just about documenting them and sharing them.

[00:20:42] The family that you helped out when they were about to host a wedding for their daughter

[00:20:51] and at their home and their air conditioning went out.

[00:20:56] You know, those kind of things and how you help them.

[00:20:59] Like people remember that and people, well that will really, really differentiate you

[00:21:05] because who's telling stories like that when it comes to like an HVAC business?

[00:21:11] And you know, this is a way to also incorporate not only your brand but your mission and values

[00:21:18] so that you can connect deeper with customers.

[00:21:20] I mean we like to do business with people that we know like in trust.

[00:21:24] And when we can see that our values are aligned with a business, we want to give them business,

[00:21:30] we want to do business with them and such.

[00:21:33] So branding and storytelling gives you a great opportunity to bring that to the forefront

[00:21:39] and be more memorable with your prospective clients.

[00:21:45] All right, number six is the user experience and design.

[00:21:51] So you know, how can you invest in something that's intuitive and aesthetically pleasing?

[00:21:59] You know, the user interface and the experience?

[00:22:02] So you know, what's cool for us is to be honest when we customize that portal, you know,

[00:22:09] that is enhancing the customer experience.

[00:22:11] They feel like they are in their world.

[00:22:14] We have, you know, their logo on the portal that they're logging into.

[00:22:21] We have the renderings of the project that they're ordering the concrete for.

[00:22:26] So you know, they're seeing what we're building together in the vision of that.

[00:22:34] And you know, is the design and functionality of it?

[00:22:38] Does it overall enhance the customer experience?

[00:22:41] So the user experience, how easy is it for someone to connect with you?

[00:22:46] How easy is it for someone to order from you?

[00:22:49] How easy is it for someone to just ask questions of you and such?

[00:22:54] So that is another really important factor to tie in here.

[00:23:00] All right, we're cruising along here.

[00:23:02] Number seven on the list is, you know, connecting and creating exclusive partnerships and

[00:23:08] collaborations.

[00:23:10] So, you know, that could be with other businesses, other influencers.

[00:23:15] You know, is there a way to partner and inform something that again makes you guys more

[00:23:22] unique in the marketplace where you're even more so in a category of one?

[00:23:29] You know, can you offer limited edition products or services and use these partnerships

[00:23:36] to create a sense of exclusivity?

[00:23:40] This is a really cool way to look at things and such.

[00:23:46] And so, that is partnerships I can't tell you is such an interesting and really, I think

[00:23:56] a good wave of the future.

[00:23:58] And the thing about partnerships is it's got to work both ways.

[00:24:02] It's got to be a win-win for both of you.

[00:24:05] So, you know, it's important that you're aligned in your core values with each other.

[00:24:12] And, you know, I would also recommend the partnership to be something that is maybe

[00:24:18] a limited time offer thing.

[00:24:20] So, you're not married to them forever.

[00:24:23] You're not building your business off of this but this could give you a nice little bump

[00:24:28] to kind of create these limited edition opportunities.

[00:24:32] And you know, it's a win-win.

[00:24:34] You're sharing your list with them.

[00:24:36] They're sharing their list with you and such.

[00:24:39] So, it enables both of you to grow your clientele with each other's customers and such.

[00:24:47] But again, think about it on a limited edition basis and it doesn't have to be kind of thing

[00:24:54] forever.

[00:24:56] You could target specific neighborhoods.

[00:24:57] You could dip your toes slowly into that.

[00:25:00] All right, number eight is education and knowledge sharing.

[00:25:06] So, you know, position yourself as the industry authority by providing some educational content.

[00:25:13] You know, it depends upon what your business is but it could be webinars, tutorials, resources

[00:25:20] that really help your customers make informed decisions and sometimes, you know, it could

[00:25:25] be stuff that is so basic but that is an educational opportunity.

[00:25:35] And you know, here's kind of a random example but I mean, oh my gosh, it seems like I swear

[00:25:44] every seven out of ten public restrooms I use there's a sign that says please only put

[00:25:51] toilet paper in the toilet.

[00:25:54] Don't put anything else in the toilet.

[00:25:56] Don't put diapers, don't put, you know, anything else.

[00:26:01] And I'm just like, oh my gosh, like this message is everywhere.

[00:26:06] Do we really have to keep reminding people of it?

[00:26:09] Well, obviously we do.

