Good knowledge about your industry and competition

The past 6 months has seen a bigger shakeup of more industries than ever before. Industries that have changed by incremental amounts over years and even decades have had to adapt in a period of weeks.

For many of you that meant two or three months of doing very little followed by the same again of trying to piece it all back together again but in very different circumstances.

One of my clients told me once that it takes about ten years before you know what you’re doing. I think there’s something in that. But then many of you had to change rapidly and redesign your business in ten days in some cases so perhaps we are capable of a lot more than we give ourselves credit for.

Most of you will have started your business having worked for someone else first. Maybe that person was your mentor. Maybe they were a parent. Or maybe they were someone slightly hopeless making mistake after mistake all quietly observed by a determined young employee who knew in their heart that they could do better.

I had the good fortune whilst qualifying to work for a couple of flawed individuals who could have been a perfect partnership if only they could have learnt a few things from each other. One was well organised and looked after the pennies but was over-cautious. I once had a debate with him about highlighting an issue to a client because he was worried that if the client acted on the issue we were highlighting and the situation got worse, the client could sue us!

He was literally hiding from doing the one thing that most owner-managers were crying out for – advice.

His younger partner gave very good advice and got lots of new clients but couldn’t get anything finished. His office looked like some terrible paper hoarder was in residence with piles of files and typed, but, unsigned letters.

I knew in my heart I could do better.

Those formative years as you build your knowledge, skills and habits are the foundation of what your business will become. You will develop principles and attitudes based on the person you are and the things you have experienced.

But whilst that might get you up and running it won’t sustain your business in the long-term.

Because every time you think you’ve nailed it, you have to cope with that one thing that buggers it all up.

Change!

Sometimes it’s driven by technology, sometimes by legislation, politics, market forces on salaries.

Sometimes it’s internal issues. A retirement, maternity leave, fall out with a colleague.

Or sometimes, it’s just all those pesky competitors, raising the bar, doing things better, making your life harder.

My old boss (the one who was too frightened to give advice) use to complain about “cowboys” whenever he lost a client. “We do things properly” he said, missing the point that cross-referencing a set of working papers in the right colour of pen was probably less important to a client than telling them that they were paying £5,000 too much in tax because they were drawing their money out of the business in the wrong way.

Ultimately of course, that particular location ended up getting closed down as client after client leaked away to other local competitors.

But that was nothing compared to what was happening to insurance brokers around the same time. Back then every town centre had a selection of insurance brokers all owner-managed and probably only a few doors down from a local travel agent. Both are few and far between these days.

One of our favourite clients, Martyn Brookes of Broadsure Direct remembers his time in the early 90s well.

“Initially we traded in standard car and house insurance. We then went onto specialising in Xr3i Rs Turbos, Renault 5 GT turbo’s Golf GTi’s and cars of that sort, as we were all really mad about cars. We also sold standard house insurance, but it was a little dull compared to the car quotes.

It was great and prices were manually worked out, and cover was presented to clients on hand-written cover notes.

But firms like Direct Line and KwiK Fit came into the market, shortly followed by the supermarkets and later the comparison sites.

Each new entry into the market seemed more tech focused than the last, and clients were depleting fairly quickly as we could not compete on price or the promises of claims services and easy payments.

We moved our product focus to now include commercial Van Insurance and associated Liability. This went well for a while until Van Insurance came into their gun sights. However, we noticed they could not get together the liability aspect associated with some commercial van covers, so, focussed our Van adverts to now include a % off all Goods In Transit cover.

Broadsure has carried on looking for niche business or business that was difficult to place. Perhaps driven by the fear of losing lines to competitors, we kept on learning new products and associated products. This has proved to be a good decision as appetite for the different insurance products changes as insurers experience high claims costs sometimes resulting in the insurer closing or refusing to continue to write a product.”

So how do you keep up to date and one step ahead of whoever is trying to take a slice of your business?

