Are you intent on allowing your ideal prospective buyer or partner to buy your transformational value and improve their immediate future (sales, profit, repute, brand power)?

or

Are you intent on selling/pitching your product or service assertively and getting their money to improve your future?

There are two entirely different mindsets, primacy of self-interests and buying decision frameworks (client outcomes vs features and benefits).

Two different levels of patience: reaching conceptual agreement with a buyer versus trying to make a quick buck.

Two different level of focus and commitment: the long-term relationship versus the quick transaction.

With two entirely different remuneration models: the former, fair and equitable value-based fees or commission mutually-agreed for the desired improvement (uncapped) and the latter, unit economics (capped) for a commodity purchase.

A great many people, who have only worked in commodity purchase sectors (life insurance sales, pensions, care services or car recovery services), know nothing but commodity sales and commodity conversations. They cannot escape old habits. The concept of value-based remuneration is seen as slow, and overly complex.

However there is a good reason, the commodity sales person has to make a sale fast, work from huge marketing lists, and experience huge rejection to make their volume numbers. It is their modus operandi. It is a daily grind and highly labour intensive. Their businesses can only sustainably scale with large volumes of sales personnel, smart technology and available capital.

If that is your idea of building or working within a fun business, go-ahead but don’t think it is the only route to a rewarding life.

In the absence of large marketing lists (north of 10,000 names), a great many entrepreneurial businesses are reliant on alliances with larger firms, who have huge distribution to profitably scale. The art of an alliance where both parties are required to close the sale, assemble the methodolgy and deliver the value to the end-user (customer or client), is that it is accepted by both parties unequivocally as a “win-win” scenario and you have corporate “buy-in” (commitment) from those with fiduciary responsibility (Heads of P+L etc.).

That means

1. the business outcomes to be accomplished are clear and unambigous
2. as are the measures of success, and
3. the tangible (increased sales, increased profit, reduced attrition) and intangible (increased security, stronger repute, enhanced safety) value created by the collaboration, and
4. the investment from both parties (time, money, energy and resource).

You then have “conceptual agreement”, which can be quickly summarised in a proposal with a 80%+ prospect of an acceptance, and an agreed commencement time and date.

The art of building alliances is a language and process skill. It can be taught yet a great many even seasoned past CEOs of national and global companies, and frontline sales and business development individuals tasked with originating and closing alliances are poorly educated.

Here is three amongst common failings:

1. They default to pitching or selling their product or service, often by force of personality, and often on unprofitable terms (positioned as a commodity sale) that hamstrings the profitable growth of the business thereafter such is their desperation for the sale.
2. They routinely lose control of the discussion, relationship and the results early-on sometimes patting themselves on the back when leaving a meeting with the request to provide a proposal. Little do they know that is a polite signal to wave goodbye by the other party, not a signal of greater intent.
3. They rush through or simply overlook building agreement on the value of the alliance pre-proposal such that the only thing that is clear, is what each partner is being asked to invest. When the value is opaque or translucent, the prospects of closing a successful alliance slump in my experience to 5-10%.
4. Your approach necessitates asking a huge pool of to dance and accepting a mountain of rejection and time loss. Why subject yourself to that ordeal unless you know no better?

The key ingredients: A reminder! Shared values, trusting relationship with a peer, willingness to enter and develop conceptual agreement, an ability to summarise it succinctly and quickly in a letter of agreement or proposal (with options and alternative investments), acceptance by both parties, and effective and efficient implementation (on the promises made), and seeking expansion opportunities during the alliance. Nothing more.

A great many high-growth businesses have a “marketing-finance function tension” with strategic alliances that if not addressed robustly by a risk-taking founder or CEO, can dramatically impact incremental profitable growth.

You see the “market need” and the combination of “competencies” and “passion” to address it, at scale, only a strategic alliance can uniquely provide your business. Particularly with distribution, technology, manufacturing or brand credibility.

Marketing tends to place the self-interests of a prospective strategic alliance partner first, and ask “what compelling proposition can we put in front of the alliance partner that is demonstrably in their self-interest to accept?”

The Finance function defaults to the opposite, asking “what’s in it for us with close to zero risk first and then, what can we put in front of the potential alliance partner?”

Think of this as the difference between “success” and “perfection” in strategic alliances.

The variable rarely asked by the Finance function is “timing”.

Invariably when the market need has exective attention in a potential large strategic partner, and the requisite mid-level manager skills and volition to engage with an entrepreneurial high-growth business partner, it is not of the latter’s ideal timing. That means “risk” perceptively shifts to the smaller partner.

You now have two very different replenishing pools of risk-taking targets for strategic alliances.

A tiny handful of “perfect alliances” if you are fortunate with the Finance function approach and a larger realistic pool of “success alliances” from which to convert interest into closed business. Think of the Astra-Zeneca covid vaccine partnerships with Oxford University, Uber and Spotify, and Amazon and Whole Foods. The commonality, is none of these strategic alliances were perfect risk-taking options and timing for the smaller, entrepreneurial organisations.

If you are satisfied that you are looking at an “ideal” strategic alliance with meaningful enterprise value creation potential, you can always make the timing “right”. Time is merely a value-creation priority matter. Nothing more.

Wednesday night in London, original thinker and the master of irrational thinking, Rory Sutherland, challenged the audience to consider the power of “diagnistic momentum”. The hardwired framework through which those with power, control and influence insist all risk-taking decisions are ultiamtely made.