[00:26:11] Obviously these businesses, these public restrooms have experienced enough one too many times

[00:26:18] of people putting the wrong thing in the toilet, not toilet paper and then having to deal

[00:26:24] with that.

[00:26:26] So you know, there's things that maybe you need to be educating on a consistent basis

[00:26:32] with your customers.

[00:26:33] You know, I have to say that I didn't realize that egg shells shouldn't go down a garbage

[00:26:40] disposal.

[00:26:41] They shouldn't go in your sink.

[00:26:42] Well, in my household when I was growing up my mom always threw the eggs shells down

[00:26:49] the garbage disposal.

[00:26:51] You know, so I don't know 40 years later did they have to replace all the piping in that

[00:26:57] house and such?

[00:26:59] Probably because there was quite a few years of egg shells going down that disposal.

[00:27:05] But you know, what can you educate your clients on?

[00:27:09] What kind of knowledge sharing can you give them in such?

[00:27:12] I'll tell you this in our concrete portal example, you know, with those clients we're sharing

[00:27:18] with them opportunities and projects coming down the pike because if they liked working

[00:27:25] with us and there's future there's projects coming down the pike that we can look at for

[00:27:30] them and give them a heads up on then they're going to be more likely to win that project

[00:27:36] and want to use us as well.

[00:27:38] So it can be big, it can be little but it needs to be something and I think you'd be surprised

[00:27:44] that a little bit goes a long way and things that you think everyone else knows they don't

[00:27:50] know because there's so much information out there.

[00:27:52] All right, so it's about sharing education and knowledge.

[00:27:56] Number nine on the list is innovative marketing and selling strategies.

[00:28:02] So you know, this is where it's great to get creative with your marketing to capture attention.

[00:28:09] You know, if you're using social media, it's a numbers game, all right?

[00:28:15] And I've heard and I'm believing this and this is my 2024 challenge to my own entities

[00:28:23] is that you know, your social media needs to have 300 pieces of content a month because

[00:28:30] at 300, your audience is going to see it.

[00:28:33] They're not going to see 300 pieces of your content but they're going to see a good

[00:28:37] number of pieces of content.

[00:28:39] If you're only putting 10 pieces of content out there, one piece of content a month that's

[00:28:44] four pieces of content a week like no one's seeing it.

[00:28:49] No one's seeing it.

[00:28:50] No bother.

[00:28:51] It's not worth it.

[00:28:52] It's about you know, being creative, being fun, being memorable and being innovative with

[00:28:59] your marketing and selling strategies.

[00:29:01] And now for number 10, trial periods and guarantees.

[00:29:06] You know, this is a great way especially when you're asking for someone to pay a premium

[00:29:11] price higher than the commoditized price and such that you really stand behind the quality

[00:29:20] that you're providing.

[00:29:23] And so guarantees are a great way or a trial period is a great way for someone to you

[00:29:29] know, test the waters or use it and feel confident that they're going to get the solution

[00:29:36] to the problem that they have because that's really what it comes down to.

[00:29:40] Someone has a problem and you have the best solution for them and that is going to solve

[00:29:46] their problem.

[00:29:48] So that is it.

[00:29:51] If you would, I know these episodes are jam packed with a lot of great useful resources

[00:29:58] and if you're listening in your car then please go to profitfirstnation.com and click on

[00:30:07] episode number 152.

[00:30:17] And you will get the list to this.

[00:30:20] So go to profitfirstnation.com forward slash 152 and you can get the resource for today's

[00:30:28] episode where we walk you through those 10 ideas and strategize strategies for maximizing

[00:30:37] your monopoly control which is maximizing the price and margin in your business.

[00:30:43] Cheers to another profitable day my entrepreneurial friend.

[00:30:51] Thanks for tuning in to the profitfirstnation podcast.

[00:30:54] We hope you found today's episode valuable and that it's inspired you to take action

[00:30:58] towards achieving permanent profitability in your business.

[00:31:02] If you want to learn more about how to implement profit first in your business and connect

[00:31:06] with a community of like-minded entrepreneurs, be sure to visit us at profitfirstnation.com

[00:31:12] to download our how-to guides and resources.

[00:31:15] Remember, permanent profitability is within your reach and we're here to support you every

[00:31:20] step of the way.

[00:31:22] So let's do profit first right together.