Posts Tagged ‘merger and acquisition’

Even The Best Sales Stagger When This Happens

Have you ever observed small businesses buying other small businesses because they see them as “best sales” opportunities?  Then in many instances within 6 months to 18 months, the acquiring small business announces the sale of the recently acquired business. What happened to all those “best sales?”

best-salesSales does not operate in a vacuum.  Profitable businesses are profitable because executive leadership has taken certain actions including:

  • Creating a corporate culture of high performance
  • Developing loyal customers (both internally and externally)
  • Demonstrating good business faith to all stakeholders

When mergers and acquisitions (M&A) take place, what happens is executive leadership of the acquiring small business believe they know best and their beliefs ignore or don’t truly care about:

  • Corporate culture
  • Loyal customers
  • Good business faith

After all, the acquiring firm just invested hundreds of thousands of dollars to even millions to acquire this small business and they know what they are doing.  Sales Coaching Tip:  Pride (ego) goes before the fall.

Locally, I just observed another failed merger and acquisition (M&A).  Personally I had suspected this was going to happen after hearing of:

  • Long time employees (internal customers) being dismissed
  • Long time paying customers (external customers) unhappy with the quality of the product and service
  • Demonstrated behaviors by leadership respective to good business faith within their other enterprises

Even the best sales cannot be sustainable when executive leadership in their efforts to maximize profits from any M&A ignore the customers, the culture and the community.  Stagger sales will be the first indicator something is wrong.  All the renovations, new solutions or any other operation initiatives will only contribute to draining the profits.

If your small business is considering buying another small business because of the perception of “best sales,” then my advice is to take a corporate culture survey as part of your merger and acquisition strategy.  Read the collected data and determine what actions are necessary to ensure those “best sales” continue to come in. Then execute those actions while keeping the lines of communication open with your:

  • Customers
  • Community

By taking these strategic business growth actions, you will be able to maintain the same high performing culture and your investment will yield those best sales as well as return on investment.

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Leanne Hoagland-Smith supports forward thinking leaders in bridging the gaps between today’s results and tomorrow’s goals in the key areas of strategic growth, people development and process improvement. She speaks and writes specifically to high performance sales people who require a tailored executive coaching solution and to small businesses under 50 employees whose challenges are more unique and resources more limited. Leanne can be reached at 219.508.2859 central time USA.  Follow her on Twitter or check out her profile on LinkedIn.

 

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Marketing Is Connected at the Hip to Company’s Brand Value

Marketing is connected at the hip to a company’s brand value. This realization became ever more crystal clear after I read this posting on CBS Money Watch of 10 Companies with Insanely Bad Marketing. Note:  CBS News recently acquired the former website of BNet.  The  actual posting on bad marketing was Okay, but one comment specifically revealed how connected marketing is to a company’s brand and brand value.

Credit www.sxc.hu

One of the commentators raised the point that initially the CBS takeover (merger and acquisition) of BNet was no big deal. But now, there has been a change in perspective regarding the brand and the writer talked about the “demise of journalism” and “we’re moving closer to the day that journalism and entertainment are indistinguishable.”

I had to agree with him or her because I too very rarely read much from this former BNet site.

Seth Godin, author of many great books, probably has the best definition of brand that I have found.  He defined brand as a noun meaning:

“set of expectations, memories, stories and relationships that taken together, account for a consumer’s decision to choose one product or service over another. If the consumer whether it’s a business, a buyer, a voter or a donor doesn’t pay a premium, make a selection or spread the word, then no brand value exists for that consumer.”

After reading Godin’s definition of the word brand, I crafted my own regarding the word “branding:”

“Verb: Are the authentic actions to connect to those expectations”

Marketing then demonstrates those “authentic actions. In my book, Be the Red Jacket, as well as many other articles I have written about the two-fold purpose of marketing.

  1. Attract attention
  2. Build a relationship

However after reading this very critically thought out response to the CBS posting on “10 Companies with Insanely Bad Marketing,” I realized there exists two additional and very subtle purposes or shadows behind the initial purposes of marketing those being:

  1. Introduce the brand
  2. Maintain brand value awareness

When CBS acquired BNet, the brand already existed that being articles and information about various aspects of business written by some noted business experts without the entertainment factor.  All CBS had to do was to maintain the brand value.  However, it made an executive decision to change the brand (the expectations) and probably accepted a lost of a few readers. Yet, the loss to brand value I believe has been far greater when looking at the absence of comments.

In a  merger and acquisition this abandonment of the brand is all too common and why most M&A fail. Companies are purchased because they are profitable. Then decisions are made to “bring the newly acquired company into the fold.” However, the brand value of this acquired company is probably subtly different than the brand value of the acquiring business.  Customers recognizing their expectations that were previously met, are no longer being met leave the now “merged business” taking their dollars with them. Many research reports estimate the M&A failure rate to range from 70-90%.

The lesson learned here might be “be careful,” “step lightly” when  looking to change your marketing because it may affect your brand.  If your brand has already created expectations by your customers or clients, your new marketing should reinforce those expectations if you truly wish to increase sales (the end result of effective marketing).

 

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Sometimes The Customer Is Not the Right Fit Even When Well Qualified

To increase sales does require finding new customers or having repeat customers engage in repeat business. Yet, sometimes the fit is just not right even if the potential customer (a.k.a. prospect) is qualified by meeting these criteria:

  • Decision maker
  • Need
  • Allocated budget
  • Urgency
  • Commitment

Recently a colleague and I through a strategic alliance presented a statement of work to a small business owner who was very much the the E-Myth decision maker. He was going through a merger and acquisition process without any written strategic business plan.  Actually, he had run his company without any formalized written action plan not to mention the lack of written policies and procedures. Given the depth of this merger, I knew he had already invested thousands of dollars between legal and accounting fees.

Even though he recognized that he should have started months before during the sales presentation, he still did not take action. (My sense is level of commitment is not where he said it was.)

Yes, the financial impact was verbalized as well as several other disconnects specific to his current operations at this meeting. In fact I learned this company was bleeding all over the place and reminded me of Gary Sutton’s chapter in his book Corporate Canaries about how you cannot outgrow losses.  I truly love this gem of a book.

Given that I am not a high pressure salesperson and do follow a pretty solid sales process, I realized that this person is probably not the type of client I truly want. Even when the facts are presented, here is someone who will not take action. And if he does make a decision, he will expect immediate results even though he has sat on the sidelines for several months. Reminds me of the quote about “lack of planning” or “procrastination on your part does not constitute an emergency on mine.”

My father who was a professional salesperson told me many years ago that yes it would be nice to earn every sale, but sometimes that simply just does not happen even when you do everything right. This is when you need to reflect on what you could have done if anything else and then let it go as a lesson learned.

Dad’s words are very true and made me recognize once again that my best sales success is with innovative leaders (key word here is innovative) who truly want to change their team’s results. So if you fail to earn a sale (some prefer to use the phrase close a sale) then take the time to honestly review what you did and what you could have done differently. Then move on to that next potential customer with another lesson learned in your sales toolbox.

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