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Stuffing the Golden Goose

 

A number of years ago the late Fred Murr asked me, “How old do you want to be when you retire?

I said, “I don’t know. Seventy five, maybe?

He asked, “Are you serious?

I said, “Fred people retire and they DIE!

Exit Strategy

I love my job. I’m going to keep on doing it forever. Well, I don’t intend to stick with the job until I die. But I do intend to do it for a long time because I’m enjoying what I do.

But we all need to create an exit strategy from the companies we own and operate for a couple of reasons. One of them is the bulk of our wealth may be tied up in equity in that company, and its going to be very difficult to retire without taking it with you.

So, let’s talk for a little bit about what you need in an exit strategy.

When Will You Sell, and for How Much?

You’re going to need two numbers. The first is, you need to know how much to sell your company for. And the second is you need to know when you’re going to do that. So, you need an amount and a timetable. And once you have that any good marketing consultant can help you get there.

What’s the amount? It’s a sum big enough that you could invest it, live on the interest, and never touch the principal. There are a few other strategies, too, but that one’s my favorite.

If you’re going to be retiring by selling your company, the first thing we need to do is figure out how much money you need to retire on. And the second thing we need to figure is will your company sell for that amount.

For most of us that answer is “no,” and we’re going to have to grow the company to create enough wealth to sell the company for enough that we can then spend the rest of our time with the grandkids, or pass it along to the kids, or sell it to a total stranger for cash, or help the employees to buy you out. But one way or the other you need to plan your exit from the company.

I don’t care if you just started your business yesterday, or if you’ve been doing it for 30 years. Trust me, you need to plan what’s going to happen when you no longer choose to come to work everyday.

What Do Buyers Want?

Investors who might be interested in your company are looking for three things:

  1. Operational Excellence
  2. Consistent Growth (with no surprises)
  3. Predictable Cash Flow

The first thing in determining your selling price is to figure out exactly how much you’re going to need. And whether you take it as a salary, or owner distributions, or investor dividends, you’ll have to replace that much money.

Planning Resource

I’ve prepared a resource. It’s downloadable, just click on the resource link. It will help you to figure out exactly how much you’re going to need to live on and what you need to sell the company for to be left with that much.   I don’t intend to take you through this piece because quite honestly it’s pretty straightforward and the steps are quite simple.

Case Study – Beckley Imports

Steve Beckley, owner and operator of Beckley Imports, Des Moines, IA.

Let me instead tell you about my client and friend, Steve Beckley. He called me some time ago. He’d participated in a group call that I was hosting and said, “Chuck, can you hang on the line when everybody else hangs up?” I did. He said, “I need your help. I need to create another million dollars in top line sales in order for me to sell this company in three years.”

I said, “I’m flattered that you think I can help you with that, but you’ve caught me at a time when I’m maxed out on the time I have available. I can’t help you now.” He called back the next month. And the month after that. Until finally I said, “Steve, my schedule has just opened up.”

I flew to Des Moines where Steve Beckley owns and operates Beckley Imports.

At the age of 22 Steve Beckley was the Service Manager of the local Mercedes dealer. He quit. He opened his own shop. A single bay.  He worked on import automobiles. Steve’s belief was that people who paid a lot of money for a precision automobile would be willing to pay a little bit more to keep it operating at peak efficiency. And he was proven right.

They kept on growing. He now has a state-of-the-art, 15-bay facility in Des Moines.

Starting the Research

I joined him there. We spent three days digging through how his operation works. Where do customers come from? How long do they stay? Where do they go? Which ones are very valuable? Which ones are not? We mystery shopped his competitors.

I said, “Steve, I love the postcard campaign you’re using to draw customers in. The only suggestion I have is they all say the same thing – ‘Dear Import Auto Owner.’ I promise you somebody that drives a BMW does not consider himself an import auto owner. He considers himself a BMW driver. Anybody who’s got a Rolls Royce doesn’t consider himself an import automobile owner.”

We redid those postcards so that the Saab owner got one that said, “Dear Saab Owner.” And the Mercedes owner got one that said, “Dear Mercedes Owner.”

One of the things I loved about working with Steve is he implements. I gave him that recommendation on the 10th of February, and by March he had the new postcards out. He called me about the 7th of April and said, “Chuck, we’ve just had our best month in the history of the company. We are $50,000 above where we predicted we’d be for the month.

Then in April we were up about $50,000. In May we were up about $50,000. If you annualize that (and I quickly did) we were $600,000 on our way to that million he needed.

I looked at it and said, “Steve, you’ve got one customer leaving out the back door for every two you’ve got coming in the front door. What’s happening?

