Archive for category: Build A Better Business

Not too far from our office, on 69 Hwy, there’s a billboard which has a picture of the rapper/actor Ice T on it, holding an iced tea from the restaurant Raising Cane’s. The tagline reads: “The official iced tea of Ice T.” It will elicit a chuckle from most people, whether or not they ever go into a Raising Cane’s restaurant. But that little piece of advertising points towards a culture and attitude that has made it one of the fastest-growing chains in America.

The Numbers

The company’s first location opened in 1996 in Baton Rouge a few steps from LSU and is known in the company as “the Mothership.” It was an instant hit and on its first day it stayed open until 3:30am. To this day the Mothership closes at 3:30am Thursday through Saturday.

Just under 30 years later, and the franchise is at nearly 900 locations. In the first half of this year, it did $2.3B in revenue, with same-store sales increasing more than 17% in that same period. Average unit volume? $6.2M, which is more than double the quick-service industry average.

The Concept

Founder Todd Graves (who still owns 90% of the chain) originally presented a business plan in college for a restaurant that served chicken finger meals and nothing else. His professor gave him the lowest grade in the class and told him it would never work. He wasn’t daunted and went to numerous bankers anyway. No one took him seriously. So he decided to save up his own dough.

He moved to California and worked 90-hour weeks as a boilermaker, then to Alaska, to work 20 hours a day fishing for sockeye salmon. With enough money in his pocket, he came back to Louisiana, took out an SBA loan, and after being dissuaded not to call it “Sockeye’s Chicken Fingers,” it became “Raising Cane’s,” after his dog.

While it is primarily a chicken finger restaurant (strange to even read that phrase out loud), it does also feature Texas Toast and a chicken sandwich. Fans of the restaurant will tell you about how good Cane’s sauce is (Google will tell you it’s probably mayo, ketchup, Worcestershire sauce, pepper, and garlic), and even more interesting, people are fans of the pebble ice that goes in the cold drinks (like the aforementioned iced tea).

Success

So what were the keys to success for Todd, and what we as business owners can take away from this story?

1. Mentorship: Todd was mentored by Andrew Cherng, co-founder of Panda Express. Todd was inspired by Cherng’s story and took to heart the importance of investing in employees, customer service, and quality real estate. Cherng also provided a model of growing methodically, not quickly.
2. Do One Thing Well: Let’s be fair to Todd’s professor: a chicken finger restaurant probably never really occurred to anyone as a recipe for success, and in the hands of less committed people, it might have failed. Todd focused on winning on the chicken fingers front and fans often call the fingers “crunchy on the outside, juicy on the inside.” He’s created a category of one.
3. Have fun: You won’t find boring decor inside the restaurants. From an Elvis picture near the soda fountain, to Texas sports memorabilia, to bright interiors and high ceilings, customers often find the interiors of the restaurants “comfortable.” The fun isn’t just aimed at customers. Employees are known as “Caniacs” and are known for friendly and enthusiastic attitudes. They are empowered to go above and beyond for customers, and that attitude is often reflected in reviews about the restaurants.

A friendly reminder: you don’t have to move to Alaska after getting turned down by a bunch of bankers, work 20-hour days, then save up and build a business from scratch. We can help you buy one from someone who already did all that. Give us a call today.

For the vast majority of history, businesses have not needed a website to successfully sell. Even now, there are niche businesses, perhaps secondary or government contractors, who have a few clients who know about them and are not really customer-facing. But for the vast majority of businesses, a website isn’t just a checkbox on a due diligence worksheet: it’s an integral part of your business valuation.

It’s Not Just a Shingle

Very reasonably, back in the 1990s, one could have thought of a website as a virtual shingle. You’ve got your company name and logo, maybe a few images, your contact information, and a “contact us” box. That allowed anyone who wanted to find you to do so, and it communicated that you were a real business (of a kind).

Today’s consumer (and business buyer) demands a lot more. Websites are:

• Your first chance to make a good impression. This means that your site needs to be updated and watched.
  • By this we mean making sure someone is keeping track of all the software updates that may be happening across your website. If you don’t do this links or images may break or become non-functional.
• Your brand on parade. Businesses these days understand the power of creating a brand experience. That means the fonts and colors that you use for your brand are there. That means you may have a chatbot to meet the customer right there instead of waiting passively for a “contact us” message. You’ve got customer testimonials, links to Google Reviews, and features of your team so that you’re not just an anonymous business.
• Lead generators. Those businesses who are utilizing best practices know that there’s nothing better than an evergreen lead machine, and a website and associated content is the best way to compete for those leads. Content includes:
  • Blogs (like this one) or podcasts (like ours) that show subject matter expertise or useful tips
  • Video content that can be oriented informatively like blogs or are more fun and whimsical. Video content can be shot in batches and then cut up into one minute slices to share on sites like Instagram and YouTube.
  • Google My Business Questions and Answers in which you can showcase that you are monitoring what the public is asking of you
• Lead receivers. If you are doing Google LSA or Adwords spending, you’re often going to take those who click through to a customized landing page or your website itself. Someone who is ready to buy needs to be impressed when they come to your site.

