Landscapes change and can impact your company worth
When you look to sell your business one day, the acquirer will most likely have a very good understanding of your marketplace. They will know which parts of your market are becoming more commoditized versus where customers are still willing to pay for value. They’ll even have an idea of your competitive landscape and where you fit within it. Are you monitoring these things?
Knowing your market landscape and where your company plays within it can be of enormous help to you as an owner and CEO. It can help you make many strategic decisions and it will help you know where to focus in building the worth of your company.
What will your market landscape help you understand:
- - How large your served market is and which parts are shrinking, which parts are growing – this will help you direct your resources to the right market segments at the right times.
- - What the various subsectors are for your overall market – this will help you learn to understand the nuances of each subsector so you can ensure your messaging and portfolio meet the needs of each that you want to serve. It will also help you know which subsectors you can move toward when you’ve tapped the segments you’ve been serving.
- - What the Good, Better and Best markets are – every industry has customers that just want the Good product or service, others that like to go upscale to something Better and other customers they only want the Best. Which do you play in and do you understand the unique needs of each.
- - Where the value is – every industry evolves and what today is viewed as high value to the customer, over time becomes a commodity. An example would be looking back to the 1980’s and 1990’s, players making all types of computer hardware realized high company valuations as customers were willing to pay a premium to get this hardware. Then come the 2000’s, the value shifted to the software. Computer software became where the value was appreciated by the customers and hardware became more of a commodity. The value of the hardware companies decreased and the value of software companies increased. And now we’re seeing another shift, the value of software companies is decreasing as a result of the advent of AI. Are you monitoring this value evolution in your market.
- - Where you stack up versus competition – knowing this will help you see where you’re unique in the market versus where you look like everyone else. Knowing your competitive positioning can help in building and protecting your competitive moat.
Developing your market landscape isn’t just a nice to have. It’s a valuable strategic tool that can help you in making many strategic decisions about your business. Our job as owners and CEOs is to build company worth. Leverage the market landscape tool in building yours.