Well there’s lots of ways, some of which are easier to do than others. My list includes the following:

1. Attend events run by trade bodies. Most industries have events of some kind with guest speakers. Attend one or two per year. Chat to other people there. Let all the sponsors regale you with stories of their amazing products and how they will change your life or business. You’ll start to build up some knowledge about things that are happening that you aren’t aware of.
2. Subscribe to trade magazines or emails. Our own illustrious journal was accountancy magazine, which as a trainee and newly qualified accountant in the 80s and early 90s was essential reading. To ensure you read the technical stuff, the pages with the important issues you had to read were in pink. But as anyone would tell you, the way to read it was to start with the articles that looked interesting (more than you’d think), then a quick skim down the disciplinary page in case any of the partners were in there. And lastly, and probably a little reluctantly, the dreaded pink section.
3. Competitor websites. These are useful if only to see who has managed to get themselves on the front page of whatever you searched on Google and try and work out why, but they also give you an idea of what your competitors are aspiring to be.
4. Organise swap days with other people in your industry (perhaps one that you met at one of those industry events). This is a kind of “you show me yours and I’ll show you mine”. Swapping ideas will benefit both businesses.
5. Find the influencers in your industry. They will be out there and some of the stuff you can download for free or read on their email newsletters is great. Of course, they’re not doing this for the love of it (although they probably do love their work) and if you’ve got the budget it’s worth bringing them or someone else in as a consultant for a while. My experience is that you will get the maximum benefit in the first 6 months and the benefits start to diminish after that. 18 months is probably the sweet spot after which the benefit of external industry consultant can be outweighed by the cost.

Whatever you do, try and retain a constant desire to learn. Not only will it help your business but the days will be more enjoyable as well. One of my heroes was the old England football manager, Bobby Robson. Not just because he ruffled my hair and said “that’s the spirit son” when I was 16 (long story) but because he had a level of humility that most managers of his era didn’t have.

As a result, he kept learning and evolving and long after his peers had retired, he was winning trophies as a manager in Holland, Portugal and Spain. Could you be the Bobby Robson of your industry?

Ok, so maybe a statue of you in bronze outside the Livery of Widget Makers is a bit far-fetched and actually just making a few quid before you retire is the goal.

If so, then of course the dream is to find yourself a niche. Something you can do and no-one else can. Oh, with some nice barriers to entry as well to stop others joining in as well.

That’s the dream. But you could spend an entire career looking for a niche like that.

Maybe it’s more practical to see if you can find something that is different to your competitors.

Elin Roberts of Better Nature Foods refers to this as white space.

Her advice is to “Try to immerse yourself in the market as much as possible, whether that’s analysing shelves, scouring social media or reading industry reports. Really get to know the customer needs and then map out your competitors on a map (with the axes of your choosing) to pinpoint the space in the market that you’re going to tackle”.

This is of course how you can start turning all that industry knowledge you have accumulated into success and profits. Elin’s view is that “This is the only way you can really offer value to your customers, otherwise all you’re doing is crowded an existing market that’s likely filled with companies with much larger budgets and louder voices than you. This doesn’t mean your product or service has to be radically different, but you need to have a clear point of difference and make this really clear in all your marketing. This could be fixing a pain point in the market, tapping into a new area of the market or even disrupting a market norm. Decide what it is, make sure it’s implemented in all you do and shout about it!“

A4G’s approach has always been that 70% of what we do is compliance work, not just the stuff that you have to have done but the stuff that all our competitors do as well. Other than try and communicate your affairs better than our competitors, it’s hard to differentiate ourselves there.

But the other 30% of our work is the valued work, the things you get a benefit from. Management information on which to base decisions, profit and cash improvement, tax planning, wealth planning or good old “digging our clients out of the problems they have got themselves into” with all sorts of other stuff as well.

Few of our competitors have this sort of holistic approach even if they do some of that work. So that’s where our marketing focus is and also where most of our research time and training goes as well although just in case someone from the ICAEW is reading this we do keep up to date with the technical content as well!

Whilst only 30% of our overall work is value added, we calculate that about 90% of our new clients come to us for those services.

And your business is probably the same. It’s the 30% or even the 5% that is different that is the reason you get most of your work.

If COVID-19 has taught business anything, it’s that we can all learn new skills very quickly even if it takes a bit of research.

If you’re not researching your industry and your competitors to see how it can be done better then the likelihood is that they are researching you.

Have a good weekend!