Why It’s Best Practice to Complete the 12 Value Builder™ Modules in Order

You may be tempted to re-arrange the modules in The Value Builder System™ to attack the most urgent issue first, but there’s a compelling reason we recommend going in order. 

Here is the reasoning:

Although they often disguise themselves as something else, the root cause of most business problems can be tied to selling too many things. When you have a broad product or service offering, it becomes hard to train others to deliver, so front line staff spend a lot of time out of their depth.

When your employees are shaky, problems arise. Employees need your help, customers want you. What’s more, your cash is likely sprinkled across a broad set of initiatives with differing demands on capital, which can lead to a cash flow pinch. Problems stack on top of each other until you feel out of control at every turn. 

Although you may want to address a symptom like tight cash flow or declining sales or profits, the answer is to address the cause. That’s why the very first step in The Value Builder System™ is to rationalize the business owner's product and service offering using The Scalability Finder tool. This allows you to identify the business offerings which will have a durable competitive advantage, often defined in a Unique Selling Proposition (USP) or the company's competitive advantage.

Next, we need to survey your customers to ensure we understand why they buy from you. We can’t create a differentiated marketing message (Module 6) until we know what your customers say — in their own words — about why they recommend you, which is why The Customer Score survey tool is Module 3 and a required ingredient before moving to Module 4, a required step in advance of Module 6. 

We can’t create a differentiated marketing strategy for the products and services that were identified using The Scalability Finder (Module 2) until we know specifically why your best customers love your company (Module 3). You may have an intuitive sense of why your customers buy, formed in your earliest days as a business, but as your company grows and the market evolves, it’s possible there are new reasons customers recommend you (or don’t). Until we understand those sentiments, it’s impossible to move on to the next step, which is designing a growth plan. 

Once you know why your best customers buy (Module 3), and have rationalized your offerings into just the ones where you have a competitive advantage (Module 2), we need to design a recurring revenue business model (Module 5). The biggest mistake companies make in trying to identify a subscription business model is to attempt to transform a company selling a broad selection of products and services to diverse groups of customers. That’s a recipe for disaster because, for a subscription model to work, you need to address a specific pain point for a targeted group. Trying to create a subscription model without going through The Scalability Finder (Module 2) will almost always render a watered-down offering that lacks appeal among your customers. 

Once you have designed a recurring revenue model (Module 5), we need to figure out how to differentiate it from your competitors so you can establish more pricing authority and leverage to get paid for a greater proportion of your offering upfront. This is why we do The Positioning Planner tool in Module 6. 

Trying to fix your cash flow issues (Module 10) without leverage over your customers is difficult because if you’re selling an undifferentiated product or service you’re at their mercy for getting paid. Sell something truly special, a product or service they can’t get anywhere else, and you can dictate your payment terms which is the essential ingredient in fixing any cash flow problems. 

Once you’ve put your product list on a diet, and have created a recurring revenue model, it’s time to ween your business off a giant customer, key supplier, or employee. Trying to reduce your reliance on a single customer (Module 8) without identifying a solution that can more than make up for the loss of a big customer is only going to shrink your revenue and undermine your value. To better deal with a customer concentration issue, you need to have a smaller list of products and services (Module 2) that will be irresistible to a large number of customers (Module 6). The same thing is true of a key employee. Most companies become dependent on one or two heroic employees because they are relying too much on the flexibility and smarts of a superstar(s) rather than having an automatic, system-centric business which runs on a recurring business model (Module 5). 

A business established around systematic processes which can be routinely followed by average employees has a lower cost footprint, greater scalability, and a lower risk profile - all attributes of a business attractive to potential acquirers.

Trying to figure out who the strategic acquirers are for your business (Module 11) before you rationalize your product and service offerings (Module 2) and identifying what makes you unique (Module 6), is going to attract acquirers who view you as a commoditized company. Most acquirers make low ball offers for generic industry players because they argue it would be easy to replace what you’ve built or turn to other potential acquisitions in your market. Acquirers pay a premium for something they cannot easily replicate on their own, which is the purpose of the ten preceding modules. 

It can be tempting to address your most acute frustrations first, but there is a method to the magic. There’s a lot at stake, so it’s worth doing it right. The better methodology is to follow the prescribed order, but spend more time on those modules which need the biggest improvements and will have the largest impact on driving up current value and top dollar at exit.