Creating Products from Services

An objective of The Active Investor blog is to inspire the thinking of small business owners and professionals to create greater lasting value in their business. There is perhaps no better way to do this than to find ways to create products from services.

A product without services eventually becomes a commodity with business going to the lowest cost provider. Selling only services is a bit like selling air. You can't really sell time. You can only rent your expertise for some time. Expertise is intangible and difficult to either prove or differentiate and in the end the amount that can be sold is always capped by a time limitation. If you want to sell the enterprise, because it's your expertise and you're leaving, the residual value is relatively small. However, when the business offers a deliverable solution that can be named plus is easy to understand and refer, you have hit a "value-added" sweet spot. Here is a personal example.

Names are important. They give the offering tangibility. As a Texas business broker, I create marketing plans for my clients, as do many other business brokers. Since most small business buyers come from the internet, this plan includes multiple internet directory listings, which again, other brokers do. So far, we're still at the services level. I've then created a unique product offering on top of these services named Business Opportunities Bulletins (BOBs). With some creativity and technology, each client listing can appear on the first Goggle results page of significant search terms used by potential buyers. If a client wants to be found by potential business buyers, here is a product, a BOB, that does exactly that.

A BOB is easy to understand. The art of selling your business is to be presented to interested parties and still keep the sale confidential. Prospective clients can see how this is already working for existing clients. They "get it" immediately.

In this example, the product's name is a take-off of my own name. If a need for my business broker services gets touched upon by someone in my network, it's easy for them to explain and refer my product (my service).

Building BOBs takes time,  expertise, and technology but their existence adds critical value both to immediate marketability and to the ultimate value of the brokerage practice. A product has been created out of services common to the industry. How many products can be developed from your services? Something with a name that is easy to understand and refer. I can't image anyone who can't develop at least one more.

Image credit: EraPhernalia Vintage (catching up)

Constellations are our Motivations

Image via Wikipedia

There is always a special moment when my younger daughter and I look up into the night sky together and see the bright cluster of 3 stars that form Orion's belt. I first showed her Orion over a decade ago and each time we see it a part of that father-daughter moment returns. It's what being alive is all about.

But in reality, there really is no Orion. These are unrelated stars light years apart that happen to form a pattern only when viewed from our planet.

Any social enterprise, like a business, can be understood as a constellation. It first takes an Active Investor, a business owner or owner-to-be, to see a new pattern that can meet people's needs. Previously unrelated resources flowing together in new ways.

Orion has a story. In mythology Orion, the Hunter, was in love with Merope, one of the Seven Sisters who form the Pleiades stars. She would not return his love and his already tragic life was ended when he stepped on a scorpion. Feeling sorry for him, the gods placed him in the sky near his faithful dogs, adjacent constellations, and on the opposite side of the sky from the deadly scorpion.

Each business has a similar story. Something that inspired the founder to start. Often a picture that could only be seen from their perspective. To everyone else, it was just a group of unrelated elements.

It's sad when this constellation story gets reduced to a just "mission statement". The inspiration of the story gets objectified as financial statements and business plans. When trying to value a business we deal in these valuable instruments; however, they only represent the passive side of any business investment. What makes the organization successful is the power of its invisible but very real story.

Being a part of a powerful story is also a part of what being alive is all about.

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• Orion Dominates Winter Night Sky (space.com)

Mapping Successful Habits

Steven Covey's 7 Habit's of Highly Successful People made the connection between business success and individual habits. This week Mary White of WTC Performance Group introduced me to the simple map on the left. It's an approach to looking at how those successful habits are formed.

We sometimes find business owners who are personally ready to sell their business; however, the business isn't ready to be put on the market. It's current value isn't as much as the owner knows it could be worth. Consultants, like Mary, work with these Active Investors to close this gap.

A common mistake made by consultants and coaches is to jump in with their expertise. On the map that's moving from Step 2 to Step 3. Often, the real need is to start at Step 1. The most immediate contribution a business value consultant brings is the ability to see an issue outside of the owner's awareness. This takes daring on both the part of the consultant and the part of the owner to allow it. That's what the #1 box in the map is all about, our Unconscious Incompetence.

Once aware, it's a process to move to the Conscious Incompetence awareness in Step 2 and then the Conscious Competence of skill in Step 3. The new skills are ultimately "ours" when we finally move into Unconscious Competence, Step 4, which is Habit. 

It's all very systematic once past that first step. Having the insight and courage to know when to take that step is the hardest part.