As investment bankers, we spend a lot of time teaching owners how to sell their company. But we have learned just as much from them. We try to learn something from everyone we work with, and over the years our clients have taught us a great deal about creating value, sustaining it, and running a business worth buying. Here are some of the most memorable lessons.
Remove the barriers to doing business
Customers come back when a company is easy to deal with. Does it deliver on its promises? Does it meet or exceed expectations? A retailer with a no-questions-asked return policy wins repeat customers because it has removed a primary barrier to buying. The company takes on some return-abuse risk, but it usually costs less than the value of the repeat business. Remove as many barriers as you can, so customers see you as easy to work with, so easy that they come back again and again.
Do not neglect your largest client just because they are your largest
Keep developing ideas for your best client while diversifying around them by adding new ones. Client concentration reduces an owner's sale options, so serve your bread-and-butter client well and keep adding others. And do not ignore small clients; small clients become big clients, and they refer you to more.
Do not be shy about pricing for the value you provide
Create both the perception and the reality of value, and get paid for it. If your offering is unique, do not price it like a commodity, which only denigrates the value you have built. If a paper or steel mill has a failed motor and no spare, downtime can cost hundreds of thousands of dollars a day. A repair company that can pull, fix, and reinstall the motor faster than competitors, and fix it right, delivers real value and should charge accordingly.
Everyone should be wanted, but not needed
The owner should not be the only one who knows how everything runs. Push knowledge down through the organization so that the loss of any one person, including the owner, does not cripple the company. Hire good people and let them do their jobs. Do not micromanage; give your team direction and the room to make decisions in line with their responsibilities.
Sell on quality and performance, not price
Sell a solution, not just a product or service. Lead with the client's needs and how your offering meets them. When the customer understands the value they are getting, price becomes less of an issue.
Take care of the people you depend on
Get ahead of what matters to employees: pay, benefits, advancement, and recognition, the things that keep good people from looking elsewhere. Do not give them reasons to consider other opportunities.
Hire forward
Operate with a trained team before the business gets busy, not while scrambling to catch up. If you expect growth, hire ahead so people are up to speed before it arrives. Hiring in advance is an investment; the alternative is untrained staff at the worst possible time, disappointing customers and damaging your reputation.
Consider the total profitability of a client, not just revenue minus cost
Is the margin worth the trade-offs of hand-holding, extra visits, and entertainment? A high-maintenance, high-touch client may be far less profitable than the top line suggests.
Our clients have taught us a great deal, and we feel fortunate for the interactions that led to these lessons. For all our experience, we keep learning, and we expect to keep gleaning wisdom from the owners we work with.
← Back to all insights