Why value-awareness is a must in your business
Hello, it’s Scott Trevethan here from Scott Partners. I recently had the pleasure of interviewing Terence Sweeney, a leading authority on Value-Creation. In this interview, we discover why businessmen have to be really value-aware as well as looking for new opportunities on how they can create and provide value in the marketplace.
SCOTT: Hi, and welcome to the Small Business Heroes show, where we talk about everything to help your small business grow and prosper. I’m your host, Scott Trevethan, and today I’m talking to Terence Sweeney.
Terence is a leading authority on value creation. He speaks, mentors, and consults to C-level executives and business leaders to partner them in leveraging the positive impact their organization is having on all stakeholders. Since creating his first business at age 21, which he sold 12 months later, Terence has been involved in numerous entrepreneurial activities, as well as holding corporate management roles.
His unique and insightful views on business have led Terence to be sought out by those looking to gain an edge in creating more value within their business or organization. Terence has written a successful book: If You Want To Be Wealthy, Stop Trying To Make Money And Create More Value, which focuses on why both businesses and individuals benefit from increasing their ability to create value.
Welcome to the Small Business Heroes show, Terence Sweeney.
TERENCE: Thank you, Scott.
SCOTT: Terence, I’ve just told the audience a little bit about you; why don’t you tell us a little bit more about what you do?
TERENCE: Primarily what I do is change the way people relate to business and also the way they relate to money, wealth, and value. I have a lot of conversations that I create. I work with business owners to leverage what they are doing, so that allows them to take their business to the next level. I work with people in the SME space. They’ve pretty much always got an established business; I don’t really work with startups. They have an established business and they’ve taken it to a certain level, and they want to take it to the next level for various reasons.
I also work in the corporate space in change management and working with how you can have the people in a large organization look at the value that they’re creating and create more value within the organization.
SCOTT: Terence, what is value? Because a lot of our audience will be sitting there going, “Well, that’s just money, surely. I know what value is because that’s the balance of my bank account.” What is value?
TERENCE: Well, there is value as money. That’s one of the things that people can – it’s like a commodity that we have, which is money. But value in itself, I distinguish value, particularly in my book, as anything – value is the capacity of an item or service to increase your quality of life.
Value is different for everyone, and it changes from person to person, but it also changes from time to time. What might be valuable today might not be valuable for me tomorrow. So it is dynamic. It’s much easier to measure value in terms of money, because we can simply give an item a number and give another item another number, and we can say okay, gold is more valuable than wood because gold is, whatever, $1200, and wood costs – I don’t know what wood costs. But say it’s like $100 for a batch of wood. We can give a price and a number to it, and it makes it look like we are measuring value.
But in reality, the value to someone of the gold and the value to someone else of the wood can be completely different. If you need shelter, the gold is not going to be as valuable to you as the wood.
SCOTT: I get that. I have read your book, and I totally encourage people to read the book; I think there’s a fair part of the book devoted to explaining and understanding that concept, which is kind of simple when you look at it in the old barter terms. Maybe you could talk through in terms of the barter transactions and money as a store of value as opposed to being the value itself.
TERENCE: Yeah. Primarily, the reason I wrote the book is because we don’t have a lot of distinction around value. We are trading value all day long, so we’re trading value – and we’re trading value right now in me giving my time to be on the webinar, and you’re trading value in you putting on this webinar.
And we’re doing that for a reason, because for me, I experience that there’s possibly something worthwhile that I will get out of being here, and whether it’s my experience, and whether I get experience of practicing being on webinars or the experience of – whatever the value is that we get out of doing this, we’re doing it for a particular reason. And the people who are watching the webinar will be watching the webinar are making a trade, because there’ll be an experience or a hope or an expectation that they will get something of value out of that.
We’re trading value all day long. Everybody is trading value all day long. We trade value in our relationships, we trade value when we go to the shops and we buy our lunch. Every moment, what we do with our time, we are trading value. We do this subconsciously, but we are always doing it. The clearer that you get about that, then the more power that you have in the trades that you’re making.
One of the things you did ask me to speak about was the barter system. The barter system, we used to trade value, and we would do it by bartering. One of the things that I talk about in the book as well is the real power of money, and what money does to facilitate our capacity to create value with each other. I won’t go completely into that right now, but that’s basically what I do. I give people an understanding of what value is. It’s very separate to money.
