Business leaders often work to get the company’s books and performance into peak condition in the year before a planned transition. Distractions are plentiful at this hectic time, so less critical activities must go on the back burner while you focus on core business functions and short-term goals. Many senior leaders are ready to let marketing fall to the wayside, too, but that’s a costly — and all too common — mistake.
Marketing is an essential priority that keeps your company going and growing throughout every stage of the business cycle, and it acquires even more urgency when you’re preparing to sell. Far from dropping it, it’s important to up your marketing game during these months. Here are five major benefits of marketing as you position your business for a transition.
No business can afford to keep marketing in a static state — at least, not if you care about cash flow. Optimizing sales allows you to show your company at its best as well as present stronger financial statements to potential buyers.
Modern marketing techniques also eliminate much of the risk that accompanies uncertainty by letting you understand your business performance and adjust revenue systematically. This additional control is an important risk reduction strategy that gives you more room to respond to events in areas you can’t control, like the economy, politics and myriad other factors that affect your business.
But why keep marketing if you’ll be out of the business in a few months anyway? Imagine you’re a Formula 1 driver. You’re in the lead as you pass the last challenger and head into the final straightaway, so you … take your foot off the gas? Not likely! You’ll lose momentum, and fast. If you’re not investing in marketing, your foot is off the gas. That market share you’ve worked so hard to earn can slip away just as quickly if your company suddenly has less visibility and engagement with the market.
Marketing momentum not only helps you achieve peak sales but also keeps your brand top of mind. Potential buyers aren’t just acquiring your operations; they’re purchasing your brand and everything that comes with it, including customer loyalty. Having little to no brand awareness knocks down a company’s market value even in a relatively obscure marketplace, while a brand that’s positioned as a leader in that space yields a better price.
Today’s data-based marketing strategies put your hands on the dials, adjusting sales up and down to meet your financial goals and operational capacity, which makes planning for growth more predictable and more effective. Acquiring that all-important data takes time though, as does constructing your sales pipeline. Your business should always have a one-year (at minimum) marketing strategy to ensure you’re consistently beginning new relationships, fostering trust and building the long-term customer relationships that drive sales.
Knowing where you stand today is an essential business practice so that you can adjust for optimal performance. You are probably well aware of your current cash flow, sales figures, accounts payable versus accounts receivable and similar metrics. But do you know what your key marketing and customer-focused formulas are telling you today?
Three basic marketing formulas can yield a treasure trove of information about your customers and more:
At the enterprise level, these figures are treated as key metrics and used to inform business decisions. Many small and mid-sized business owners don’t yet recognize the value of these marketing metrics, but they’re vital for keeping your business on track and growing.
Enterprise-level organizations achieve their size and strength through sound management and the application of effective growth tactics. If you’re transitioning as an owner or CEO, it’s important to set these baseline values for your successors to help ensure their future success. Evaluating the data from your marketing formulas lets new leaders regulate their initial marketing spend to align sales levels with their short- and long-term goals for the company.
Are they ready to invest in additional capacity? If so, they can turn up marketing to increase sales in a predictable manner, allowing the company to scale at the desired rate. Whatever the intended growth trajectory may be, a potential buyer can proceed with confidence using the baseline data you’ve established — over multiple years, ideally, but even a few months is helpful.
And while many small businesses operate successfully without the benefit of marketing formulas, measuring and monitoring marketing metrics like CAC, LCV and churn rate marks your business as a well-run operation. Sophisticated buyers know to ask for these figures and will view your business as a more attractive target if you can present them — even more so if they fall within healthy parameters.
You need to know these essential marketing formulas when it’s time to sell your business. Not because you’ll appear less-than-savvy without them (although that’s true as well), but because the information will be part of a potential buyer’s due diligence.
In fact, providing this data is mandatory in some situations. A private equity firm will inevitably ask about churn, retention rate and CAC, and then gauge the value of your company based partly on these formulas.
When you’re selling your business, everyone wants to look under the hood to see what’s really going on. It’s only natural for potential buyers to seek evidence that the company is strong and sustainably profitable, and marketing formulas are an easy way to help them see that for themselves.
And if the numbers aren’t so good? Knowing what these formulas are telling you before you list the business gives you a valuable opportunity to make changes. You can adjust content and ad planning, accelerate conversion, automate the sales team or make other tweaks as needed to lower CAC in just a few months. Then you’ll be ready to put your business on the market all polished up and looking its best for buyers.
An active, data-driven marketing strategy delivers valuable returns at any time, but it’s especially important when you’re thinking about selling your business. Contact our Strategic Marketing Outsourcing experts for help getting started, as well as other ways to take control of your operations to stay profitable and sustainable.
