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I once had a landscape management customer who told me that my company would have her contract as long as one of the owners of my company personally looked after her properties. In other words, she didn’t want to trust her properties to an account manager who may not have the same level of dedication as an owner. She went on to say that she fully expected our business to grow to the point where we would rely on non-owners to handle large commercial portfolios like hers. In fact, it did. She was simply letting us know in advance that when we reached that point in our growth, she would no longer be a customer.

Game pieces with images of people (Photo: Demianastur / iStock / Getty Images / Getty Images Plus)

Photo: Demianastur / iStock / Getty Images / Getty Images Plus

I found this statement to be both unusual and interesting. But what she didn’t say was even more unusual and interesting. She didn’t say that Phil Harwood had to be looking after her properties. She made it clear that what she wanted was an owner to be present, not a specific person. That opened the door to my business partners who were also owners. It also opened the door to future owners if we were to sell our business.

Their person

The more typical scenario is that the customer wants a specific person to handle their account. In this situation, the business owner is the only person who is acceptable to represent the company with that customer. If the owner attempts to hand off this customer to another person, the customer may be lost. Similarly, if the owner exits the business, a new owner may not be able to retain the customer.

All of this becomes highly relevant when an owner is unable to exit their business without losing customers. A buyer will not look favorably on a situation where customers will leave as soon as the previous owner retires or sells the business. More specifically, a buyer will not value as highly such a company. In some cases, it may even be a deal-breaker.

Imagine a company with a first-generation owner who has always been the face of the company. Every customer has a personal relationship with the owner and relies on the owner to take care of their needs. In addition, the owner is the only person at their company who has the knowledge or experience to prepare an estimate, create a proposal, present to a group of prospects, negotiate a deal or draft a contract. The owner has kept all of this to themselves since day one.

A buyer of the company described above has to assume that none of these customers will be retained after the owner is no longer there. And the buyer will value the company accordingly. Not only that, since the company lacks any sales capacity, future sales will be a struggle as well. This is will drag down the company’s valuation even more.

The solution

The obvious solution to all of this is for the owner to wean themselves from selling and managing accounts in advance of exiting. I used the words “obvious solution” instead of “easy solution” for a reason. This is not easy by any means. Nevertheless, a wise owner will begin to move in this direction soon after the lightbulb turns on. Once an owner realizes the negative consequences of being the exclusive salesperson and primary account manager, they will begin to take steps to correct the situation. This may take years but it all begins with recognition of the need to get started. Is it time to get started?

Now go forth.  

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