All posts by marketingdepartment

What are business models and why are they so important?

The term business model may seem like a very simple notion. However, the phrase has evolved drastically over time. Today, enterprises are doing all they can to keep up with the ever-advancing technological world, by adapting and editing their business models accordingly. Although this might look easy to the eye, it is actually quite complex and many companies can’t keep up resulting in their inevitable downfall.

Have you noticed that some of today’s most successful businesses are those who have redesigned their business model, disrupted their industry, and produced the type of value that customers are looking for in the digital age?

How can we define a business model?

The word “business model” refers to a company’s profit strategy. It specifies the items or services that the company intends to sell, as well as its target market and any estimated costs. Business models are important for both new and established businesses. They help developing companies attract investment, recruit talent, and motivate management and staff. Established businesses should regularly update their business plans or they’ll fail to anticipate trends and challenges ahead. Investors use business plans to analyse firms that they are interested in.

What types of business models are there?

Technology has changed the way businesses operate. Interconnectivity, globalization, and a digital, tech-driven world have all enabled forward-thinking thinkers to reconsider traditional models in industries ranging from travel to retail. There are as many types of business models as there are types of business.

The platform business model is an example of an age-old company model that has been altered by technology. In its most basic form, this concept puts buyers and sellers together in a single location. This paradigm has existed for decades, if not centuries, in the form of an in-person marketplace, auction house, or retail mall. However, thanks to digital technology, these platforms are no longer bound by time or geography. Innovative business owners have been able to leverage this sort of approach to develop massive digital networks that enable participation and cooperation all around the world thanks to technological advancements. Some of today’s most successful businesses, such as Facebook, WhatsApp, Airbnb and Google are all examples of reinvented platform business models.

Another example of a technology-inspired business plan is the global business model. These models rely on the quick speed of globalization and interconnectedness to succeed. Focusing on creating and selling internationally in a short period of time. The clothing brands Mango and Desigual, are strong examples of successful models that sell to tiny target groups internationally in order to obtain economies of scale, which is only achievable in a globalized society.

Example of an innovative business model:

As an example of a company that has taken an old business model and redesigned it, Uber is at the top of the list. Uber was able to seize a piece of a pre-existing market by employing a disruptive, tech-based paradigm by looking at how a present business model—taxis—could be enhanced.

You might be interested in: Part VIII – Bonus model 3: Cloud Restaurants

Uber is in continuous expansion through reiterations of their initial model. For example, there is now Uber Eats for food delivery; Uber Health providing rides for patients and healthcare workers and even Uber Freight which offers shipping services.  Uber has done exceedingly well at adapting its business model in order to remain relevant and successful.

To sum up, innovation is a critical component of every company strategy in today’s fast-paced digital environment. Executives and CEOs are accountable for trying, learning, and continually upgrading to remain ahead of the competition. It is clear that having a flexible business model is key to the longevity and success of any company.

What is Venture Capital?

You use services and products from Venture-Capital backed companies every day, yet you are probably unaware of this. Uber, Wish and Airbnb are just a few examples. It can be quite a tricky concept to grasp at times. However, even though the industry is in constant change, the fundamentals of venture capital remain the same. But what actually is Venture Capital?

If you are interested in modern business models such as uber read our article on 21st Century Business Models

In this article we will explore the main principles and provide you with the answers to all your questions.

How can you describe Venture Capital?

Well, it is a type of financing in which money is put into a firm, usually a start-up or small corporation, in exchange for a share of the company’s ownership. It’s also a significant subset of the private markets, which are a considerably bigger and a more complicated aspect of the financial landscape.

What is the difference between Private Equity and Venture Capital?

Venture Capital is actually a type of Private Equity in technical terms. The fundamental distinction is that, private equity investors favour solid businesses, whereas venture capitalists typically invest in start-ups. Small businesses with tremendous growth potential are typically given Venture Capital.

How do these type of firms make money?