The cardioligist whose heart health determinations must follow through their rigid health diagnostic framework and the politicains who insist every valid policy must pass through their economic and legal diagnostic framework.

Biases are embedded, and alternative ideas and opinions ejected (don’t fit the rational decision-making framework).

It leads to a narrow set of alternatives and close to zero opportunities for “alchemy”, the title of Rory’s bestseller. Decisions and benahvioural changes promplted by irrational logic which are often more effective than the rational answer, in the real world. Why? Humans don’t act on rational decisions in many instances.

Is your organisation or your competitiors beholden to diagnostic momentum? As an entrepreneur, does that create hidden opportunity? When everyone views value-creation through the typical banker lens and metrics, is there an opportunity to think and act differently in an exisitng and new market? If so, why?

If every competitor is obsessed with AI-driven revenue and cost synergies and data centre capex, can you find hidden value in doubling your investing in superior human intelligence?

If you run a chain of UK funeral homes with a sector under deep regulatory scrutiny, might there be hidden value in having your best people design better fulfillment processes, communication practices and identification procedures not to impress the regulator but to give customers and their families greater meaning, smarter risk management and powerful reassurance that you have their self-interests at the top of your agenda? The human before the technology.

THE ENTREPRENEUR’S BUSINESS PLAN SPRINT

Summer Offer (available for all inbound inquiries to 31st August): In 90 days we create a complete, professional business proposal with guidance to advisers and/or investors. This will include your marketing platform, competitive analysis, presentation, and so on. I’ve had dozens of business plans result from prior Business Plan Sprints. I provide group and individual feedback based on regular assignments and we meet via Zoom. Fee: £3,999 (USD/EUR equivalent) plus taxes. Finally write, get that business plan in front of your ideal partners including investors, and convert interest into closed commitments fast. Write to me to apply: james@elliceconsulting.com  I am beginning on 1^st September the next cohort and I already have interest from people in Europe, US and Asia. All sessions are also recorded.

If you buy the $5 trillion baby boomer market opportunity, are you optimising the transfer of your clients’ assets or the transfer of your clients’ resilience?

There is a huge difference.

Most expert commentary focuses on the “assets” as if it will occur in a linear fashion when all the evidence today suggests that it will occur at a time that the heirs to the baby boomer wealth, are highly vulnerable to shocks and disruption (aggressive IHT changes, wealth taxation, currency instability and geopolitical changes).

Over dinner in a trendy late nineties New York Vietnamese, a friend closely associated with the early development of the Tommy Bahama men’s apparel brand excitedly told me how Nordstrom had agreed that week to stock the brand. Part joy and part fear hung in the air that night about delivering upon the promises her team had made. A finance guy had run into her office, as she left her office and asked what numbers he could put against this prospect in the next three years cashflow forecast? She could tell him what stock was being shipped to the nationwide department store but the sales figures were simply guess work with a high level of variance (risk). She defaulted to some generic figures her Nordstrom buyer had suggested. No one knew, nor was the real business transparent until the customers came into the store (this pre-dated Nordstrom’s online sales platform).

I make this observation because as exciting as it is to have a huge corporation with big “reach” offer to collaborate with a new product or service line, there is no business until the cash register rings.

The simple act of consistently “showing up” (in-person, virtually or by phone or email) is a long overlooked super-power in business. Would others describe that as one of your super-powers, if not why not?

The number of clients and prospects I meet, who lack the routine and exceptional discipline particularly in periods of a business transition: raising capital, a business acquisition, or on-boarding a new team, and use it as an excuse not to lock in a meeting date, get on a plane or return a call or email in a timely manner to a prospective new business partner or client is staggering.

They then convince themselves it is a secondary or tertiary priority when the reality is building their business, and ensuring there is sufficient fuel in the tank, is a constant priority if they are serious. It is not “either or”, it is “both”. It begs the rhetorical question why should they make you their future priority (bring you business)?

As an entrepreneur are you results-focused or sales-focused? Do you elicit early on from your buyer without fail what his or her intended result is (desired overall improvement or saving) before offering terms (your “frame”) or do you simply respond to his or her demand to buy your service (fear of losing the business) by immediately quoting a price you hope you can get away with?

If your default position is the latter, you are using his or her “frame”. You are building a low-fee / low-margin business. You are leaving huuge money on the table, which you will never recover from. You are instantly a “commodity” purchase in the buyer’s mind. Your buyer will increasingly seek a new and improved “deal” (three for two), at the next opportunity, trying to keep more of the money on the table, and cutting your margins further.

In the absence of educating your buyer about the “value” in advance, you have a one-sided set of scales – cost (your fee) – with all the weight on it (time, money and energy) and transparency, leading to an inevitable low estimation of the return-on-investment by your buyer.

You have lost control of the discussion, the relationship, and the results that will ensue with the buyer.

Welcome to the “commodity trap”.

I meet a great many smart people, former CEOs, finance and investors but when the conversation pivots to effective marketing, they rarely get that the future is largely about imagination and creativity. They insist on benchmarking businesses against their peers today, picking holes in what they don’t do well rather than what Rory Sutherland term’s “reverse benchmarking”. Working out which increasing market needs in future you can superbly address that your competitors cannot and amplifying that value to your ideal buyers of your products and services.

For example, if your distinctiveness as a domiciliary care business is creating the best “high touch” service at your ideal customers point of greatest vulnerability, don’t get caught up in trying to counteract digital competitors, powerfully market your value (“meaning”) in those “moments of truth” to the family members.