I think I am the type of person for whom it is difficult to write a series. Usually, I write on the spot about what is relevant for the day, not just from the world but in terms of what is happening in my world. But as I prepared the CEO moment article 2 weeks ago, I realised each topic to be covered merited a separate post, given its importance as one evaluates strategic direction. It ends up being timely as I am spending a good part of this week looking at opportunity, so I probably have even more to share (and preach) than 2 weeks ago. So I stick true to my word, and it even comes with a worksheet.
When I see a window of opportunity, I just grab it
Pridhee Gupta
The idea
Sometimes we get so bogged down in execution that we keep our head down and forget to look up to see what is in the horizon. In fact, part of what strategy means is to just stop and take a tally of what else could be out there? A product we did not push for? Clients we do not serve? Competitors stealing our cake? It is not just about the concept, but we need to get to the nitty gritty of it.
Did you lose business from an important client? Take the opportunity to assess what you are losing and where you can be pressing more.
Did you find out a new set of clients interested in your product that you previously did not do business with? Take the opportunity to dig deep and find out more about them.
The practice
Last year, I spent an enormous amount of time assessing opportunities in the business. For some people, I think it was painful to have me on their back chasing them to understand what it truly meant. But in fact, as we pass the turmoil of the pandemic, it came in handy to get to June and sit down for a first deep breath. With it, we could look back and re-assess our plans for growth and whether they were still valid or not, analysing whether to push or slow down.
Assessing opportunities does not mean you go and pursue them all in one go, but rather that you are ready to hit the power button when it is time. And as business planning time starts, I am yet again doing a round of assessment of where new opportunities may have come up and where things have moved on in a different direction. No matter what size of business, it is always important to understand the opportunities out there. Or else, how are you going to prioritize.. and find growth?
The opportunity assessment process
With me being me, you figured there had to be some sort of process right? The process does not always mean a spreadsheet, but means you have a way to be thorough in assessing opportunities. The worksheet has the below schematized, but read-on for an explanation.
The market data
Do you have a full understanding of your market? If not, can you get some data about it? I am conscious that is not always an available option, either because the data is not there or because it is not the right time to make that investment. More often the problem is just the availability of transparent independent data that allows you to assess what is going on. Yes, it is really annoying, I feel the same. But when it is not there, you need to build your own assessment of what the market needs and wants.
- Client Conversations: can you engage a few loyal clients in understanding what keeps driving them to your business? Or even the opposite brave, can you engage the ones you are losing to understand if the needs are changing or your service levels need adjustment? Whatever route you chose to go (both probably), understanding your client is something you can do better than most. They are, after all, your client. Some businesses do this 1on1 and others prefer to do it in focus groups to foster discussion. Whatever works for you, get chatting,
- Client Surveys: are you able to survey your customers in a systematic basis? Or do you do so but never really worked on the data that comes out of it? Whatever the case is, if you have a higher volume business, client surveys with a few questions addressed to better understand customers behaviour and preferences can help you find trends and have a higher volume of quantitative information on a regular basis. What I like about systematic data is that it does not depend on you having time for a conversation or something going particularly wrong. It can be done on a continuous manner. But remember – read the data!
- Competitor analysis: I know you probably believe you have a differentiated and unique product. But, in fact, in most cases there is competition everywhere. Often established industries out there are a red ocean with lots of people ready to take on your next lost client. Now, I am not here to scare you, but rather than to poke you to face this as an opportunity. Have competitors started offering something new, a new service you don’t provide, a new product related to yours? It does not mean you have to copy everything they do but it means you understand where YOUR customers are spending their dollars (or pounds)
The list
A long list is ok. It does not mean you are doing anything wrong. It really only means that you have been able to identify different areas where your business can grow into. And in times like this, this is quite impressive. What could that list have? Hard to standardize in a list where we are not talking about your specific business, but let’s give it a few alternatives
- New Products/ Services: Product expansion is a typical way of growing, whether we are talking about a physical product or a services based business. Have you thought about what your high volume offering is? What about your high end offering, the ones that you price in a way that you think no-one will ever pay for but actually, they will? Are there adjacent products you could do marginal expansions to without too much efforts? Or products that require investing?
