Healthy Ecosystems Create Profits

Running in the background of every professional services firm is an ecosystem.

At the center of this ecosystem is a seed.

If the seed is bad, poorly constructed, or ill-conceived, everything else will be weak and disappointing.

When the seed is of the highest quality, it produces revenue, profit, and valuation that rewards you for your ownership.

Professional and B2B services firms need specific components in their seed

Corporate strategy, Pricing Strategy and Pricing Model

I’ve seen that the most successful companies have a very concise and tight corporate strategy. In fact, it is one sentence, and it reads like this:

We create X IMPACTs for Y clients for Z profit.

The X, IMPACTs, are life changing differences clients experience as a result of your knowledge and expertise. Sometimes they are extremely significant and long-lasting, sometimes they’re significant for a short time.

IMPACTs are qualitative. They reflect the client’s needs, wants, and desires. Clients describe the IMPACTs they’re seeking, and your firm creates them.

Use a short phrase that consolidates various IMPACTs.

The Y in your corporate strategy describes the market or industry within which your Great Fit Clients work. Don’t fall into the trap of thinking “we create IMPACTs for everyone.” There’s not a person worth working with who thinks of themselves as “everyone.”

The Z profits part of the corporate strategy is yours to set. If you don’t set it, you’ll end up with leftovers. Leftovers do not create value for the owner.

 

The seed includes the Pricing strategy. This is the rule you will apply to create a pricing model.

At one end of the pricing strategy continuum is “We price to cover our costs and our target profit.”

At the other end is “We price proportionally to the IMPACTs we create for our clients.”

The Pricing model is designed to implement the rule.

At one end is “cost plus” and at the other is IMPACT Based Pricing.

The Ecosystem graphic

The High Proft Business Ecosystem graphic shows you where the seed is and all the elements that surround it.

In the inner ring are the company’s internal departments and tasks. On the bottom of the outer ring are the company’s “back end” components. At the top are the necessary external connections that will contribute to success.

By definition, all of these elements are needed to generate revenue and profit and a meaningful valuation of the company.

Your ecosystem is not a “set it and forget it” pretty picture.

Some elements are ongoing; others are activated from time to time. Over the years the details of all the elements will adapt to changing needs and times.

Use the Ecosystem diagram to conduct your health check.

The savvy business owner takes the pulse of the company every few months. Yes, that frequently, because we live in fast changing times.

Ask two questions:

  • What are we currently doing in each of these areas? Make the answer short and quick otherwise you won’t do it at all. (I’ve been there.)
  • What do we need to update, eliminate, or add in two or three of the elements right now? When you address a few of the elements each time, over a year you will have kept all of them up to date.

Small and targeted changes every few months are easy and less costly and give your company a quick hit of adrenalin.

You can implement this health check yourself or with a small team.

Or you can have me work with you as a guide through the health check. If this piques your interest, please schedule a meeting to discuss how that would best work for you and your company.

You’ve done the hardest part, planting the seed and building out your ecosystem. Let’s make it grow stronger and more profitable than ever before.

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