Let’s talk about Scale Up differentiation! As every entrepreneur knows, starting a business is hard. And so is sustaining that business as it grows. Every account, every sale, every new opportunity for income counts. We turn down nothing. Because every single pound of revenue is vital. As one business founder said to us about their early days; ‘We did everything for everyone’.
However, as a business enters Scale Up mode, the dynamic changes. Investors need to see a business that is worthy of a strong multiple. That means looking at quality of earnings, not just quantity.
A company that is doing vanilla, low-margin business for easy-come, easy-go clients is in a weak position. The founder mindset has to change. To move away from an ‘everything for everybody’ mindset. Instead, move towards one of ‘Scale Up Differentiation’. A Scale Up business with a truly differentiated offer is able to properly articulate its Value Proposition. Such that it separates from the rest of the competitive herd towards a position of strength.
Delivering Scale Up Differentiation needs a mindset change. By this we mean a flip from Founder Mindset to Investor Mindset. Firstly, this is a recognition that the future value of the business will be driven by the nature of its client base. A differentiated Scale Up has a client base characterised by high-margin customers. Ones who are paying for solutions. Not for easily substituted ‘stuff’.
Secondly, the differentiated Scale Up business will be pricing more confidently. Because it can clearly demonstrate its true value-add, it can better defend its price in any negotiations with Purchasing professionals.
Let’s sum up. For a business in Scale Up mode, a sharp and differentiated Value Proposition is vital. This isn’t about fluffy marketing. Its about having a stand out business that can demonstrate value* and so protect its competitive position. And also attract the sort of multiple its investors dream of.
*PS, for more on ‘Value’ try Tim Williams’ blog here
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