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The growth in the number of business crashes has been matched recently only by the numbers of struggling businesses coming up for sale as old-school business leaders, throw in the towel and admit they’re not up to the challenges of the digital economy.
We know that over 60% of businesses recognise the need for change yet only 21% of these has a plan. Frankly, there has been deeply ingrained inertia, exacerbated in markets like the UK, paralysed by Brexit, and 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, although this is very often the case, 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. If, as a business leader, you’ve settled into a daily routine that allows you to chug along comfortably, you are unlikely to be enthralled at the prospect of having to pull on your running shoes for a Bolt-like sprint to the end of your working life.
Many business leaders have avoided the issue, claiming they will introduce the changes they need to compete once the disrupters arrive, but this has only revealed their failure to understand the pace we are moving at and what digital transformation really means and shifted their organisations from the category of “struggling” to that of “collapse”.
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 your resources to the needs of a new breed of consumers – digital natives who now represent over sixty per cent of the economically active population and have completely different needs to their predecessors. Nothing is the same in the digital economy, including business models and management philosophy.
However, before you throw the baby out with the bathwater it’s important to note that there are elements of most traditional businesses that may be fit for more than the rubbish skip. 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 technology as the business driver. If you are lucky, you will already own assets around which you can build your new model.
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 “walking dead” 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 dinosaur? 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 your business to be seen as a “fixer-upper” rather than a demolition job you need to think of it 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 business strategies 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 which are the assets of a business and a plan, that with appropriate investment, the investor can activate to create a business that’s right for the digital economy.
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 that speeds things up and minimises cost.
If the idea of selling up and retiring, is starting to look attractive, but you can’t get the deal that could make that happen, it’s worth considering how you might add sparkle to your proposition and attract the investor that will take your business forward and be prepared to pay a fair price for it. Don’t let agents convince you that scrap value is the best you’ll get. There’s often a better way.
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