Create Longevity for Your Promo Business With These Simple Succession Planning Steps for Every Stage of Your Career
Now is an exciting time to be in the promo business. In addition to an expanding community of more than 24,000 distributors across the globe, branded merchandise has taken on a renewed importance for companies as part of their overarching brand strategy. It’s a critical marketing tool to generate awareness, build loyalty, influence consumer behavior and drive spending.
The numbers tell us a powerful story. Here’s what we know: It’s big and it’s growing. According to PPAI, the promo industry generated $24.7 billion in sales in 2018—up 6.3 percent over the previous year.
Because we’re part of an industry that’s on the rise, I’m continually having conversations with AIA’s community of nearly 300 independent owners about succession planning. Years and even decades in advance, they’re starting to think about what they need to be doing now to set the business up for long-term success and make it appealing to the next generation of leadership.
At any stage in your career—whether you’re starting out, building or approaching retirement—the goal for every promotional products distributor should be to structure a business that’s strong enough to continue when you’re no longer steering the ship. Impending retirement is not the time to slowly run down your company until you’re ready to close shop. When you’ve done the heavy lifting up front, the business is more likely to thrive—making it all the more appealing to your successor when the time is right.
Based on 25-plus years serving as a small business owner, national sales manager, president of OfficeZilla and, most recently, vice president of business development for AIA, I’ve learned a thing or two about effective succession planning. Here, I’m sharing my top considerations as you prepare to pass the torch to the next generation.
• Pursue relationships above everything else. Ultimately, relationships are worth more than any order because they’re what sustain your business over time. It’s important to shift your focus from chasing sales to seeking real and lasting bonds with existing and potential customers. Know who your clients are along with their specific needs, then spend considerable time strategically going after and nurturing those relationships. These efforts typically lead to increased trust and loyalty, which results in ongoing orders and referrals.
• Have multiple stakeholders. As the saying goes, it’s best to avoid putting all your eggs in one basket. Having multiple contacts (and, therefore, buyers at one company) puts you in a better position for continued business regardless of changes in leadership, budgets and marketing initiatives. Especially within our industry, 10 healthy buyers at five companies is usually better than 50 buyers at different companies. The key is developing relationships with—and doing good work for—a variety of decision-makers within an organization.
• Build a wide-reaching community. I’ve found that being connected both inside and outside of the industry is key. This means finding a community of promotional products professionals along with a peer network of entrepreneurs and small business owners. From trade shows to online groups and industry-specific events to traditional lunch meetings, there’s no shortage of opportunities to access and build relationships with people who can serve as business advisors, confidantes, even friends—and who may be positioned to join your company in the long run. Community is one of the key tenets of AIA, and we work hard to provide independent distributors with a network of peers to collaborate, troubleshoot and share best practices. By taking a preemptive position and beginning the process years in advance, you’ll give yourself ample time to carefully select a buyer who brings the right personality and skill-set.
• Develop a robust customer list—and engage these individuals. When thoughtfully executed, email marketing can directly contribute to the bottom line. What’s more, an already-established list of contacts is attractive to a prospective buyer. Naturally, they’d prefer to acquire a business with proven marketing practices and end customers in place than start from scratch. This includes individuals who are already engaged. They’ve opted-in and are in the habit of opening emails, clicking through to your website and placing orders—and the pattern is likely to continue. It’s far more difficult to create engagement when preparing to sell a business.
• Drive multiple orders. It’s considerably easier to scale up with current customers and increase order size and frequency, because you’ve built the relationship and established a process. While younger companies getting off the ground may (and, in many cases, should) go after any and all orders, more mature ones can prioritize incremental sales—and upselling your best customers. When calculating the value of your time, it’s almost always more efficient to operate this way. The industry average tends to be one to two orders from each customer every year, so I always challenge sales leaders to use that figure as a benchmark.
• Use data to make decisions. High-stakes decisions, even for small businesses with limited resources, should be rooted in data. This is how you identify key insights about everything from sales trends to customer behavior to team member performance to top-selling products—and put companies in a position to take a micro-level view at what’s really happening. Armed with this information, you can take action in both proactive and reactive ways. For example, AIA’s success managers analyze purchasing trends and customer habits to help owners make their businesses more effective and profitable.
• Establish a social media presence. The numbers are staggering: Facebook is the world’s largest social media platform, with more than 2.3 million users every month. It’s where businesses of all types want—and need—to be. Beyond setting up a company page to build your brand, you must be committed to maintaining it to realize the full value. To drive likes, followers and real engagement, plan time to develop a monthly editorial calendar, generate new content, post regularly and respond to comments. And, this goes without saying, tie your social media presence to your professional pages—like LinkedIn and your company’s Facebook and Instagram pages—rather than your personal.
• Seek industry-specific counsel. Before you begin crafting your exit strategy, be intentional about surrounding yourself with experts in the field. More often than not, traditional attorneys and CPAs (even those with vast experience) don’t have the technical expertise and know-how to provide the right advice for this particular industry. Seek out specialists who understand the ins and outs of the promotional products business and can tailor their recommendations as opposed to offering broader and more general counsel.