Management and performance fees are how these firms make money. These can differ from fund to fund, but the 2-and-20 rule is usually followed. Management fees are calculated as a proportion of assets under management, which is usually around 2%. These charges are incurred on a regular basis to cover everyday expenses and overhead. Fees for performance are the amount calculated as a percentage of investment profits, usually about 20%. These fees are paid to employees as a way of rewarding their achievement and incentivizing higher returns.

To sum up although many of us don’t understand or realise that we use these type of companies’ services etc, it is importand to comprehend the main principles given it´s popularity in the finance world.

How can digitization help with the sale of your company?

How can digitization help with the sale of your company?

The recent pandemic that we have been through has caused a significant change in business models. Specifically, it has accelerated digitization in all types of companies and their processes.

Technology advances faster than we think, and it is essential for companies to identify in which direction they should go. For this reason, it is crucial that, no matter how successful your company is, you have a vision and the right strategies to develop your company’s full potential and take it to the next level in this new landscape.

Digital transformation and technological trends can multiply your company’s benefits and increase its value for potential investors. So, how can digitization help with the sale of your company?

6 Main benefits of the digital transformation of your company for its sale

1. It allows better optimization of your process

The most precious resource for any company is time. Wasting it leads to delivery delays, lost customers, and planning disruption. Digitization can optimize these processes. Using the right tools for your company, you will avoid these unforeseen events.

Doing a good study of the type of technology you need to optimize your processes is always recommended.

Your work team will increase its productivity and, therefore, the profits of the company will increase.

2. Automation of your processes

In all companies, there are necessary but repetitive processes.

Currently, thanks to developers and technological tools, we can use systems that perform these tasks simply by programming them.

An automated process implies increased productivity, higher work standards reflected in the quality, easy fault detection, faster correction, and reduced possible human errors.

3. Incentive work team

Often, a work team is not as productive as expected because it does not have the necessary tools or does not know they exist.

Once these resources are available, it will be beneficial for the company and open a window of opportunity for the team. Employees will be able to add more value to the company.

 

 

4. Greater adaptation to market changes

Digitization contributes a lot to the efficiency of your company’s production processes, making the response to customers much faster.

Entrepreneurs often think about the difficulties of carrying out technological innovations: resistance to change, the need for staff training, the time required to adapt processes to new changes, etc. What they fail to see is the excellent long-term benefit from the investment of that time and effort.

The adaptation of the means of production, distribution, and customer service is a necessity imposed by the market and an opportunity to increase the profits and value of the company. For both the entrepreneur and the company, the integrated technological elements for process optimization will increase the company’s value, whether it is to take the company to the next level or sell it

You might be interested in reading: Maximize the price of a company

5. Create new business opportunities

The renewal of your company at a productive level allows new business opportunities to arise. You will be more competitive in the market, and you will have a broader range of possibilities when investors are interested in buying your company.

6. Cost savings

Achieving the most significant benefit with the least possible expense is one of any company’s main objectives, and the use of technologies helps to enhance this objective.

The use of data stored in the network and the automation of processes of all kinds are examples of reducing business costs.

There are significant benefits to be obtained from the digital transformation of a company. If the objectives are the sale or the search for investment, you must consider that every investor performs Due Diligence. It is a necessary audit of the company’s financial, legal, commercial, labour, environmental, and business aspects to be purchased.

Therefore, a digitized company with organized processes and good productivity and efficiency makes the buying and selling process phases easier and more fluid.

Digitization can often be complex; however, the benefits it provides to your business must be taken into consideration, as it will make it a more reliable and attractive company.

Preparing your company for the sale is a fundamental factor to consider. Digitization will mean that your company’s life cycle will be longer, and your brand will be more established.

If you are considering the sale of your company and you need professional advice, do not hesitate and contact us without any commitment:

How is digitization changing the business world?

Technological advancement has altered the way we live our lives on a daily basis. Even simple tasks such as communicating, travelling and working have been significantly facilitated with technology. This technological advancement is also linked to the digitalization process. Digitization has greatly affected the business world and has proved it is a necessity in the modern corporate sector.

You may also be interested in Jose Ramirez´s article on marketplace.marketplace is a platform where vendors can come together to sell their products or services to a curated customer base.

What is digitization and how does it relate to business?

