The utility sector faces radical transformation; changing consumer expectations, new digital technologies, and distributed renewable generation are creating a more competitive, complex, and challenging energy world that is coming faster than you think. The ability to develop different business models, new capabilities, as well as a mindset centered around collaboration and agility are great determinants for the survival of the utility industry.
Michael Jusbasche, the Chief Executive Officer and one of the founding partners of ALTIVIA, explains how a utility business can drive growth. With experience that spans over 30 years in the chemicals and utility industry, he has propelled ALTIVIA to grow in chemical production, drinking water technology, and wastewater treatment. To succeed in the new energy world, you need to develop the capabilities, technology, and a business model that will help you be well-positioned.
Here are some handy tips to help you develop and grow your utility business:
1. Broaden and consolidate service offering
Expanding the geographic footprint and a range of services by acquiring additive businesses goes a long way to growing a utility business. Being a highly fragmented sector, the drive for technological capability in utilities can be a strong driver to enhance acquisitions.
To support growth, existing utility businesses should consider expanding their bundled solutions and range of service offerings. There is a need to develop value-adding solutions to meet the growing demand for multiple services. You will gain a real competitive advantage when you develop a multi-skilled workforce across a range of activities.
2. Innovation is key
There is more demand in the utility space for technical innovation than ever. Utility companies are being heavily incentivized (and penalized) to improve customer service and deliver efficiency savings. They innovate ways of managing their networks as we strive to create a low-carbon economy.
By embracing new processes, systems, and technologies, you will have aligned your strategy to meet your clients’ needs and have a successful business. To help implement and develop new ideas, you should recruit and develop the right people.
3. Building a deep talent pool
Driving your utility business forward needs more good people in the growth journey. Ideally, you should invest in training and developing specific skills and fresh perspectives.
4. Having a national mindset
The key to enhancing value and winning enormous contracts within the utility sector is the ability to support clients across a vast geography. With the presence of several similarities across the huge-utility asset owners within the US, a key strategic opportunity to support growth is becoming a national player through geographic expansion.
5. Keeping things flexible and developing a clear strategy
Keeping a close eye on your competitors and understanding the market dynamics helps you know where you’re positioned. To become a significant part of your customers’ lives and build a winning position, it’s essential to compete in growth markets. Just ensure you’ve got detailed budgets as well as a clear strategic business plan. However, you don’t have to be rigid – you should have the flexibility to respond if the world happens to change tomorrow.
6. Have a convincing growth story
To be in a better position of winning major utility bid contracts, you need to show a consistent track record of growth in your company – at the bottom and top lines. This will help you find and complete sensible acquisitions.
Looking forward, ensure your utility business can demonstrate an order book that is strong with longer-term revenues. It should also be scalable and well-positioned in the markets that can deliver growth opportunities.
You also need to have cultivated long-standing and strong customer relationships over the years. A convincing growth story can help you realize the value of your business
7. Building a brand
While this could be seen as subliminal, building a strong positive brand alongside a clear set of values can yield enormous benefits for your utility business. Prospects and customers will feel more confident to deal with you. A reliable brand will also attract the best people to come and work for you, bringing in more skills to make the business perform even better.
That said, ensure there’re no time-bomb liabilities that could bring you down at any moment. Ensure you identify, manage, and mitigate all possible business risks. Poor documentation and record-keeping shouldn’t trip you up; this could be personnel records, contract documentation, property leases and titles, safety records, and insurance documentation. They should all be up-to-date and easily accessible.
Most importantly, ensure you intimately understand your business’s working capital needs and that your cash conversion ratios are where they should be. You should be able to convert your profit into cash: the notion of “Revenue is vanity, profit is sanity, but cash is king” is a piece of old business advice that should always be followed.