In 1992, 10 million Americans were out of work, the country faced record deficits, and poverty and welfare rolls were growing. Family incomes were losing ground to inflation and jobs were being created at the slowest rate since the Great Depression. That’s when Stephanie Breedlove started a payroll company. Rather than compete with the big providers, she decided to focus on providing payroll for parents who had a nanny. It was a tiny slice of the payroll market, yet 20 years later, she sold Breedlove & Associated for $54 million.
To grow, she had a choice: sell more to her existing customers (e.g. busy couples often need lawn- care, house-cleaning, or grocery-delivery services) or stick with her niche of paying nannies. Most consultants and experts would say it’s easier to sell more to existing customers (and they’re right), but it doesn’t make your business more valuable. Breedlove decided to stick to her niche and find more parents who needed to pay their nannies, and that decision laid the foundation for a more valuable business.
Investors like Warren Buffet look for companies with a deep and wide competitive moat that gives the owner pricing authority. When you have a differentiated product or service, we call it having The Monopoly Control and companies with a monopoly get significantly higher acquisition offers.
Rather than selling existing customers generic services in commoditized markets, Breedlove focused on selling one thing to as many customers as she could find.
How can you focus your business on doing one thing that maximizes value and profitability?
Contact Kirk W. McLaren, CEO, MBA, CPA, IFM, and Georgetown University lecturer at kirk@foresightcfo.com to learn how the eight drivers help you grow with clarity.