Webinar with John Warrillow: How to Build a Sellable Business

John Warrillow, the bestselling author of Built to Sell: Creating a Business That Can Thrive Without You, will lead a one-hour presentation on building a sellable business. Built to Sell was ranked by both Inc and Fortune magazines as one of the best business books of 2011. During this unique session, John will present the six steps to making a business sellable and discuss the principles of increasing the value of your company – John will also take your questions directly.

The webinar will be offered Wednesday, March 28, at 10:00 am CDT.

Click here to register :
https://www3.gotomeeting.com/register/466271190

Be sure to list The Principium Group as your advisor when you register.

Organic Growth versus Acquisitions

It seems pretty simple to many people.  Organic growth must be a better strategy than risky, expensive acquisitions.  Of course, organic growth is often the best strategy.

Organic growth makes sense when your business is growing or you can stimulate growth at a rate that meets your objectives, when it can be achieved at a reasonable cost with manageable risk and if your timetable permits it.  In other situations, it may be wise to consider acquisitions as a vehicle to drive growth.

Sometimes very successful companies become overconfident of their ability to grow organically and, as a result, take on too much risk and miss out on opportunities.  For example, some otherwise very successful companies have added branches without acquisitions expecting to grow their business and have run into unexpected roadblocks.  The newly opened branches may not be successful and losses incurred in an expansion drive can threaten the prospects of the base business.

Here are some examples of situations in which considering acquisitions makes sense.

Geographical expansion – Geographical expansion can be very risky.  In its simplest form, you might identify an area to expand into, rent a facility, acquire equipment and hire a staff in the expectation of being able to attract customers.  That process is risky indeed and usually is going to produce start-up losses, even if the new business location is launched successfully.  Some businesses may be in a position to absorb start-up losses.  Many will not be.  In addition, there are many factors, of course, that may affect the success of the new location, but success is rarely assured.  A strategic acquisition may allow a company launching a geographic expansion to absorb the acquisition’s customer base and reach a critical mass in the market much more quickly and with less risk of failure.

Reaching critical mass – A business may need to grow to reach a level of critical mass, a level at which overhead is covered and the business can reach or significantly enhance profitability.  An acquisition may significantly shorten the time required to reach critical mass, allowing the company to attain profitability and pursue its other objectives.

Enhancing Profitability – Beyond just reaching critical mass, an acquisition may enable a company to enhance profitability.  For example integrating overlapping customer routes may produce a higher level of customer density and greatly enhance productivity by reducing drive time.   It may also improve purchasing power.

Adding a Service line – An acquisition may be an attractive way to expand the service offerings of the business.  For example, a landscape maintenance company might acquire an irrigation business to jump start its entry into irrigation services.  Not only might they gain a profitable customer base, but they might be able to add experienced personnel at the same time.

When Organic Growth has Stalled –  An acquisition may be an attractive option when organic growth has stalled.

Solving a Problem – Sometimes a strategic acquisition can solve a problem that has developed within a business.  One example that comes to mind is a business owner who has no clear successor in place.  An acquisition may be able to bring a new leader into the organization that may evolve into a logical successor.  There are many other possibilities.

Extraordinary Opportunities – Some acquisition opportunities don’t fit into any of these categories.  An opportunity may come along that just can’t pass by.  One reason is that it is pretty difficult to find high-quality acquisitions.  Most business owners in the green industry are not in a hurry to sell their businesses.  When a high quality business becomes available, even when you are not really looking for an acquisition, it may be a good idea to take a look and consider the possibilities.

If you find yourself in any of these situations, it may be wise to at least consider acquisitions as a vehicle for growth.  An acquisition may even serve as a “tipping point” that sets the stage for stronger organic growth going forward.

Webinar March 27 - How to Sell Your Business

Tips for Lawn & Landscape Business Owners

You are invited to join Ron Edmonds and the team from The Principium Group for a webinar presentation on How to Sell Your Business.  Ron Edmonds will present important issues for lawn and landscape business owners to understand, including:
Deciding to Sell Your Business
Preparing Your Business for Sale
How will the Market Value Your Business
Who Will Buy Your Business
Choosing Advisors:  Lawyers, Brokers and Others
Avoiding Mistakes
There will be time reserved to answer your questions

Title:	How to Sell Your Business – Tips for Lawn and Land Landscape Business Owners
Date:	Tuesday, March 27, 2012
Time:	11:00 AM – 12:00 PM CDT

After registering you will receive a confirmation email containing information about joining the Webinar.

System Requirements PC-based attendees Required: Windows® 7, Vista, XP or 2003 Server

Macintosh®-based attendees Required: Mac OS® X 10.5 or newer

Space is limited.
Reserve your Webinar seat now at:
https://www4.gotomeeting.com/register/777058231

Caution: Do Not Poke the Giant

By:  John Warrillow

On June 1, 2011, both Floyd’s Coffee Shops in Portland, Oregon were busier than usual. The regulars were elbowed out of the way by new customers visiting the store for the first time to redeem their coupon and get $10 worth of coffee for $3. 