He said, “Well, some people sell the car and don’t need us any more. Some trade it in on a new one and now they’re covered under the factory warranty. Some of them leave the community or they die. But, you’re right. That is an awfully high turnover.

So, we studied the operation, we came up with a customer retention program, and cut the attrition to about half.

Well, now we’re getting very close to that million a year, and it hasn’t been a year yet.

Owning an Asset, Not a Job

Steve decided the next thing he must do is take himself out of the picture because nobody wants to buy a job. They want to buy a company that is functioning well without outside supervision. So, he hired a manager. A very good manager. And that manager did things so well that the staff started saying, “Steve, do you think you could go home? You’re getting in the way.

Steve took his mother to Turkey because she’d always wanted to see it.

The he visited an orphanage in Africa that he’d been supporting for a few years. He brought his tools this time and spent the next two months fixing and tuning up every Range Rover automobile they had. That was the only brand they bought.

When he got back to America a couple of his buddies said, “Get your bike out.” They rode their Harley’s from Des Moines to Seattle and back. They stopped at some national parks along the way.

Then he called me. And he said, “Chuck, I’ve decided not to sell.” I asked “Why is that?” “Because I’m now making more money than I’ve ever made in my life, and I don’t have to go to work any more.

Revising the Exit Strategy

Steve has hit on something really important.

The exact attributes that make your company attractive to a buyer also make it a great company to own and operate.

If you don’t have an exit plan, it’s time to start one. You need to run through the material in the Stuffing the Golden Goose booklet to calculate how much money you’re going to need to support yourself in retirement. Once you have the amount you’ll need and have determined the timetable, get a good marketing consultant to help you bridge the gap between them.

I’m Chuck McKay. For most of us the company we own and operate is the biggest asset we own. You need to start planning your exit from that asset. I hope you learned something today. We’ll see you next week.

Download your copy of Stuffing the Golden Goose.

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The Truth About Recycled Ads & Pickup Lines

Swipe Files / Headline Banks

Have you seen those ads for “headline banks” or “swipe files?” Collections of the 100 greatest advertisements of all time so you don’t even have to learn anything about marketing or advertising. You just have to copy these “proven ads” and you will, of course, have success.

If you believe that.

You know, you’re going to get about the same one hundred ads from every one of these suppliers and they’re all approaching one hundred years old, because those are the ads that the copyrights have expired on.

And seriously, these were great ads when they came out.

Great Advertising Examples

Max Sackheim’s ad for Sherwin Cody’s home study course in the English language was brilliant: “Do you make these mistakes in English?” You know, that ad made money for Cody for over four decades, and they never changed the copy ’cause it just kept on working. This was a great ad.

John Caples classic for the U.S. School of Music, “They laughed when I sat down at the piano, but when I started to play…” In those years leading up to the great crash of ’29, when money was easy and confidence was everywhere, thousands of (largely rural) Americans looked at this and thought, “Hey, maybe the key to becoming popular is mastering a musical instrument.

Then there’s the Wall Street Journal ad that asked, “Who else wants to get promoted?

No Thinking Necessary

The idea is you take your name and put it where their name used to be, and you put your offer where their offer used to be. And now you run the ad.

And because these ads were so brilliantly written they’re going to pull in hundreds of thousands of sales for you.

For your heating and air conditioning company.

For your family restaurant.

For your income tax service.

If you believe in magic.

Here’s the reality. Those ads were so good because they were designed to work in a specific time, in a specific market, against specific competitors, in specific media… and none of those conditions exists anymore.

So, recycling somebody’s old ads makes as much sense and recycling old pick up lines, for pretty much the same reason.

He: “Do you make these mistakes in heating and air conditioning repair?”

She throws her drink in his face.

He: “They laughed when I sat down at Mom’s Family Diner, but when I started to eat…”

She throws her drink in his face.

He: “Who else wants to file Schedule A with their long form 1040?”

She throws her drink in his face.

Here’s What Really Works

Find out what your potential customers are already talking about, and join in on that conversation.

He: “If you wake up every morning with a backache, maybe it’s time for a new mattress.”

She: “Tell me more.”

Stop Using Other People’s Ads

You can’t afford to lose any sales, and the right bait is the right information for your customers, at this point in time, in the medium you’re choosing, against the competitors you’ve got.

Yes, there are magic words, but they’ll be unique for your company. And you need that kind of powerful customer bait when you’re fishing for customers.

Your Guide,
Chuck McKay

Marketing consultant Chuck McKayYour Fishing for Customers guide, Chuck McKay, gets people to buy more of what you sell.

Got questions about expressing the specific values and advantages of what you sell? Drop Chuck a note at ChuckMcKay@FishingforCustomers.com. Or call him at 760-813-5474.

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