top of page
Search

Building Business Moat - Where to Begin?

Just like castles were built with water around the walls to protect the structure from invaders, MOAT in business represents qualities of a company that prevent competition from taking over its market share.

=> Types of Moats: Cost of Production, High Switching Costs, Intangible Assets/IP, Branding & Network Effects, and many other closer aligned with your industry.


Think of Moat as anything that would prevent a competitor from stealing your customer!

Strategic Retreats are best of re-assessing company’s moat that should be determined at the founding of a company and developed over time.


Pivoting can be valuable here if done very strategically… and not very often! Private Equity is very good at this. Entrepreneurs are event better! Think Harry’s Razors – not a novelty but rather product re-imagined!


Process of designing your MOAT starts with periodic assessment of your business and product positioning in the industry.

A couple of easy tools that can help assess and design your moat are Porter’s Five Forces and Benchmarking.


=> PORTER’S FIVE FORCES – a good tool, if used correctly, used to assess your current position within the marketplace.


The Five Forces are - Industry Competition/Concentration, Entry Costs, Threats of Substitutes, Power of Customers and Power of Suppliers.


=> BENCHMARKING – a deeper dive into various attributes of your product or service then compared with similar attributes of your competition. The point here is to identify how you differentiate yourself from a competitor, and also find ways to assess and re-design your weak points.


=> BONUS – call it R&D or NPD (New Product Development). This is more about finding ways to reinvent your product or service (other words – create a value-add component that would make you stand-out). Think – Roasted Nuts as All-natural Plant-based Keto Snack with a pinch or probiotic coating vs. A New Mix of Almonds, Cashews and Walnuts.


Process of designing your MOAT starts with periodic assessment of your business and product positioning in the industry. Use PORTER’S FIVE FORCES, BENCHMARKING and NPD to drive how you will differentiate yourself!

7 views0 comments

Recent Posts

See All

Comments


bottom of page