Market Gap Investments
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  • November12th

    I gave a presentation to a CPA Australia SME discussion group this week and found the discussion very interesting.

    I am a presenter for The Climate Project http://www.acfonline.org.au/default.asp?section_id=193.

    The first half of the presentation provides an overview of  what climate change is and why it is important to start to do something about addressing the causes now.

    The second part of the presentation is a discussion about innovative businesses that are taking positive and profitable steps to reduce their impact on the environment.

    While we discussed reducing waste and making conscious decisions about how we do business now, we also discussed how successful those businesses who have changed their business models are becoming.

    While my expertise and focus is in the SME space, I am aware of a number of significant projects that major corporations are doing to change their business model.

     A great and informative read is “The Necessary Revolution” by Peter Senge – a summary is here: http://edgarwille.wordpress.com/2010/03/26/peter-senges-book-the-necessary-revolution-full-review/

    I know a number of businesses who have started to harvest water, who are generating sufficient renewable power to run their business, who are thinking outside their current framework to reshape their future.

    The traditional valuation model centres on current investment models using some form of assessment of maintainable earnings as a basis for determining value. The future model will include a calculation to assess a business’ environmental cost or contribution as part of the process.

    Reshaping the future means value will be determined by the customer, the community and the impact we leave on our environment.

  • August5th

    The value proposition for any business is defined by what value is delivered to the customer.

    12 micro caps presented to a room full of investors earlier this week, and the customer proposition was clearly defined in only one of those presentations.  I understand the pitch was focused on returns to investors, yet I was intrigued that only one company provided insight into the value they delivered to customers, and coincidently that company seemed most investment ready to me, a somewhat scary proposition,  given that all companies are listed on the stock exchange.

    I don’t recall any sensitive information being divulged that would provide competitors with any advantage, though that may be why 11 of 12 companies didn’t talk about their client value proposition.

    Every business acknowledged their customer, the source of their business value, yet only one clearly linked the customer value proposition to the value of the business.

    When you understand the value you deliver to a customer, you understand the value of your business, and so do your customers, staff, investors and prospective purchasers of your business.

  • April19th

    I believe that depends on where you sit from the customer’s point of view.

    While there are many different value points along the way to delivering a service or product to a customer, it is the customer that will determine the value by what the customer is prepared to pay.

      I’ve looked at several business plans in the last week.

      The plans are great on describing the business idea – the technology, product or service that will be taken to market. The analysis seems right, the descriptions of how things work and will be delivered are passionately explained. The strategic thinking behind the offering seems thorough.

      The major focus of each of the financials is revenue and then profit, with a reasonable explanation of the cost structure.  The financial strategies to turn the idea into profit seem to make logical sense.

     Cost structures seem clear, mainly because they have a price and an invoice attached to them.

     What is more difficult to explain is the value proposition and how dollars flow in the value chain that delivers the benefit along the way to the customer. While it may be relatively easy to develop financial projections, the strategies can only be implemented when enough customers see value in the idea and are prepared to pay for that value.

      If we buy something for $10 is it because that is the cost, or do we buy something for $10 because we get some intrinsic benefit or value we can attribute to the purchase that is equal to or greater than the price?

      It is important a business thoroughly understands the value proposition from the customers’ perspective when determining the appropriate pricing model and developing the strategies to take the offering to market.

      The strategy should be developed on the understanding that the customer must receive at least the value they are paying, or there will never be a long term relationship.