One of the main problems, I think, when I’m speaking to people about the relationship between money, wealth, and value is that people think that value is money. But they don’t realize the value of money and why money is actually really important. I’m not saying money isn’t valuable; money is very important. We’ve all got a sense of that, but very few of us are very clear on why it’s important. As a tool, if you have a tool and you don’t understand how to use that tool and why it’s important, it’s very hard to use it effectively.
So that’s basically what I do, is I talk to people about that relationship, and then I look at how you can use the clarity that people get to impact their business, or impact their relationship to their customers, impact their relationship to their staff, impact how they relate to their culture of their business, impact how they relate to innovation and strategy.
SCOTT: That’s great. Can you give us an example? If we have a small business owner that might be watching this right now that’s thinking, “I’m not quite sure. I’m a plumber, and I run a number of plumbers who work for me, and I go out and do things” – is an understanding of the value that they give going to help them improve their business and grow their business?
TERENCE: Definitely. Any business owner. Any individual and anybody in business. Doesn’t matter whether you’re an SME, you have a plumbing firm, or you’re a large organization. The only reason that a plumber is in business is because they’re providing value in the marketplace.
A lot of people when they start off initially in business, they think they’re in business to make money. And often they are in business to make money. There may be another job, and they want to leave that job and set up a business so that they can have a bit more freedom financially and possibly time-wise as well.
But what will have that business dictate whether it’s successful or not is whether that person can provide value in the marketplace. That value may be that they’re a great plumber, and they’re better than the other plumbers. That’d be classed as value in the marketplace. It may be that there are just hardly any plumbers, and just having a plumber would provide value in the marketplace. Sometimes people can provide value because they’re charging less than other plumbers. That’s not the area – I never recommend going there. I’d always say to people that it’s much more profitable to look at how you can provide more value rather than drop the price.
But there will be a whole load of reasons why that plumber, if he is successful – and if he’s in business, then there’s got to be some degree of success – there will be whole reasons that are particular to him and his plumbing firm that help him be successful. It may be because of the personality of the owner. It may be because of the way he runs his staff. It may be because his edge in the marketplace is that he’s really organized and he’s capable.
The person in the business, however, because that’s just what they automatically do, they may not realize the value that they have in the marketplace over their competitors and why people come to them. And until they realize that, it’s hard to leverage off it. Does that make any sense?
SCOTT: Oh, absolutely. Absolutely. I come from an industry where we’re traditionally time-based billing, so completely ignoring the whole concept of value and just how long it takes us to do something is how much we bill. I think this concept really encourages us to think differently, doesn’t it, in terms of what value we’re doing by lodging a tax return and what that would be worth to the other person, rather than the fact that it took 10 minutes or 2 hours.
TERENCE: Yeah, completely.
SCOTT: I guess using the plumbers example a little bit further, that’s like the old story where the plumber comes in and fixes whatever, the machine, by hitting it with a hammer once and then charges $1,000, and the business owner objects, and the plumber says, “Well, that was $1 for the hit of the hammer, but $999 for knowing exactly where to hit.”
SCOTT: Is that parable or that story really about understanding the value of your service rather than looking at time-based, or even cost?
TERENCE: It links in. It’s not the way I would recommend communicating it to the customer. [laughs]
SCOTT: Oh, sure, sure.
TERENCE: Because I think what’s important is if that plumber understands that, and he’s charging $1,000, for it to be providing value for the customer, that customer having their thing fixed has got to be worth more than $1,000, right? Or it’s not going to provide value. So I think the more you understand that, the easier it is. That customer wouldn’t have been left probably experiencing being cared for.
I think with that scenario, how I would work that scenario is communicating to the client what the value to them was, in them having running water or heating or a plumbing system that works. Although it may be true that the 20 years’ experience is what’s brought his ability to create value, it’s kind of irrelevant.
I think what’s relevant and clearly communicates is the value to the end client. If it’s costing $1,000, but the value of what they got is $5,000, in my world it doesn’t really make a difference whether he was there 1 minute or 10 hours, and it doesn’t make any difference whether he’d been a plumber for 2 days or 20 years. In the end, the value of the transaction is him providing a service and the client receiving value that was worth more than they had to pay.
