I love the concept of moats. A moat is really simple. It’s what makes it difficult for your competitors to horn in on your clients….or those who should be your clients.
The bigger your moat the more value you’re building in your firm. Let’s take a look at some reasons you need to be thinking about developing a moat around your business.
Moats only happen when you’re different.
One of the problems I see in the wealth management and financial planning world is it’s very hard for me to tell what’s different between firms. If you close your eyes and listen to the way most firms talk about themselves, they sound exactly the same.
Your going to have to spend a lot of time thinking about what you can do in your firm to build a moat. Some things you might want to think about could be developing a very specialized niche, taking a contrarian point of view about finances or even coming up with a way of servicing your clients that’s unique.
My favorite company with a great big moat is Apple. They’ve done a magnificent job of building an ecosystem that no one else is even close to having. Apple has spent a lot of time building a system that’s just easy to use. What have you done in your firm to make your service user friendly?
You have to think about developing a moat to get a moat.
Moats don’t usually automatically appear. They often come as a result of lots of very hard and mindful work.
Sometimes developing a moat is more about looking at what’s not there. I find that when I look at what doesn’t exist, it becomes easier for me to think about developing a service that’s unique and valuable. If you’re looking at making minor changes to what exists, you’ll never develop a good moat. It has to be something that fills a void.
Think about what’s not there and you’ll be taking a giant step towards building a moat in your firm.
You’re going to have to work to develop a moat.
The hard thing about building a moat is you’ve not been trained to build them. You went through training on how to handle investments and provide financial planning, not building a moat.
Like every new skill, you’re going to have to practice. You’re likely to look a little foolish at first. But, that’s what it takes to learn a new skill. I can promise you one thing: If you learn how to build a moat around your company you’ll be handsomely rewarded.
Building a moat will take time.
You’re not going to wake up tomorrow, decide to build a moat and by 10 AM be able to move on to your next activity. Building a moat is going to be a trial and error activity.
When I’m working on moat like activities I like to include my client advisory board. They can tell you when you’re on to something that’s different and unique. You want your advisory board (you do have an advisory board don’t you?) to be tough on you. Make sure you instruct them to be skeptical. You really want ideas that will make you different.
Being different will help you narrow the field to who’s right for your firm. Firms with moats never try to be everything to everybody. They want to be different. Being different allows those firms to charge more for their service because they solve unique problems. Choose unique problems you can solve that provide a high level of value for your clients. It’ll make you more money and you’ll have more fun.
Once you build a moat it’s not permanent.
Here’s the sad thing about building a moat it’s never permanent. You can be sure that your competitors will be watching what you’re doing.
If you build a practice that specializes in women in transition and you’re successful you can be sure that one of your competitors will try to knock off what you’re doing. That’s just part of the deal.
The good news on being an early mover in building a moat is that you have an advantage over your competitors. You’re not playing catch up, they are. You get the opportunity to keep leading the pack. That is if you continue practicing.
What do you think? Is moat building in your future?