Longevity Matters

Part of what leads to the “authority” of websites is how many websites also link to it and how long it has been around. That means you can’t wait until you are planning to sell your company to suddenly put up a shiny new website as part of brightening the curb appeal of your business. You need time to build and maintain the website, as well as create a lead engine via content. While a website may take weeks to build, inhabiting and maintaining a website takes months and years.

Part of why a better website can lead to a better valuation will be part of the traffic and analytics you can present to potential buyers. They will see what you have been doing both organically (“free”) and via paid advertising and part of the value they will look to add will be to see what they can do above and beyond what you’re doing to bring in more sales using the website.

If your website is just a shingle or you’ve never thought of using it as a vector for leads, that’s going to be an area of investment for buyers, which will be something they may deduct from what they offer, as they know what we’ve articulated above: it’s not your grandfather’s business anymore; websites are really important.

Some of what we mentioned here was also discussed in a podcast episode which you can listen to here. If you need a recommendation for someone to help build or refresh your website, we know a few people: give us a call.

At the beginning of 2024 the market was led to believe that there would be multiple rate cuts. Yet the Fed met in early June and there hasn’t yet been one (though one, and one only, is forecast before the end of the year). Instead, Fed Chairman Jerome Powell has kicked the ball into the long grass, claiming that “rate cuts that might have taken place this year, take place next year.” What does that mean for buyers and sellers in the small business marketplace?

Don’t Fixate

Sellers have been known to wait for the “perfect time to sell,” and we can tell you from many years of experience that such timing rarely occurs. What makes more sense is “the right time to sell” and that’s grounded in circumstances that both buyers and sellers have real control over. Searching for perfection can often lead to disappointment in life, not just in buying and selling businesses.

What we’ve seen in the last 12 months, as the federal funds rate has stayed in the 5.25-5.5% range, the highest in 23 years, is that there are still good buyers chasing good businesses. Because their primary goal has been to capture a great business, they have looked for that first and then worked on financing after identifying the right business. In certain circumstances, given the current rate climate, we’ve seen some flexibility from sellers given expected cash flows in relation to higher bank loans.

If, however, potential buyers are waiting on the sidelines for the “right rate” they should keep in mind that others may think this way as well, and when they wade back in when “rates are right” they might get caught in a bidding war for a business, leading any “savings” from “waiting” to turn into a premium they end up paying.

Trust the Market

That leads us to our second point. Whatever your thoughts on politics and government, many would agree that when the Fed is seeking to intervene it’s trying to adjust for something that is already happening.

Yes, there is much uncertainty in the world at the moment, and domestically, it’s an election year, but we can only report to you what we are seeing and hearing, and that is that businesses are being bought and sold. 2023 was our best year ever at Apex and midway through this year we feel confident that we are going to have another good year.

A solid business doesn’t rise or fall based on interest rates in the market. The same goes for when you buy a business. If it’s a solid business at this time, it will be whether rates go up or down. And as we’ve said (and seen) if the business is a good fit, a seller might be willing to make a concession on price to help make the financing work for serious buyers.

As we said, serious buyers are interested in the right business, not the perfect interest rate.

Thinking of coming off the “interest rate” bench? We’d love to talk to you about what’s available right now. Give us a call.

Those of us of a certain age remember that gas didn’t always cost more than a dollar, and the only things you’d find if you went inside a gas station to pay were auto maintenance products and some of the worst coffee in the land.

These days, gas prices are always on the rise (as are electricity charging prices for the EV lovers who are about to remind us that they don’t have to pay for gas anymore), but the coffee inside many gas stations is far from the worst in the land. You can sometimes even customize that espresso-driven coffee order and add some fresh-made food that rivals or easily beats what you’ll find at fast food joints. We’ve entered an era in which people brag about their regional gas stations.

On the East Coast, the battle is between Wawa and Sheetz. While many rightfully associate Quiktrip with the Midwest, it has locations as far west as Arizona and as far east as North Carolina. Then there is the cult-like following of Texas-born-and-bred Buc-ee’s, which has been slowly growing out of the Lone Star state as rumors of its “experience” have grown.

Unexpected Disruption

There are some key lessons that all of these brands, whatever their differences in positioning, marketing, and geographic reach, can offer any business:

• Don’t be a prisoner of your legacy business. Gas stations might just be one of the most boring businesses out there. People who use a vehicle regularly have to visit them whether they want to or not. Instead of serving up the same old same old, these companies decided to level up to add more dollars to their top and bottom lines.
• Win the little things. Buc-ee’s very famously advertises its clean restrooms on billboards more than 100 miles away from their locations. No one is ever going to complain about restrooms that are too clean! In fact, the intended result often occurs: people who had no need to go to the bathroom amble in any way to make their own inspections, and after concurring that yes, these might be the cleanest bathrooms they’ve seen on the road in their lifetime, stop by for some food or grab an ICEE to go. That cleanliness extends outside as well, as employees often strive to make sure pumps are clean, working, and stocked with receipt paper.
• Ride a trend. Americans love food, but they prefer (and will pay more for) freshly-made food. Here, we see unexpected disruption again. We used to think of gas-station food as solely comprised of those rolling metal tubes for hot dogs or taquitos, presaging the rolling of your stomach some hours later after consuming said food. Now you can find freshly-baked pizzas or made-to-order subs or even breakfast sandwiches. Turns out that people would rather just buy their food where they are fueling up rather than get in another drive-thru line to get food.