SCOTT: I think from where we are with industry disruptions galore, whether it’s from the digital side of things through machines and artificial intelligence, or whether it’s from the labor side of things through low-cost labor environments, this is going to be a really, really important thing for our small business owners to grasp. That you can’t just do the same thing in the same way without really exploring the kind of value that you’re giving and the kind of value that your customers or clients are getting. Because if you don’t have a grasp on that, then you are going to be literally dead in the water.
TERENCE: Yeah. The thing is, this is what is causing stuff to change so quickly now. There was a time where people would come and buy from your store because they’d bought from you for the last 10 years or because they knew your family and things like that. But in today’s society, we’re becoming much more conscious of value, and so when you look at – people say that there’s these disruptive businesses, such as Airbnb and Uber, etc. Their ability to disrupt has been amplified, but what they’re doing is really no different than what anybody else has done over the years, which is look at an existing marketplace and look at “How can we create a lot more value in that marketplace than the current people are providing?”
So yeah, for anybody who’s listening to this, the main thing is you have to become really aware of value. First of all, you need to know why people buy from you and what the value that you’re providing in the marketplace is. If you don’t know that, you’re not going to be able to see somebody else coming into the marketplace and tell whether they’re providing the same value or not. Does that make any sense?
If I know what my value is – and one of the things, particularly with large organizations, they have to have people who are watching the marketplace to see if anyone is going to provide a lot more value. Because there are so many ways people can disrupt with technology, that they can provide a service that’s really simple very quickly and very efficiently, and demolish a marketplace.
There’s lots of examples. What GPS would’ve done for Mailway. Mailway has been in business for a long time, and then all of a sudden you had GPSes come out, and GPSes obliterated the marketplace. Then they had to deal with the whole disruption, the GPS company itself, possibly – within five years certainly, they were disrupted by Google in putting the – so their whole marketplace disappeared very quickly as well. It can happen so quickly nowadays.
The same with – I was reading a thing the other day about the dating sites. The dating sites in the U.S., there’s a whole marketplace around dating, and they were all looking at particular ways, but they weren’t clearly looking at what’s going to provide value in the end. And then when Tinder, the app, came along, they became the #1 market leader within I think it was like six months. Because they were just able to provide something that was a lot more efficient and actually gave people what they wanted, or what they at least think they wanted, a lot more effectively than anybody else.
It’s very easy to do that nowadays. Anybody who’s in business, you have to be really value-aware, and you have to be clear on your own value. As well as looking for new opportunities to create value, you also have to be looking at everybody else and watching for when they create unprecedented value in the marketplace.
SCOTT: Absolutely. Terence Sweeney, it’s been an absolute pleasure having you on today. I highly recommend – because I’m going to say where can people reach out and contact you or have a look at what you’re doing, if they wanted to work with you further, and I understand that you work with large corporates, not necessarily with our Small Business Hero audience. But I can highly recommend your book, which is If You Want To Be Wealthy, Stop Trying To Make Money And Create More Value. Where can they get that book? How can they reach out to you in other places?
TERENCE: They can go to my website, which is terencesweeney.com.
SCOTT: We’ll put those details just below.
TERENCE: Yeah, sure. You can go to my website, terencesweeney.com. You can go to a website www.ifyouwanttobewealthy.com. Takes you straight to the link. But if you go to my website, there’s a Bookstore link there, and you can purchase my book there. It’s also available on Amazon and in bookstores. If you go to your bookstores, some bookstores have got the book as well, so ask at your bookstore and they’ll be able to get it in for you, possibly.
SCOTT: If they haven’t got it, ask for it by name. [laughs] Do yourself a favor and have that read. You should be reading at least one business book per month to keep up your business education. I highly recommend this is on your Top 10 of reading to-do. Thank you so much for your time today, Terence.
My name’s Scott Trevethan, and you’re listening to the Small Business Heroes show. If you want to find out where all these interviews are posted and where all the other information is stored, go to our Facebook group, which is Small Business Heroes. You can also like Scott Partners; that’s our company page on Facebook. Or you can contact us at www.ScottPartners.com.au.
I’m Scott Trevethan, host of Small Business Heroes. We’ve been talking to Terence Sweeney. Thanks very much.
TERENCE: Thank you.