Regulations are the natural enemy of business, but often they will provide opportunities to win new business by providing solutions to customers’ compliance problems. TOM McKASKILL explains why you need to take a fresh look at the laws and regulations gov
By Tom McKaskill
Regulations are the natural enemy of business, but often they will provide opportunities to win new business by providing solutions to customers’ compliance problems. Time to take a fresh look at the laws and regulations governing your industry.
If the only certain things in life are death and taxes, then perhaps we can learn something useful from them in regard to how we stimulate growth.
Both are uncomfortable and both are to be avoided or delayed whenever possible. The interesting question would be – what would a customer pay to avoid or delay those situations?
The answer lies in what is termed the “compelling need”. Generally speaking, customers are not price sensitive when it comes to their health or avoiding or reducing severe penalties associated with compliance regulations, like taxes. Knowing that, we can use this to our advantage when seeking new revenue opportunities.
If you are not in the health business, then try spending some time looking at the regulations that govern your target customer sector.
What you are seeking are emerging or recent regulations that mandate conduct where the penalty for non-compliance is severe, perhaps large fines or even business closure. You also want a situation where there is a limited supply of acceptable solutions and where you could build a competitive advantage by being early to market and by building on some existing product or service.
These are highly fertile grounds for growth opportunities.
The nature of regulations is that they impose an obligation on an individual or a business. If the individual or business fails to comply they suffer personal or business setbacks, fines, closure, disruption, loss of reputation and so on.
Compliance situations are often time critical. That is, they cannot be delayed beyond a limited point. The price individuals and businesses are willing to pay to comply is directly related to the size of the penalty or cost to the business of the associated closure or disruption.
What you need to look for are situations where the cost of not complying is high, the available solutions are not able to meet demand, and where you have the capacity and capability to bring a solution to market in a timely manner.
Even if you have a weak competitive situation, the excess demand will still allow profitable business to be achieved. Clearly, if the solution can be underpinned by strong intellectual property or capital, the horizon for generating profitable business will be extended.
Where you have a range of products and/or services targeting a sector, you might try to introduce compliance products or services that act as door-openers.
You can reduce your sales lead time with a compliance product. Close the sale on that item and then use the now established customer relationship to sell complementary products and services.
Even where the door-opener item is of relatively low value, this still allows you to cross-sell higher priced products and services later. As we all know, it is much easier to sell to an existing customer than to find a new one.
Even where you have a well-established business, introducing compliance-based products and services will shorten sales cycles and increase account stickiness.
Tom McKaskill is a successful global serial entrepreneur, educator and author who is a world acknowledged authority on exit strategies and the former Richard Pratt Professor of Entrepreneurship, Australian Graduate School of Entrepreneurship, Swinburne University of Technology, Melbourne, Australia.
Smart Company is the leading online publication in Australia for free news, information and resources catering to Australia’s entrepreneurs, small and medium business owners and business managers.