This tempting offer was made because Floyd’s had been picked as the first-ever Google Offers “deal.” Google Offers is the company’s first baby step into the world of “social buying” style promotions where a special, limited time offer is made by a business hoping that the deal will spread virally and thereby introduce a new legion of customers to their business. 

Google, of course, did not invent the deal-of-the-day category; they were goaded into it after their generous $6 billion dollar offer to buy Groupon was turned down. 

Now Groupon is starting to feel the pinch after thumbing their nose at one of the world’s most valuable companies. According to compete.com, Groupon’s traffic went from 33.7 million unique visitors in June 2011 to just 18.3 million unique visitors in January 2012. That’s a drop of almost half inside less than a year. Not surprisingly, Groupon’s stock is also down around 25% since its IPO last year. 

Over-playing your hand

The moral of the story is to be careful not to over-play your hand when being approached by someone who wants to buy your company. Acquirers usually have deep pockets and, while you may think your business is unique, never underestimate the resolve of a big company with lots of cash. 

They do have an alternative to buying you: they can simply compete with you. 

Typically when they make the decision to walk away from the negotiation table they do not leave empty-handed. They come away with new-found insight on how you run your business, what works, and what flops; so they have an enormous head start to launch a competitive company.

And it doesn’t just happen in Silicon Valley. Take a hypothetical example of a home security company generating $500,000 per year in profit (before tax) installing and monitoring home alarms.  One day a big alarm company comes along and says they want to buy the business and they’re willing to pay four times pre tax profit.  The alarm company owner turns up his nose and demands six times earnings. 

Now the suitor has a choice. They can try and negotiate with the owner, but that would undermine the economics of the model they’ve used to buy hundreds of similar alarm companies across the country, or they can simply hire someone to start an office to compete with him. 

Let’s say they pick door number two and hire a young, aggressive manager. They guarantee her $200,000 a year in the first 12 months on the job while she is building her business.  You have not only lost the opportunity to sell your business; you’re now competing against a young, motivated rival with a parent company who has an extra $1,800,000 ($2,000,000 withdrawn offer minus the $200,000/ year salary for their manager) that they didn’t use to buy you and they’re putting it towards helping your new competitor build her business. 

If you’re lucky enough to get approached by a big company who wants to buy yours, remember that they are usually not choosing between buying you or buying your competitor. They are often choosing between buying you or setting up shop to compete with you.

Wondering if you have a sellable business? The Sellability Score is a quantitative tool designed to analyze how sellable your business is. After completing the questionnaire, you will immediately receive a Sellability Score out of 100 along with instructions for interpreting your results. Take the test here: 
http://sellabilityscore.builtosell.com/?advisor=BRETY3HWR57BQ1

Gridiron Capital Invets in Facilities Manager QSI

New Canaan, CT, February 2012 Gridiron Capital, LLC (“Gridiron”), in partnership with QSI’s founder and existing management team, announced the acquisition of Quality Solutions, Inc. (“QSI”).

Yellowstone Landscape Group is also a portfolio company of Gridiron Capital. Landscaping and snow removal are included in the menu of services provided by QSI.

Headquartered in Wichita, Kansas, QSI is one of the leading managers of facility services for retail and foodservice customers in the United States, Canada and Puerto Rico. Through a network of over 23,000 local vendors, QSI provides a range of over 75 trades including electrician, handyman, and HVAC repair to over 9,000 client locations. The company also offers customers unique national project management and light construction capabilities, coordinating jobs such as remodels, retrofits and rollouts across hundreds of client locations.

Founded by Eric and Wendy Dunn in 1997, QSI has developed an outstanding reputation for speed, reliability and quality of service. Through its staff of highly trained project managers that take personal ownership of client service calls, QSI has set the standard for customer service in the outsourced facility services market. Today, we believe that QSI is positioned for significant growth as it meets increased demand from retail and foodservice operators looking to outsource increasingly complex facility services, freeing them to focus on the profitability and growth of their core business. Gridiron will support QSI’s management team as it maintains the company’s emphasis on developing excellent customer and vendor relationships, while positioning QSI to be the provider of choice for national scale customers.

Mr. Eric Dunn, Chairman and founder of QSI stated, “QSI has been successful because of our unwavering commitment to our customers, vendors and employees. We are partnering with Gridiron because I believe that they share our company’s core values and bring with them the operating expertise and financial resources to help QSI reach the next level of success.”

Mr. Joseph Saldutti, Jr., Managing Director of Gridiron stated, “We are excited to be partnering with an outstanding management team and a great company. QSI’s strong commitment to providing its customers excellent service has resulted in it being a great platform for future growth. We look forward to working with the QSI team to continue its long history of success, and to expand its services and capabilities for both its customers and vendors.”