How do some entrepreneurs build highly valuable businesses super quick?
I was a young lawyer when I first experienced this phenomenon at close range, and it had a huge impact on me.
At the time I was working for a fast growing corporate law firm, Minter Ellison, and doing a lot of work for a business called The Uncle Tobys Company.
The business had been around since the 1860s and specialised in traditional oat based food products, most of which were fairly stodgy and just plain old fashioned.
That all changed when Uncle Tobys was taken over in the mid-1980s by Doug Shears, one of Australia's most dynamic and innovative entrepreneurs in the food and agri-business sectors. He quickly acquired a number of complimentary household brands such as a Nabisco, White Wings and Vita Brits and relaunched and revitalised the Uncle Tobys brand.
Within only a few years Doug and his team totally transformed the business and sold it in 1992 to Goodman Fielder, one of Australasia's leading food groups, for A$330 million.
So how did they do it?
Well, they did a lot of things right. Most importantly, they built what I call a Highly Sellable Business.
Highly Sellable Businesses
Highly Sellable Businesses have a number of key features. In particular, they aren't dependent on their owners for day to day operations, have strong growth drivers, aren't dependent on key suppliers or customers and have products and services that command premium prices.
The food industry is a tough, competitive game; many food companies struggle to simply survive on wafer thin margins.
However, creating a new or boldly different product can be a highly effective way to develop a successful business in the competitive food industry. Not surprisingly, food manufacturers put huge amounts of time and resources into trying to develop the next category killer product. The failure rate is always high.
If this strategy is executed well though, the lack of competitors, particularly early on, removes all of the usual price pressures and can lead to high margin, profitable products and rapid growth.
Doug Shears and his team excelled in these areas and quickly turned Uncle Tobys into one of the strongest brands in its sector.
New innovative products
Uncle Tobys product range was quickly transformed from staid and old fashioned oat-based products to dynamic new products that were closely associated with high-endurance performance sports and healthy living. In doing so, Uncle Tobys cleverly took advantage of the trend toward exercise, healthy living and a stronger focus on the nutritional value of particular foods.
Mostly importantly, Uncle Tobys re-engineered its traditional stodgy flapjack – a product that had been around for many years – into a new, attractive and healthy muesli bar. In doing so, Uncle Tobys created a new, highly profitable product category overnight,
A strong, attractive brand
The new product range and revamped Uncle Tobys brand was supported by a range of innovative and popular activities and events, in particular the Uncle Tobys Super Series, a professional ironman circuit which ran from 1989 to 2001. The Uncle Tobys Super Series was linked strongly to surf lifesaving, a traditional summer institution much revered in Australian culture. It inspired many Australian kids to become involved in surf lifesaving.
Through its Super Series, Uncle Tobys effectively turned the ironman circuit professional by contracting competitors who made a full-time living from the sport. In doing so, Uncle Tobys turned superbly fit and charismatic ironmen – such as Trevor Hendy, Guy Leech and Craig Riddington – into superstars, household names and great ambassadors for the Uncle Tobys’ brand.
From virtually a standing start, muesli bar sales skyrocketed due to Uncle Tobys’ innovative and extensive branding campaign.
Now this is a great story, but how does it apply to you and your business?
Growth drivers and monopoly control
I find many business owners spend a lot of time focussing on what their businesses need right now, rather than building a business which will be highly attractive to a future buyer. The problem with this approach is your business won't miraculously turn into a Highly Sellable Business the day you decide to sell it; you have to put in the ground work up front.
Uncle Tobys did two key things which are common to most Highly Sellable Businesses. By developing muesli bars and effectively creating a new product category Uncle Tobys embedded a huge growth driver in its business. Secondly, by supporting its new and revamped product range with a highly innovative and engaging marketing campaign it established a level of “monopoly control” that enabled Uncle Tobys to earn high profit margins on it products compared to its competitors.
Focussing on how you can build growth drivers and a level of monopoly control into your business would be a good first step to building a Highly Sellable Business.
Want to learn more? Join us for our new 2.5h Freedom Workshop in Melbourne on Tuesday 6 December.