2020 was a crazy year indeed with coronavirus pandemic, hurricanes and wildfires, it was easy to overlook all the mergers and acquisitions in the restoration industry. Several of the larger national restoration companies such as BMS Cat, Global Restoration (Interstate), Kustom and ATI made significant moves and purchased large independent companies while outside private equity companies continue to have interest. While there is considerable instability in the business world, restoration proved to be both essential and valuable. One consequence of the M&A activity is that the competitive landscape has changed in many markets. In an instant, through an acquisition, you may have a very significant competitor in your marketplace. The thought of this market transformation should cause you to take steps to protect your business and your market position today. Additionally, the steps you take to build walls to protect your business may also make your business an attractive target.
The first step in creating a defensible business is to understand your numbers. It may seem counterintuitive that in order to protect your business, rather than looking out, you look inward. Often in our consulting we discover that companies do not have a solid understanding of their numbers and frequently they are either losing money or losing an enormous amount of opportunity cost. That is they are letting money slip through their hands by not setting or hitting their job budget numbers. These companies are continually looking for new clients in order to pay their bills or create capital reserves. The effect of this inefficiency is to limit future growth, reduce access to capital, prevent acquisition of assets or to pay high enough salaries to attract and keep the best available talent. It is my recommendation that you first have good, timely and accurate reporting of your key numbers. You need to set job budgets and then put a plan in place to assure achievement of the numbers. After you have strong budgets then you need to have a proactive collection plan so you can turn your profits into cash. Whether you are looking to create a stable company or build value in your business get your numbers in order, capture your profits, track you numbers, finally, create consistent financial reports that you understand.
If you have a created a platform for reporting and understanding your numbers, you may feel that you are ready to build a formidable business through an effective marketing plan. One thing that I communicate to my clients is that it is easy to get work – the first time. It may take time and effort, but it is the result of consistent activity. The real challenge is getting the work back – if you fail in service or quality delivery. If you have a solid company that performs at an elite level and consistently delights your clients, now you are starting to build a solid wall around your market and your business. Consistent service delivery is the result of defining and applying a service delivery program and then working every day to perfect this program. I am a huge fan of Steve Toburen’s Healing the Loss program, available from Jon Don as it lays out an easy to follow program of identifying and managing Moments of Truth in every interaction with your clients and potential clients. After you have established a service system, then you need to define your control mechanism – whether it is JD Power calls, net promoter scores, online review (I recommend something more proactive), in progress service calls or other programs, then you will be able to monitor achievement. Quality control on projects is a function of great service, combined with a commitment to deliver a quality product on every job.
After you have assured that you are on solid financial footing and created a program to consistently deliver high quality work, now you are ready to focus on growth or at least securing the high value clients in your market. Sometimes companies focus too much on growth and top line sales numbers when in reality the important metric is defining and securing your ideal client. This step should lead to bottom line and cash growth. This is the ultimate measurement of maintaining market dominance. One of my principles is that competition is not a bad thing – as a matter of fact, I want to have competitors, but I want to keep them weak. A marketplace without competition is an invitation for quality companies to enter. If you target and focus on the high value and high-profile clients, then you can leave the unprofitable and undesirable work for the others to fight over.
The first step in your marketing plan should be to determine your company goals – in essence, what do you want to be when you grow up. The next step is to break these goals into desired revenue categories: Commercial or Residential; and reconstruction, contents, water damage, mitigation, biohazard or other. When you have clarity in your destination, you can start to assemble your team and create an action plan to get to your destination. The first step is to make sure you have the right people on your team and that they are in the right spots. If you have assembled your plan and you have the team in place along with great service, quality products and timely measurements then you can put a plan in place to financially reward your team. If you have a well-compensated team, clear goals, profitable work, then your protective walls just got a little taller.
The next step in delivering max value in your business is to make sure that your business development team has a great sales plan that helps target your ideal client and works to add value to their business. A value-added marketing approach will help you overcome the other marketing representatives that visited before you and will visit after. Perhaps another article will discuss some value-added approaches to your marketing activity, since that is a much more in-depth discussion. There are great resources in the industry to help drive this process as well, and if your marketing representatives are only filling candy dishes then you will have a difficult time standing out from the rest. The important point is that you have done the work creating a company of value – now you need to make sure you are telling your key target clients in a manner that influences their decisions. Assemble a marketing plan and budget that is reflective of your goals and then track your progress.
When you take the above steps, you have started to secure your market and as part of that process you have improved your company value. After achievement of these items, you may now be the ideal and valuable target of an acquisition. Many owners do not realize that the companies that are buying today, do not want to fix broken and underperforming companies. Most companies want to purchase market leaders and top performers and will happily pay a premium for these businesses. If you are watching the acquisitions and concerned about how that will impact your business, then create a blueprint and start building walls to secure your business. At a minimum you will be able to build more wealth and create a company that is easier and more fun to run.