Digitalization is a fundamental business transformation that:

  • Involves the use of digital technologies to streamline business operations.
  • Increases productivity.
  • Improves customer experience.

Essentially it is the process of converting analog data into a digital format using appropriate electronic devices, allowing data to be processed, stored, and sent via digital networks. For example, scanning a physical photograph and having it as a digital copy on your computer or converting a paperback book into an e-book.

Moreover, there are some less obvious examples that people are unaware of. Such as, when you buy a new phone and that phone immediately contains all your contacts and photos or when you call your bank or hospital and your transaction history or medical records are automatically. When you order via companies such as Amazon and all your payment and shipping details are saved and you receive your order the next day. These are all examples of how digitization truly is everywhere.

The fact that digitization makes work considerably faster, smoother, and overall, more efficient is one of the reasons why it is so crucial in the corporate sector. This phenomenon occurs in all firms nowadays.

In what ways is the business world adapting to digitization?

There are various ways the business world has adapted to digitization:

Artificial intelligence

One being Artificial intelligence. AI has become increasingly relevant in most business sectors. The reason behind this is due to how it enables companies to diversify into new businesses and obtain a competitive advantage.  AI has already had such an impact on the corporate sector to the extent that corporations are using it to automate jobs and specific operations such as performing data analysis, developing algorithms, and even increasing client communication.

Innovation

Innovation has been greatly facilitated with technological advancement. There is a plethora of fresh and unique options available on the market that are applicable to practically any facet of a company. Technology innovation enables businesses to generate new ideas, reach a larger audience, employ specialized tools for organizing and managing work, and, most importantly, create a superior product that is perfectly tailored to ensure the highest degree of customer satisfaction.

You may be interested in: Part V: The cloud Market group: XaaS

Evolution of business models

Finally, digitization has also allowed for a wide range of new business models to evolve. With all the information and tools available online businesses can create models adapted perfectly to their own needs. For example, cloud restaurants are one example of how the restaurant industry adapted its business model to conform with digitization. The vast resources that digitization permits, offers companies the chance to build something completely different and band-new. This is crucial in creating a flawless product that was not possible before the era of digitization.

To conclude it is clear that digitization has drastically changed the ways in which businesses operate. This can also be reflected when selling a business as digital transformation and technology trends can multiply your company’s profits and increase its value to potential investors or buyers.

Digital revolution

The Digital Revolution

Have you ever thought about how new technologies have changed your daily habits? It is almost undeniable that the digital revolution is here to stay. It affects everyone and everything, including the evolution of companies, however traditional they may be.

The digital revolution is already a part of the new trends that are transforming nearly every business. For any firm, the process of innovation and change is fundamental, and no entrepreneur can avoid it.

If a corporation is unable to keep up with technological advancements, , its collapse and decline is almost inevitable. One of the most powerful disruptive trends is the digital revolution, which has already transformed business models of countless industries.

The impact of the Digital Revolution on industries

The Digital Revolution has created a fusion between technology and humans.It enables us to streamline work procedures while also analyzing and identifying consumer demands and improving the business/customer relationship.

Nowadays, the effectiveness of a company’s digital processes contributes to its success.Signifying that other aspects such as means of production and old customer communication models have become less relevant.

The necessity for businesses to adapt to the digital world is undeniably critical.All companies want to know what their customers do, what their needs are and how they act online. Digital marketing is already a new industry that captures everyone’s interest. We see this reflected in large consultancies as they acquire digital marketing companies as a means of adapting to this revolution.

The Digital Revolution in the tourism industry

This is mirrored in major consultancies’ acquisitions of digital marketing firms as a method of adjusting to this transformation. Tourism is one of the sectors most impacted by the Tech Revolution. Can you Imagine going to a travel agent to book and pay for a flight?  Today, the leading agencies in the market have almost completely digitalised their operational processes. These companies already work with the following systems:

  • Digital payment methods.
  • Digital agents for the purchasing process.
  • Data collection to create personalised offers.
  • Integration of apps to optimise their services.
  • Virtual Reality to optimise pre-trip experiences.

