At Gould+Partners, the top piece of advice we consistently provide to our clients is to build their PR firms as if they plan to sell them. After years in the industry, we can confidently say that the firms that operate with this “build to sell” mindset are among the most successful and profitable – whether a sale is ultimately made or not.
Adopting a “build to sell your PR firm” mentality inspires entrepreneurs and firm owners to be more financially disciplined, more accountable and more organized. It encourages them to operate responsibly and to develop the infrastructure necessary to make the firm successful in the short term, the long term, and, ultimately, appealing to buyers if the time comes to sell.
In his May 2015 column in Inc. Magazine, Norm Brodsky, a veteran entrepreneur and entrepreneurship expert, echoes the Gould+Partners mantra. Brodsky encourages entrepreneurs to lead their organizations as if they intend to sell and states, “I have long believed that you should build a company to sell it for as much money as possible, even if you don’t plan to sell it anytime soon.” Brodsky goes on to say, “From the start, you should know what practices will get you top dollar. By adopting them, you’ll wind up with a better company.”
There are a number of ways you can strengthen your company by building it as if you’re preparing to sell it. Brodsky highlights a few of the key organizational improvements business owners make to build a stronger, more profitable company. He highlights eliminating your organization’s vulnerabilities, figuring out how to maximize the multiple of EBITDA and monitoring interest rate risks when considering putting your organization on the market. He also delves into the importance of customer contracts, maintaining a diversified account base and ensuring that your company’s account base isn’t solely dependent on a relationship with one client:
“If you want the highest multiple, you need long-term contracts that you can transfer to a new owner without losing customers. The relationships can’t be solely dependent on you, and the company shouldn’t be solely dependent on a few customers. The smaller percentage of revenue that your largest customers account for, the more valuable your company will be.”
Brodsky’s perspective further validates our ongoing message: operating your business as if you plan to sell it helps you to maximize value, profitability and success. Whether you’re planning to sell your PR firm or not, adapting a “build to sell” mindset is beneficial and will help you in both your day-to-day operations and when/if the time to sell your firm does come along.
Read Norm Brodsky’s “Lead Like You’re Up For Sale,” then find out more about how Gould+Partners can help you put the “build to sell” mentality into action within your PR firm.