Our collective recent experiences with Covid-19 and lockdown practices have acted as a helpful reminder of the importance of being able to operate our businesses online. If you’re a Founder, CEO or business leader, why should you be looking to digitise your business?
This blog will look at the Top 11 reasons why you should move from offline approaches to online/digital working practices. It won’t consider what you could build, or how you could build it – those will be topics of other blogs – we’ll simply talk about why it makes sound business sense.
1. Contracted and Recurring Revenues
If you are running a traditional offline business, regardless of industry, you may be heavily reliant on project-based deals and revenue flows that are non-recurring in nature. Or they’re usage-based, not contracted. Digital platforms change all that. Repackaging what you sell so that it can be a multi-year managed service instead of a one-time CAPEX payment, for example. But we’ve seen subscription-based plays disrupt everything from shaving to coffee beans.
The businesses that have held up strongest during lockdown are those whose revenues were already there – contracts or subscriptions – meaning that the management team can sleep better at night.
2. Make Money While You Sleep
Not only are those management teams sleeping better at night, but they’re also making money while they sleep. You can too. Prospects can become customers without any of your people needing to get involved. They can simply serve themselves.
3. Automation and Exponential Scale
A digital platform, with in-built automation, means that you don’t need to scale headcount in a linear fashion as revenues grow. Rather, you can grow exponentially and benefit from operational leverage, so your bottom line grows more quickly than revenue.
4. Intellectual Property
The platform tech you build whilst digitising your business has inherent value. You are creating intellectual property as you grow. Indeed, we know many businesses that have moved from offline to online and been acquired by a competitor who is buying the technology, not the traditional bits of the business.
5. Higher Multiple = Improved Valuation
Dynamics 1-4 combined will all earn you a higher multiple than an offline, people-heavy organisation without any IP. Simply put, that will result in a valuation that’s anything from 3x to 10x higher than your current enterprise value.
6. Reduce Founder Dependence
Most sub-scale and offline business are very reliant on their Founder(s) for business development, sales and go-to-market thrust. A more digital approach, with inbound customer acquisition, online processes and contracted/subscription revenues, doesn’t always need your hand on the tiller.
7. Access to More Users
Non-digital businesses with traditional go-to-market approaches are usually geographically restricted in the users/prospects that they can reach. Platform plays, subject to logistics and/or fulfilment considerations, can be anywhere and reach users everywhere.
8. Better Customer Experience
Chances are, your customers would welcome more automated processes and the ability to serve themselves, to a point. Digital working practices mean that customers are doing all the work and they think it’s great. You can take huge leaps forward by partly or fully digitising your CX.
9. De-risked Business Model
There are not just significant upsides to moving online; it also takes a lot of risk out of your business. Platform automation means more consistent, repeatable and scalable processes. More predictable revenue forecasts and better financial modelling means your business is easier to understand, manage and scale, without leaping into the unknown.
10. Operational Efficiency
There’s a compelling internal return-on-investment associated with digitising your business processes. As well as bringing speed, digital automation will take cost out of your business whilst improving accuracy. Even if the digital transformation doesn’t face the customer, making your own lives easier internally is still a good thing to do.
11. More Investable Approach
If 1-4 result in a higher multiple, 1-10 combine to give you a more investable approach. You aren’t essential to the business, you can scale exponentially, you’ve got IP, automated customer acquisition, platform repeatability, etc. Whether you are looking for investment for growth, acquisitions or to sell your business to somebody who will value it highly, moving from offline to online by digitising your business model will make you more investable.
Hopefully, you’ll see there are many reasons – this isn’t an exhaustive list – why you should consider revamping your business model to move to a digital platform play. We’d love to talk more about who else we’ve helped, what we might build with you and how we help on a practical level. Get in touch here!