8 Key Drivers Of Company Value (Series) — 6. Monopoly Control

How well differentiated a business is from competitors in its industry

This series of articles follows on from an article I published recently, titled “8 Key Drivers Of Company Value That Every Business Owner Should Know”, where I mentioned that I use the Value Builder System™️ to help small business owners grow the overall value of their companies, by focusing on 8 Key Drivers that impact company value.

At the heart of this system is the Value Builder Score, which determines how well a business is performing in each of those 8 key areas. This series of articles provides some deeper insight into each driver with tips on how to improve in those areas.

But ultimately, what makes this important? It’s every business owners dream to be rewarded for all the hard work they put in over the years when they finally decide to exit, so they get to enjoy a long and happy retirement without financial worries.

So, knowing about these drivers and how to improve them, puts business owners on a path to maximizing the value of their companies while giving them the peace of mind to know that they are growing an asset of value before they exit.

Today we’ll look at Monopoly Control, which looks at how well differentiated your business is from competitors in your industry.

This is how John Warrillow, the founder of the Value Builder System, explains it:

“So the monopoly control is an attribute of saleability that means you’ve got control over how you price your product. You’re not being commoditized essentially because you’re unique and different on the marketplace.

You’ve heard Warren Buffet, the famous investor, talk about this idea of having a deep and wide moat around your business. He’s referring to the idea that he invests in companies that have a differentiated marketing position, a lot of investors look for companies that have a differentiated proposition, because that gives you an ability to control your pricing.

The more you control your pricing, the more margin you make, the more margin you make, the more you can invest in sales and marketing, and it triggers this nice little domino effect that enables you to stay different in the marketplace. Again, the more different you are, the more control over you have with your pricing.

So the way you can improve your score on the monopoly control is to really scrutinize the way you’re marketing your business through two lenses because a marketing strategy has to have two attributes. It’s got to be meaningful to customers and it’s got to make a difference.

So scrutinizing all the messages you have in the marketplace, so look at your website, the side of your vans, however you communicate to your market and say, “Does this make us different and do customers care?” Those are the two drivers that drive up your monopoly control score.”

John also delves a little deeper into this topic on his “Built to Sell Radio” podcast:

“In this episode, Jean-Eric Plamondon was struggling to make headway in the heavily commoditized market of scrap metal. With no scrapyard of his own, Plamondon found a unique solution that helped him buy scrap for a fraction of what he could sell it for, and put him in a niche of one.”

Listen in and find out how Jean-Eric went from having lots of competitors to a virtual monopoly on what he sold.

So if you’re a business owner who’s planning ahead and considering ways to exit your business on your terms, I hope the information I provide in these articles will help you reach those goals.

If you would like to chat to me about this in person, feel free to book a slot in my calendar and we can discuss it further.

FREE Assessment:

If you want to see how you score in each of the “8 Key Drivers” right now, take 15-minutes to complete this survey and you’ll get a comprehensive 25+ page report benchmarking your business against its peers, plus 49 tips on how to improve those 8 key areas.

Links to all the Key Drivers of Company Value:

1. Financial Performance
2. Growth Potential
3. Switzerland Structure (Key dependencies)
4. Valuation Teeter-Totter (Cash flow)
5. Recurring Revenue
6. Monopoly Control (Key differentiation)
7. Customer Satisfaction
8. Hub and Spoke (Company structure, systems and processes)