Exit Strategies: 5 Tips for Maximizing the Value of your Promotional Products Business

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The promotional products industry is an exciting place to be. Few other industries can boast such ubiquitous value to the end customer, wide ranging industry trade support, and genuine creative appeal. Successful entrepreneurs in this industry work hard, develop deep relationships with their clients, and have a passion that leads to longevity of business ownership. However, as rewarding as this industry can be, there will come a day when you need or want to exit your business. When that day arrives, you want to be prepared to ensure the successful long-term transition of your business. After all, many promotional distributor business transactions are based largely upon an annuity of a percentage of future profits over a defined timeline.


There will come a day when you need or want to exit your business. When that day arrives, you want to be prepared to ensure the successful long-term transition of your business.


 

Based upon our experience at AIA working with a community of nearly 300 distributors, here are 5 important steps to take today, as you prepare for the profitable and successful transition of your promotional products business in the years ahead.
 

1. Pursue Customers And Relationships, Not Orders

In the early stages of your business, it’s natural (and even wise) to pursue every order. In doing so, you build experience, learn the industry, develop supplier relationships, and gain invaluable insights. Over time, as your business matures, it’s important to begin to become more purposeful in your approach. Strategic time investment in larger, more complex customers with program requirements, company store programs, larger orders and multiple client touch points will ultimately create more consistent revenue growth and long-term value than chasing individual orders.

Ultimately, relationships are worth more than any order because they’re what sustain your business over time. By shifting your focus and creating real and lasting bonds with existing and potential customers, you are increasing the current and future value of your business. Take the time to understand who your best and highest potential clients are, along with their specific needs, and invest time with them to increase perceived value and loyalty, which can result  in ongoing orders and referrals.

Buyers will be more attracted to the idea of stable, long-term customer relationships driving consistent, predictable and frequent orders, vs transactional customers with more sporadic and often last-minute needs.
 

2. Build Brand Engagement

Through Social Media

ASI’s 2019 State of the Industry / Life of a Promotional Products Distributor Report shows that 80% of all promotional distributors promote their businesses through Facebook and 70% do so through LinkedIn. While these percentages are impressive, we find that many distributors are promoting their businesses through their personal Facebook and LinkedIn profiles, rather than through a professional and branded page. If you are planning for a future transition, you should be building engagement with a business page that can transition to your successor, rather than building engagement with you personally.

Beyond setting up a company page to build your brand, commit 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.

If you’ve already begun marketing your business via your personal Facebook or LinkedIn profiles, don’t worry, it’s not too late! Facebook and LinkedIn have defined processes to help you convert them. It’s worth the effort in the increased value your future buyer will find in being able to take over those valuable marketing assets.

Through A Robust And Engaged Customer Email List

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 during or after the sale of the business.) When looking at marketing programs, consider the competitive edge AIA’s marketing programs offer, with proven success.
 

3. Build And Leverage Your Industry And Peer Network

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, confidants, and accountability partners. Ultimately, friends who inspire, commiserate, share ideas, bring you tips to grow your business today ...and who may be positioned to join or acquire your company tomorrow.

Community is one of the key tenets of AIA, and we work hard to provide independent distributors with a network of peers and suppliers 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 identify a partner who will bring the right personality and skill-set. After all, as mentioned above, often the true long-term value of a business will be directly tied to ensuring the successful transition to the new Owner.
 

4. Standardize And Use Your Data

The value of reliable, clear and consistent data is immeasurable for the success of your business today, and for successful transition of your business to a new leader in the future.

Today, your data can show you 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. Click here to learn more about how AIA’s Success Managers help AIA Owners use data to run a more effective and profitable company.

This data is critically important to the long-term success of your business transition. Your successor will be able to reference buying patterns, cash flow trends, reorder reports and more to serve and grow your customer base well into the future.
 

5. Seek Industry-Specific Counsel

When you’re ready to put together your specific exit strategy, be intentional about surrounding yourself with advisors with industry experience. More often than not, traditional attorneys, business brokers and CPAs (even those with vast experience) don’t have promotional distributor experience and can set unrealistic expectations related to valuation and structure. Take advantage of the industry peer groups mentioned above to understand how other successful transitions have been structured and what options may work for you.
 

What’s Your Strategy?

Promotional products distributors, we'd love to hear from you. Tell us what you’re doing in preparation for the eventual sale of your company. Or, better yet, what did you do that made all the difference when courting potential buyers and/or handing over the reins? Let’s talk about how we can collectively put our best foot forward