This wonderful episode features globally recognized expert in positioning and pricing for larger agencies, and author of Positioning for Professionals, Tim Williams. Tim dives into how to position your business for deliberate growth, what that means and how that may look from a positioning and pricing strategy.
What we cover in this episode:
- 02:24 – “Growth by design, not by default”
- 06:36 – Narrowing your focus
- 08:03 – Intentional growth: healthy & unhealthy
- 10:15 – Your prospective client
- 12:42 – The magic business and the logic business
- 15:05 – Value propositions
- 16:54 – Revenue strategy
“Growth by design, not by default”
Businesses need deliberate growth in order to function properly. Without deliberate growth comes unintended diversification. Bringing on new clients that don’t fit into your scope of business, can impact your business in the long run.
Tim Williams’ shares an analogy that highlights this challenge; “Unless we’re really conscious about the nature of the growth, we can become like a ship that collects barnacles as it goes through the ocean and they collect on our hull, and we don’t know they’re there, and we’ve evolved into something we never intended to.” Tim points out that clients hire for your expertise and not necessarily your time.
Tim explains, “If you spread your attention too thin and in too many directions, then you are obliterating what your clients are seeking in the first place, which is expertise… so when we advertise a wide range of services, vast experience in a number of areas and industries and categories, that works against us because clients look at that and say, ‘Well that actually doesn’t bolster my confidence, that worries me because they appear to be kind of a jack of all trades. What I care about is expertise in my category, solving my problems.’”
Narrowing your focus
To grow, you must narrow down your focus to a specific niche in your industry. This seems a bit crazy because we think if we take in every client that we will grow fast, but that isn’t correct when it comes to deliberate growth.
Clients see you as a business growth consultant and they want that tailored to their industry. If you try to tailor your services and expertise to every industry, you may have a big client pool, but your skills would be “thinned” in all areas; versus being adequately skilled in a few industries.
Growth can be hazardous to your business strategy. Sure, growth sounds great, especially if it is fast. But, if you grow too fast, too soon, with the wrong clientele you can experience problems like lack of cash flow, lack of employees, lack of structure, and more. A large amount of clientele can also hinder future growth with other clients with whom you may actually want to work.
Intentional growth: healthy & unhealthy
Tim remarks, “Not every dollar is a good dollar. There are good clients and there are bad clients. My friend Ron Baker has a maxim that bad clients drive out good clients, and I think that’s true.”
Unhealthy growth isn’t necessarily growth. Sure you can try to make a point that the client is still a client, and the services are still being paid for, but at what expense? If you have a client that is making your job harder or your environment toxic, they are most likely an unhealthy client and that can be bad for business.
Healthy growth looks like partnering with your client to help them succeed and they reciprocate that to you as well. You are being hired for your expertise, to be that business growth consultant, and “to have the strategic discipline and knowledge in-depth in a particular sector, that’s where the margins are.”
Your prospective client
Megan talks about how hard it can be as a new business owner to say no to potential clients. “It’s so hard to say no, but in saying yes to these accounts that are coming to you that maybe you would just be the doer… You’re also saying no to the other potential opportunities that are out there where you could serve somebody in this higher capacity.”
Tim dives in deeper to state that your brand and name are on the line when saying yes to doing business with clients. The clients you take in and serve can define your firm and your future business. Saying no to a client may be a short term money loss, but can make you potentially bigger money down the road.
The magic business and the logic business
Tim makes an important differentiation between expertise and the ability to problem-solve, vs. administrative work. He adds, “So magic is the problem solving, innovation, ideation, strategic planning piece where we add tremendous outside expertise that clients couldn’t do for themselves.”
He goes onto explain, “The logic business is the implementation execution part of what we do that is important and gotta be done well. But that business is much more commoditized. There are many more providers. It’s under a lot more price pressure.”
Tim states the goal is to keep your business in the magic business. This is because it keeps your specialty and services classified as “rare.” As he says, “there is margin in mystery.” Being rare in an industry drives deliberate and healthy growth.
When you know who your clientele is and who you serve, you are able to focus on this market, perfect it and offer them something others can’t; expertise in their industry. “What’s scarce is valuable” and that’s how you position yourself as the business growth consultant they want to hire.
Businesses change and evolve due to time and technology. Reevaluating your value proposition to make sure it is in line with what you believe as a company and where you want to go as a company, may be needed every couple of years.
Not only can your business strategy change but the other businesses changing their strategy can have an impact on your company. Megan brings up a great point about virtual firms. At one point, having a virtual firm or business was rare. Then COVID came and the availability of virtual and remote offices for many businesses swarmed the market.
Taking a step back and making sure your business strategy, value proposition and positioning and pricing strategy are in line for growth and change, is needed regularly.
When it comes to strategy, Tim explains “So you’ve got to have a focused positioning strategy. Know what you stand for, well-defined markets and service offerings.” He makes the point that until you are able to monetize that, you’re not going to ever reach your true potential.
Most service based businesses tend to structure their pricing based on their costs and time, which seems practical. Tim talks about how moving away from this pricing strategy and creating a revenue model is not only innovative but more efficient. Making sure you monetize intellectual property, licensing, subscriptions, etc. leading to a more output-based pricing model creates a more scalable business.
A business model that has hourly billing for labor, Tim states, is not a scalable business. In order to grow with this strategy you have to hire more people. A scalable business adds more revenue without adding more people; figuring out how to do this is the goal. Trial and error may be the best way to start the process of implementing a revenue model, but the results can be highly worth it in the end.
There are many notions to leave you with in this episode. However, Tim sums it up perfectly with “…a big thought that I find really motivational. It’s Peter Drucker who said, all profit is derived from risk. All profit is derived from risk… So if we run from risk, then of course we’re gonna limit our profit, our ability to grow.”
“If you want to make more money, you’ve got to take more risk. That’s just how it works in business; in life. So to view risk as an economic positive is a big shift in mindset for most professionals. But that’s exactly the way to think about it.”
“We shouldn’t run from risk. We should embrace it, and view it as something that can have a really positive impact…You gotta rock the boat and inject a little bit of risk, or you’re never gonna do big important things.”