By Charles Milam, CBI, M&AMI
Improve the return-on-investment for your marketing campaigns
Every business will eventually change ownership and the decision to sell a company can either be viewed by the owner as the most agonizing event or the most liberating. Some owners are ill prepared for a business transition and are caught off guard by deteriorating health, unanticipated financial calamities, divorce, or personal stress. These owners are forced to sell without proper planning and often receive less than optimal remuneration for their company. Other owners recognize that in order to maximize the business value, similar strategic planning done during the years the company was being built is also required prior to selling the enterprise. This latter category is typically comprised of those owners selling for (legitimate) retirement purposes. These “retiring” owners have reached the point where they are interested in other life pursuits, whether that be spending time with a spouse/children/grandchildren, engaging a personal hobby, or taking the time to travel the globe.
Business intermediaries looking for new businesses to represent would improve their results by catering their marketing campaigns specifically to those business owners of retirement age. This makes sense on a number of levels.
Baby Boomer Retirement
The entrepreneurial explosion that occurred in the United States over the prior thirty years has created record numbers of small businesses whose owners are now 50 years old and over. As these baby boomers seek retirement there will be an unprecedented volume of business transitions in this age group.
When an owner has kept the business in operation up to retirement age, this is typically done as a result of the sincere love the entrepreneur has for their business. They have kept, maintained and grown their business because of this love and when it comes time to sell are not doing so because of any business fundamental hick-ups, declining trend lines, or a negative outlook for the future. These owners are selling because they are honestly seeking to take some chips off the table and diversify their primary asset, their small business, which typically represents a significant component of family wealth.
Business intermediaries would be well served in focusing their marketing efforts on business owners who are of retirement age. While many businesses are sold each year by individuals of all ages, on a percentage basis, it is this retirement age segment that will provide the greatest return on investment for every marketing campaign.
First, a few brief definitions:
A target market is a set of prospects that the marketing campaign is aimed at. A well-defined target market is the first goal of a successful marketing strategy.
A target audience is those people of a certain age group, marital status or gender. It is the specific group of people within the target market that marketing communications are focused on.
For maximum results the goal of any targeted marketing campaign is to narrow the field of prospects based upon the criteria and demographics likely to produce the optimal outcome.
The key to success for any marketing campaign, whether that be direct mail, telemarketing, email marketing, social media, or networking, will be based on the accuracy of the data. In a nutshell, it all starts with a quality list that can be customized to cater to the target audience. Unfortunately, for the typical list buyer it is difficult to acquire the most accurate information. There are a plethora of marketing list providers with each promising proprietary market intelligence, data segmentation, and advanced demographics. Reaching new potential clients is critical to any businesses success, a scenario even more important to the business intermediary field where only a handful or two of deals are consummated in any given year. The end result is that where you are spending your marketing time and resources and who you are communicating with on a daily basis will have a material impact on the bottom line.
I have significant experience in this arena, having owned a telemarketing business previously. Sourcing a list that will have the highest return on investment requires in-depth knowledge and a fundamental understanding of how this industry works. All data list providers will indicate that their data is of the highest quality and that it is unique in the market. Unfortunately, this is not always the case. In fact, it is rarely the case. I would be happy to assist any M&A Source members in acquiring the appropriate age-specific marketing list that would be the most desirable for the business-for-sale market. Feel free to contact me directly to discuss this in more detail. Please realize, I am a business intermediary and not a list-broker and have written this article with the sole goal of assisting my fellow M&A Source colleagues.
In summary, businesses sold for true retirement purposes are often the most successful and will typically have consistent revenue and profits, reside in a strong industry, and have a bright outlook for the future. Since every business will be exited at some point in time the goal for any successful business intermediary is to focus their time and energy on finding those business owners who are at or nearing retirement age. Do we want to work with owners on an exit planning basis to succeed or transition the business in 5-10 years or do we want more near term opportunities?