Building A Business That Is Bigger Than You

| May 25, 2018

There is a maxim in business: “No one wants to buy Bob.”  In other words, a company can have a strong cash flow and flawless operations, but if the owner is all important, then the company will be undervalued.  If the owner is the technical expert, the chief problem solver, and (most importantly) the one who holds the relationship with the customers, the company however profitable is hard to sell.

According to John Burley of Burley Consulting, there is a question directed to every acquisition target: “who has the primary relationship with the customers”. If the answer was “the owner” the process ends right there.  “There are lots of problems than can be solved. There are lots of issues you get past, but … this one is a non-starter–and for good reason.”

This is because customers who are customers of the owner are not customers (or clients) of the company – and that means the business really have any customers at all.  If the owner is gone and all the customers were doing business with the owner, is there any cash flow you can count on at all?

This is an important challenge to recognize and to overcome.  Most small businesses are successful because of a successful entrepreneur. But when the mindset in the customers or the clients is not “I use the ABC Company” but rather “I use Bob” – well, “nobody wants to buy Bob.”

So, the company needs to be bigger than you.  Recently, Matt Christ and Orsi Herbein of Brand3, Inc. participated in a web conference to address a methodical and systematic way to deal with this issue, which they call their ‘legacy branding’ process.

  1. Transfer the mindset of the customers from identifying with the owner, to identifying with the brand

The customer experience has to be realigned to the brand–not the owner. Once this happens, the transition to brand loyalty begins. Simple survey tools like Net Promoter Score (NPS), with some modification, can measure owner dependency issues and provide insight for what needs to be done to realign the customer experience.

  1. Align internal cultures away from the owner, and into a brand experience model

Realignment of an internal culture usually requires adjustments in the areas of systems and processes, however building a “brand motivated culture” is the foundation for real change. This can impact the attitude and dedication of a team, thus shifting the identity of the company from the owner to the long-term vision and legacy of the company.

After-all, when we talk about “brand”, we are really talking about “identity”. Employees that identify and rally around a company and a mission, can be transferred to a new owner. Employees that rally around the owner, aren’t very valuable to a new owner.

  1. Increase the goodwill value of the business

According to Orsi Herbein, Brand3’s Creative Director, “brand is the most powerful intangible asset a company can have.” The measurable results of this are loyal customers with potentially higher margins and reduced competition. The business’ brand should also be well documented and secure with appropriate trademark registration. This, combined with the business’ ability to manage and maintain a consistent image and message, is a critical step to long-term value and sale-ability of the company.

  1. Build a national-quality image

Everything you communicate is either building a consistent brand experience or creating space for your competition to do it better. A small business with a national-quality image is set apart from the mom-and-pop shops, and can be worth more as a result.

Matt Christ, Brand Strategist for Brand3 puts it this way: “A powerful brand experience is the key driver to owning market share. Your brand is either a liability or an asset, there is no middle ground.”

This translates to buying and selling companies as well. Is your brand an asset or a liability? If it’s the latter, now is the time to get to work and fix it.

 

This article was adapted from one originally published by Inc. and by Brand 3 at brand3.net Used by permission © 2018. 


Category: Marketing