Lack of familiarity with these concepts has triggered the downfall of some companies. A recent example is British travel agents, Thomas Cook, which despite being a leader in its sector, has been forced to cease operations.  This happened as a result of the complete disregard in implementing the changes that its sector has clearly demanded into its business model.

Why is it important to adapt to the Digital Revolution in the business world?

At the moment, it is mainly the new up and coming entrepreneurs who are able to create flexible companies that allow them to implement new business patterns, making them the future of their sectors.

These new business models have completely changed the rules of the game and have put some entrepreneurs in a difficult situation.

Faced with this wave of digitalisation, they have no choice but to adapt their business to change. What they can decide on is how to go about this process. As a first step, it is important to properly analyse and understand the different trends that are affecting your company’s sector.

 

At ONEtoONE we have extensive knowledge of digitization in both the buy side and sell side activities. We have been involved in more than 1,000 mandates meaning we can provide the best advice possible on value ranges and other aspects of a potential corporate transaction. If you need advice or are interested in buying and selling companies, please contact us.

 

 

What is Big Data?

The surge of interest in Big data has soared to record highs in recent years. Moreover, it has become of increasing importance to businesses globally. However, many business owners are left confused over what it actually is and how it can truly help their company.

Big Data analytics aids companies in harnessing their data and using it to identify new opportunities. Furthermore, this leads to more carefully thought-out business moves, more efficient operations, higher profits, and happier customers.

How can you define it?

Big Data refers to vast, complex data sets that are both structured and unstructured. These data sets are generated at an extremely high-speed rate and transmitted from a multitude of different sources such as transaction processing systems, customer databases, documents, emails, medical records, internet clickstream logs, mobile apps, and social networks.

Given that these data sets are so large, traditional data processing technologies can’t handle them. However, these vast amounts of data can be leveraged to solve business challenges that you previously couldn’t solve. For example, the ability to estimate metrics, including consumer loyalty has been facilitated significantly with the introduction of Big Data. Big Data allows for higher prediction power.

You may be interested in José Ramírez Terc´s Understanding 21st Century Business Model. In this series, he explores the ways in which modern business models born with the internet boom are changing how companies operate.

What are Big Data´s attributes?

The three V´s of Big Data:

1. Volume

It is the enormous amount of data being stored. When we are dealing with Big Data, we have to process extremely high volumes of unstructured and low-density data. For example, we are attending to Twitter data feeds, clickstreams on a web page or a mobile app, or sensor-enabled equipment.

2. Velocity

When looking at the velocity we are talking about the incredible speed at which data streams must be processed and analysed. Companies and organizations must be able to harness this data and develop real-time insights from it; otherwise, it is worthless. Real-time processing enables decision-makers to move fast, providing them with a competitive advantage.

3. Variety

Variety refers to the many types of data that are available. The majority of large data is unstructured, which means it does not fit seamlessly into a typical model. A huge data stream might include anything from emails and movies to scientific and meteorological data, each with its own set of characteristics.

You might be interested in Big data and its impact on M&A.

What you need to know about private equity

Private equity has become more and more popular in the finance world and interest in the topic has grown significantly. You have probably heard it being mentioned various times in conversation and maybe not quite understood what it actually is. This article will help you understand the main principles of private equity and allow you to join in on the conversation!

What actually is it?

Private equity is a type of private financing that takes place outside of public markets and involves funds and investors directly investing in firms or buying them out. Their main goal is to invest in companies with a majority or minority stake. This way they can generate value over a period of around four to five years, enabling them to sell their share with the highest capital gain possible.

The investment span for private equity varies from mid to long term with a maximum of ten years. Standard investments for private equity include private company capital as this facilitates growth and success. In most cases, capital is returned in exchange for the risk incurred.

How do they differ from normal banks?

Moreover, private equity firms differentiate themselves from normal banks as they invest in your company in exchange for owning a part of it unlike banks who regardless of your company’s financial status will lend money with the expectation that it will be reimbursed with interest on predetermined dates.

Private equity´s profits and success will depend on the company they invested in. If it does well then so do they.

