Before you market your company, promote visibility and a high profile
In the first installment of a five-part series that I wrote last month for Vending Today, “M&A Best Practices – How to successfully sell your business,” we looked at the importance of advance planning and preparing your company in order to optimize the selling price. There is also one important question to ask as part of the process. Is your company invisible to the industry and your clients?
Q Rating
Have you ever heard of a “Q Rating or Q Factor?” It is a measurement of how popular and familiar people are with a person or thing. It's often used in the entertainment industry to gauge a celebrity's popularity. That rating is something that every operator in the convenience services industry should be thinking about, especially if they are considering selling their business at some time in the not-too-distant future.
Why is it important? Because a company that is a well-known and visible entity is more attractive to potential buyers than one that has been operating under the radar. I talk to many old school operators who simply have not paid much attention to their visibility within the industry and their level of engagement with clients. It takes effort and time to make your company more visible, but it is an important part of the advance planning process that will yield a return on investment.
Social media is important
Top Rank Marketing reports that social media use by B2B customers is increasing as much as 20% annually. The key areas to focus on are social media, such as having an Instagram and Facebook page. Being on these platforms is a plus, but it is critically important to post on a regular basis. A social media page that is regularly updated sends a message that your company is vibrant and actively engaging with clients. Social media that is outdated or rarely updated sends a message of neglect and stagnation.
LinkedIn is key
Just look at the increase in LinkedIn activity by convenience services operators. Content marketing is a way to show your clients and the industry itself that your company is actively engaged as an innovator and a thought leader. Operators like Linda Saldana of Seventh Wave Refreshments in Atlanta, Judson Kleinman of Corporate Essentials and William Mandile of Marche in New York are actively posting, talking about their key people, their unique approach to serving their clients, their connection to the community and more.
Ongoing use of social media increases your company’s exposure to the industry, which means a potential buyer is getting more than company – they are buying a brand. There is another positive side to being active on social media, especially LinkedIn. Studies by Insider Intelligence show that 60% of B2B marketers named social media as the most effective channel for driving revenue.
Social media drives revenue
In the February 4th Vending & OCS Nation podcast, host Bob Tullio pointed out the importance of using LinkedIn to drive revenue. “Get serious about using content to connect with prospects. Start by taking a good look at your LinkedIn connections and the LinkedIn connections of your sales team and customer service team. Ask yourself the following questions.
· Have we reached out to connect with every viable prospect who we engaged with?”
· Have we studied our connections to see who has moved to a new company? A new opportunity for them is potentially a new opportunity for you.
· Have we maintained the focus on posting for our prospects so they will be attracted, educated, and engaged by what we are doing as a company?”
Why is quality content so important? Brynne Tillman, a LinkedIn expert, has the answer. She says that studies show that 74% of buyers chose the company or sales rep that was first to provide value and insights. Three-quarters of these buyers are working with the people that influenced them first, not the one that had the lowest price.
Part of the planning process
So not only does effective social media activity build your company’s Q rating in the industry, it also generates new business opportunities. At VBB Advisors, the leading sell side intermediary in the industry, we have seen the value when sellers are a well-known entity. That is why we consider building your exposure rating an important part of the advance planning and preparation process as you position your company to optimize the selling price.
Control what you can control
VBB Advisors can help. While you cannot control your location and the general economic outlook, there are many factors that can be controlled with long term planning. I work closely with my clients on the following areas, all of which represent defining characteristics of a premium acquisition that an operator can control and your level of exposure to the industry and your clients is clearly something you can control. Those other key areas:
Contracts – Are your key accounts based on a handshake deal? Buyers want the security that contracts offer.
Recurring income – Buyers love any income that is totally predictable – rentals, delivery charges, service fees and subsidies area big positive.
Management business – Are you top heavy in this area? It can be considered serious clutter to some buyers.
Gross Profit – There are many ways to pump this number up. As noted above, this is very important to buyers.
Choosing technology – Use the same big-name technology providers that the buyers are using. A budget-oriented technology choice is a negative factor that will require costly changes.
Pricing – Raise your prices to the appropriate level to make your company more attractive. Planning makes that possible.
Leases – Avoid long term leases as part of your long-term exit strategy. Buyers will definitely consider any burdensome leases a negative factor.
One of the easiest ways to increase your Q rating in the industry is to attend and be engaged at the upcoming NAMA Show in Las Vegas. Getting on the radar will have a positive impact as you operate and certainly as you prepare to sell your company.