These gas stations have all taken what was traditionally a cut-throat, geographically-limited, low-margin high volume business and transformed it, with a little bit of effort, into a high-margin business, sometimes leading people to drive miles to go to their preferred gas station. Turns out that people like clean, well-lit, delicious-smelling places if given a choice.

If gas stations can reinvent themselves, why can’t your business? Things to ponder:

• How can I level up services my clients already “have to” use?
• What adjacent products/services would engender loyalty/surprise/delight in my clients?
• Could my technology (website/app/social media) be better?
• Are my customer-facing team members friendly, smiling, and always well-dressed?

We’ve got other ideas to help you as you try to add value to your successful business in light of a sale in a few years. Give us a call today.

It’s no secret that marketing is essential for any type of business, no matter its size. Small business owners may be hesitant to enter the space — preconceived notions about the cost of marketing (and the effort required to keep up with it) abound. Sure, some organizations pump thousands of dollars per month into their strategies, but that doesn’t mean you can’t find a middle ground that fits into your budget.

In the spirit of decoding the wild world of marketing, let’s discuss what’s fact, what’s fiction, and everything in between.

Fact or Fiction: Word of Mouth Advertising is Enough

You may be tempted to build your business purely through word of mouth — and it could work for a time — but it’s not a sustainable strategy. Your business might be able to rely on this type of advertising if you live in, say, a very rural area, but even so, you won’t be able to bring in new customers unless you’re very focused on it. There are going to be a lot of people who have no way of knowing who you are and what you do unless you invest in some serious boots-on-the-ground marketing. And, if you’re focused solely on that, other areas of your business will inevitably fall by the wayside.

While word of mouth can be potent, it’s not a one-size-fits-all solution. Small businesses need to complement it with active and proactive marketing strategies to reach new customers who might otherwise remain undiscovered.

Ruling: FICTION

Fact or Fiction: External Marketing is Too Expensive

Every business, regardless of its size, should engage in some form of marketing. The key lies not in being able to afford an entirely outsourced agency, but in planning and budgeting for marketing as an essential activity.

There is a wide belief that only businesses with deep pockets can afford external marketing. The truth is that there are solutions out there for every budget — determine your own. That could mean cutting corners elsewhere so that you can hire an agency, or making an effort to learn all you can on your own. There are a ton of great resources out there (check out Udemy, Coursera, or Skillshare) that you can lean on.

Ruling: FICTION

Fact or Fiction: The 2% Revenue Rule

Should you dedicate 2% of your revenue to your marketing strategy? Not necessarily. If you have a healthy budget then spending 2% of it on a good marketing budget would be wonderful — until next year when your revenue is down. In that case, you would be spending less money on marketing because it’s only 2% of whatever your revenue is, at a time when you should be spending more than that on bringing in more (paying) customers.

If you follow this ambiguous 2% rule, it quickly turns into a downhill slide: you’ll continue to lose money because you’re spending less in marketing.

Assess your business’s individual needs and invest in marketing based on your unique circumstances. It’s a personalized approach rather than a one-size-fits-all solution.

Ruling: FICTION

Fact or Fiction: You Have to Pay to Get Visibility on Facebook

Unfortunately, you do. Facebook is also a business with the aim of generating revenue. Only 2-5% of your followers see organic posts, which means that paying for placement is essential for broader reach. There is value in organic social, but businesses need to allocate funds for specific messages they want to be seen by many.

Ruling: FACT

Fact or Fiction: All Marketing Agencies are the Same

Not all businesses are created equal, and the same goes for marketing agencies. This is good news for organizations that are looking for solutions that don’t require them to go “all in” on an expensive package filled with things they don’t need.

It’s important to tailor your marketing approach to fit your unique needs. Seek out agencies or even freelancers who are willing to work with you to give you exactly what you’re looking for. Some will specialize in Facebook, others in SEO. Don’t be afraid to shop around, conduct interviews, and reflect before you decide on the solution that works for you and your business.

Ruling: FICTION

Marketing may seem complex, but it doesn’t have to be if you bring on the support you need. Integrate it into your budget as you would any other important operation, such as HR, IT, or bookkeeping. In the end, it’s not about how much money you spend, rather, it’s about the strategies you implement. Embrace the right ones, and you’ll flourish — ignoring the need for marketing altogether is a recipe for disaster.

If you want to learn more about marketing your business with the hopes of selling it one day, that’s where we come in. Give us a call.