Private equity aims to increase your company´s success and value without enduring in the day-to-day tasks of actually running it.

You might be interested in: Six things to know when negotiating with a private equity

What are private equity´s main characteristics?

  • Risk: the allocation of capital doesn’t have any personal or real guarantee.
  • Orientated towards innovative companies: They are looking for companies with the following four characteristics: a strong management team, substantial growth potential, a distinct competitive advantage, and viable divestment options.
  • Temporary and usually minority share: In periods when funds are scarce, their goal is to give stable financial support. If these early stages are successfully completed, private equity will give way to other investors, allowing them to regain their initial investment as well as capital gains in exchange for the risk they took.
  • We advisors say that there is no such thing as majority or minority, only good or bad shareholder agreements. Therefore, the agreement is as important as the type of shares.
  • Management support and added value: Not only does the investor participate in board meetings to oversee the investment, but he or she also provides knowledge and facilitates access to new partners, clients, and suppliers.
  • Compensation via capital gain: once past the riskiest stages, they look to be replaced by other investors, who will compensate for the risk they have taken and the assistance they’ve offered.

If you have a dynamic growing company which contains all the characteristics listed above then private equity may be a serious option to consider. It can also help you if you’re looking to sell your company or give it over to management.

4 elements to look out for when finding the right M&A advisor for your company sale

Selling a company is a huge step for any entrepreneur that requires thought, preparation, and time. Having an expert M&A advisor is essential as it plays a significant role in the amount of value created in the deal. Therefore ensuring you have picked the right one for your company is critical as many M&A advisors are not effective.

In this article, we explore the 4 key elements you should keep in mind when finding the right M&A advisor for you.

1. Understands your business

Your M&A advisor must have a factual understanding of present and future industry trends, enabling technology, and interdependent industries to raise the value ceiling significantly. With this, they can design an optimal collection of investment candidates for you.

2. Finds the best investors and companies for your business

A great investment advisor will identify the investors and firms who are most interested in a client’s offering. The advisor will swiftly find the most advantageous matches for each customer using analytical approaches to create a well-defined target profile.

3. Leverages global reach and local insight

An experienced advisor should leverage a vast international investor network that conjoins numerous industries. Your advisor should then leverage access to other valued M&A colleagues with a thorough understanding of financial markets, industries, and companies in each region globally.  This enables them to open conversations with new investors and corporate networks who ensure a significant interest in the deal.

4. Sees business in a personal light

A skilled investment advisor is fully aware that M&A success is reliant on people’s willingness to embrace and support you before and after the transaction. It is essential to find an advisor who understands how important your company is to you. This way you can ensure the best possible outcome for you and your business.

You might be interested in: Why give exclusivity to an advisor in the sale of my company?

As you can see there are many things to keep in mind when selecting the right M&A advisor for the sale of your company. At ONEtoONE we can help make the decision a little easier with our team of expert advisors who will guide you through the process every step of the way using a tailored service to create competitive interest and maximize value.

The slow decline of cash payments in today’s post- pandemic society

As a result of technology advancements in digitization and data processing, electronic means of payment have become more accessible, convenient, and cost effective. Companies and customers are increasingly opting for electronic payment alternatives over cash payments. Financial experts have been predicting the disappearance of cash transactions for years now, however some feel it will never completely disappear.

Change in payment habits:

It is well known that in the northern hemisphere of Europe, in particular in Scandinavian countries, the decline of cash payments has been going on for years now. In fact, In Sweden the use of cash fell from 39% in 2010 to just 9% in 2020, with predictions that it will continue to decrease in the future (Riksbank, 2020).  However, we are now also noticing this decline in southern European countries such as Spain and Italy who are known lovers of cash payments. This has also been as a result of the COVID-19 pandemic as people have changed the ways in which they consume.

“Cosumers have changed their behaviour as a result of the pandemic”

Reasons for these changes:

People are less likely to go into physical shops or restaurants and therefore less likely to use physical money. For example, the increase in Cloud restaurants has encouraged the use of electronic forms of payment.Cloud restaurants are restaurants with singularly an online presence and no phyisical presence. This meaning that there is no option to dine in, they only operate through food delivery apps such as Glovo, deliveroo etc.