- New Clients/ New Geographies: Client expansion is at the core of a business. But some businesses live of a handful of clients alone, so don’t assume this is the one solution for the world’s problems. Sometimes, you may actually shift customers. For instance in service based businesses where time is often the most constrained resource, going from a large number of low paying clients to a small number of high paying clients is not a client expansion, but rather a change in client targeting and segmentation. Niching down can be an opportunity. Another opportunity that may have opened, especially in a year where everything went virtual, is the possibility of working with new geographies. If you don’t already have a global business, could you have one? Would it be worth it?
- New revenue types: people love the concept of passive income I know, but that is not the holy grail. If you sell your time by the hour, how would a monthly retainer based on outcomes rather than time spent feel like? If you sell physical products, do you have somewhere the opportunity to turn that into a subscription? One of my favourites a while back was Thermomix. They would sell you this really expensive piece of equipment that you would really hope to never swap in years to come. No matter what upgrades, the machine was sturdy and long-lasting. So there goes a customer not coming back soon. A few years back they implemented a subscription model where you get full access to all recipes. That was an entire revenue line.
- Team Expansion: this is often the most effective way to create passive income. Yes, you could have thought of “affiliate sales” in the previous bullet point, and that is ok. We all love to be making money while we are sleeping. But to the majority of those that need to make money while awake, having a team is second to none in terms of opening up opportunities. It can mean bringing someone with a client portfolio, bringing someone with a complementary skillset that can open up new lines of business, or even someone that will take away some of your management tasks so you can focus on making money. All these are immediate opportunities at hand.
- New Supplier Agreements: yes, it is not all about revenue, efficiency and cost counts too. Whilst we are trying to support the full value chain, the truth is there is opportunity in negotiating contracts that you established when you first started and may no longer make sense for your volume of business. It may mean you get more for what you pay, or you pay less given your volumes. Don’t disregard the cost side for the flashy lights of revenues.
- Process Improvements: oh yes, the boring process. But if you could get 2 hours back in your week, every week, month after month, would it be worth investing some thought into it? I am a time optimization master and believe me, any automation and standardization are time-savers for me. If I prioritize them? Not always, but they do come with high ROI on my time.
The Prioritization
Once you are done with an exhaustive list, don’t be discouraged by it. It is time to put some more meat to it and assess what you think could come out of these opportunities.
- Size of opportunity: Dollars are best, whether they are revenue or cost related. Savings help your bottom line too.
- Costs: With each dollar of opportunity you need to also establish a column for what you think the resources required will be – people, equipment. Ideally with number estimates.
- ROI: if you can, an ROI is an excellent addition. But I am conscious sometimes it is too much “finger in the air”. But at least look at net costs – e.g. new people need to be looked at in terms of what they bring and what it takes to get them in the door
- Timing: What are short term opportunities that are only available perhaps for the next 3 months (think Covid) an those that are only there in the long run. Being there in the long run does not mean you only start working next year, but rather you make a plan to be ready by then
With all this information in hand you can rank your list with criteria that matter to you as CEO. Immediacy of profits, ability to hire or spend extra money on the business, size and ROI of opportunity. Have the list handy, you don’t have to pursue it all now!
The Plan
While you are at it, I would add a few next steps you will take. It is not time to talk about plans just yet. Bit if you are in a creative flow and already thought of a couple of things you would need to do, write them down so you don’t lose them.
Making a plan may take more than a day, but once you identified your top 3 (or top 5, top 10, depending on your bandwidth), you need to define your course of action. As I said many times before, strategy is of no use without a roadmap to get somewhere. But I guess that time will come. For now, you should be proud of the list of opportunities you have just opened up for the business.
Photo by Paul Skorupskas on Unsplash