In response to the rise in online shopping, COVID-19 has spurred a lot of conventional brands and merchants to upgrade their e-commerce facilitating the use of online payments. Customers will be more likely to give retailers their money and time if they have a wide range of payment options such as, auto-fill billing and shipping information, and one-click purchasing with fingerprint or facial recognition on mobile devices.

Is the future cashless?

On the other hand, many feel as though there’s a reason why physical money has been around for so many years despite credit cards and other forms of technological payments being introduced. Some reasons could be because cash is almost untraceable, convenient to carry around with you and is widely acknowledged. Cash seems to almost act as a backup plan if something were to go wrong technologically such as an issue in the online system causing the online commerce to fail. It is a sure, safe method of payment that you know will be accepted worldwide.

To conclude it is obvious that the ever-advancing technological world in which we live in today will prioritise the use of digitalized payments however the question still resides as to whether cash transactions will truly disappear.

Do's and Don'ts when selling a company

6 do´s and don’ts when selling a company

Selling a company is one of the biggest decisions in the life of any entrepreneur. But to get the best result and, above all, the best price for the sale, there are a number of do’s you must address and don’ts you must avoid.

Read on to find out the 6 do’s and don’ts when selling a company!

3 don’ts when selling a company:

1. Don´t forget to carry out a reliable valuation of your company

Failure to carry out a reliable valuation of your company  means that you won’t know how much your company is actually worth. Subsequentially, you will not be able to reasonably argue a price to your potential buyers. You could be asking for a price that is above your means, or you could be oblivious to the fact that your company’s true worth is greater than what you are asking for.

2. Don’t proceed with the sale of your company without a professional strategy

A smart seller must consider why they want to sell their business and how to clearly face the selling process. If you’re not clear on this, it can be detrimental when it comes to selling your company because the buyer might notice odd things about your attitude and become concerned. They can mistake your insecurity for insincerity, leading the buyer to question you and your company. This raises their risk perception and, as a result, lowers the value they see in your company.

Having a professional strategy is crucial to a successful sale although it is difficult to do this on your own. Professional advisors can help you every step of the way to ensure you get the most out of the sale.

3. Don´t negotiate with a single buyer

When a single buyer realizes that you are negotiating solely with them, they may take advantage of the situation. They’ll begin to play with time, extending deadlines and demanding for more and more concessions. As a result, it’s critical not to make the mistake of selling your business to the first company or investor who approaches you. This decision should not be made without a comprehensive study and analysis of all possible offers and prospects.

A professional advisor would know the best way to find the best potential buyers and would help you in this kind of negotiation.

 3 do´s when selling a company:

1. Do be prepared to take your company off the market and professionalise the selling process

During a company’s sale process, you may learn that there are no potential buyers or that there are buyers who are willing to pay less than your minimal price. In this circumstance, you must be prepared to take your company off the market and continue operating it, creating value for one or two more years before trying to sell it .

“A professional advisor can focus on the selling process while you put your full focus on your company, so it doesn’t lose value during the time of the operation. This is the best way to ensure you don’t miss out on the best deal for something you’ve been working on your whole life.”

2. Do keep the interests of the minority shareholders in mind

First, agree on the sale with them and include them in the process from the beginning. A good agreement between the co-owners needs and expectative will ensure the more successful result possible in the selling process.

3. Do face the company’s intrinsic obstacles

Once personal obstacles are clarified you should face the company´s obstacles. With professional advisory you will know how to face the unavoidable steps in the selling process. Regularizing contingencies, hiring prestigious auditors, clarifying the company structure, avoiding long-term obligations, establishing a competent and cohesive workforce, and defining and documenting business procedures will be used to overcome these challenges.

 

If you want to know what mistakes to avoid during a company’s selling process, click and read our article10 mistakes when selling your company – ONEtoONE Corporate Finance

 

If you are thinking of selling your company and want to ensure you follow the do’s and don’ts and make the most of the sales process, do not hesitate to contact us without any commitment: