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The Three A's

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The Three A's

   This was an article I wrote a few years ago, before Gold Seal E-Liquid turned into the distribution company True North Vapor.  Although there is a lot of information in here for small and medium businesses looking to expand, it is still quite relevant today.

  1. ACQUIRE

   When considering buying another company out, keep in mind it is rarely done by small businesses because it’s simply not cost effective. This is probably the area I am presently trying to learn the most about because it seems like the natural progression of our company. This can also be applied to licensing as much as out right purchasing out a brands intellectual property.

   Prior to Gold Seal most of that experience on this subject came from competing relentlessly with different brands in the retail markets.  They either went broke and I bought them out of bankruptcy or they simply closed, and the landlord gave me a great deal on their fixtures, fittings and assets. Ultimately, I would end up amalgamating their inventory and clients into my own business and simply growing stronger.

   One interesting story that did first spark my interest was a Domino’s Pizza franchise store that closed and moved to a “better” location. In the wake almost immediately, I saw a man open up a non-branded pizza shop in the same location and begin to capture huge chunks of the customers who thought it was still Domino's. To my surprise the clients really didn’t care what kind of pizza they got because they were simply hungry. Even more fascinating was this mans pizza was excellent and he soon had a very successful and booming business that would have taken him years of hard work to develop.  Right then and there I realized you could acquire residual business and goodwill inexpensively if you were willing to keep your eyes open and jump on opportunities when it knocked.

   At the moment there is simply too much open territory still available to warrant buying out to many E-juice brands. If you do feel like buying someone’s existing business is a good opportunity always compare that objectively with what it would cost to simply build it yourself. It is also almost always a bad idea on the smaller scales to try and buy competitors out because you think you will capture there customer base and increase your revenues. I have seen it happen many times after the purchase is complete some unknown party comes along and creates, yet another e-juice and you get stuck in a cycle you cannot sustain. It's also impossible to ignore customer loyalty that sometimes extends beyond the brand and to the creator instead.

   Overall, I have found this to be a touchy subject because it seems to always take on a form of hostility. Either the company being bought out at the small levels over values their company or takes it extremely personally. Very few people can value their assets objectively and come to agreements that make sense to both sides. It’s the primary reason why very few small companies sell in today’s markets.

  1. ALLIANCE

   This is my personal favourite out of the three as I believe quite heavily in the value of diplomacy. In my younger years I am ashamed to say my eagerness and willingness to work to extreme levels gave my youth an immature and combative nature. I didn’t go looking for fights with competitors per say but I certainly rarely considered the value of simply talking out issues with my competitors. It’s amazing for me to think about how much my viewpoint has changed on this topic.

   I can remember in one such instance I fought tooth and nail against a rival business who decided to open within a few blocks of my then retail store. They essentially copied my business exactly except made the dominant color blue instead of my chosen red. Right down to the carpet choices, the counter designs and colors, computer software etc… This ended up in a near decade long rivalry of every single trick in the book. I can very clearly remember taking it quite personally and losing sight of why I was in business in the first place. I participated in Price wars, bashing them verbally, sending in spies so I could price things 1 cent or 1 dollar cheaper. I even remember going to their cardboard bin at the back of their store at night and dumpster diving to try and find out what company was supplying them with a specific product so that I could carry it too.

   In the end you could say I won because their company went bankrupt and I bought it for a thousand dollars lock, stock and barrel. However looking back, I spent almost half a decade of my life trying to win whatever it was I thought I could win and ended up with not one red cent in my pocket as the victor.

   This was a tough learning experience, but it taught me the tremendous value of diplomacy. I could have avoided a huge amount of grief and losses by simply meeting the owner, shaking her hand and working out an amicable arrangement.

   Going a little deeper you can create more formal agreements with competitors but only if they are willing to communicate and put effort into it on an equal basis. These are a few things I look for when trying to put either verbal or contractual deals together with competitors.

  • Do not do deals with competitors unless they bring something to the table you do not feel you can do yourself. The reason for this is once you have the means to accomplish it a lot of resentment can grow very quickly and sour the relationship. This is interestingly often a major reason why business partnerships fail in 50/50 deals (among other reasons) because one partner over values the skill of the other and suddenly realizes they could have done it themselves and resent them. Special thanks to Peter for giving me more insight on this.
  • Build up small agreements as a foundation with little regards on if they work or not. What you are much more interested in is building up trust, respect, and mutual responsibility for each side’s tasks being completed on time and correctly. If things become difficult right off the bat with keeping their word on small points, it’s a good sign to think a large deal with fail anyway.
  • You must be willing to take risks to develop lucrative and successful partnerships with people. I have never personally seen a super successful and profitable plan that lasts over the long term that does not follow a ratio of risk to reward.
  • Choose right from the get go who will be dominant and who will be submissive – equal personalities rarely get things done easily and unless you want a lot of sparks to fly be aware of how this will affect you mentally.
  • Have a great deal of integrity, morality and ethics because if you want to grow and become successful your reputation will only become more valuable as you get bigger. Eventually you will reach a point where it will act as a huge amount of dead weight that will stop you at every turn or propel you into massive gains depending on how well you have managed it in the past.
  • An often-overlooked point is the value in maintaining great relationships with your businesses local neighbours. I believe that the people that end up beside me or who are in my plaza that run companies can either be my greatest support or my worst enemy and I prefer to keep them as happy with having me there as possible.

   There is simply so much wisdom that can be talked about regarding corporate alliances. A company for example is simply a group of people working together and communicating with the intention of completing some common goal(s) or purpose(s). It’s very important that both companies have as closely matching common goals as possible. The more they align the easier it will be to complete tasks, find agreements and work together.

   If for example one company is interested in purely making money and another company is focused on running a non-profit business one of them has to yield to the other. In this example what we often see in society is the profitable company does some sort of fund raiser or charity event simply giving money to the non-profit in exchange for some form of good will or marketing edge.

   The last point to make on this subject is that no one is ever neutral no matter how much they proclaim to be. Any competitor that’s worth his salt will be aware of you and know more about you then you think. You should also think this way too. There is absolutely nothing wrong with walking into a competitor’s business and introducing yourself in a professional manner. It’s often the person who takes that first step that can set the tone and the precedent for how you will interact with one another.

   Never be afraid to compete on the corporate battle field if it’s done professionally and on the fundamentals of business.

  • Price
  • Service
  • Quality

 

  1. ATTACK

   This is probably the area that I dislike the most and I stress great caution in the use of this type of attitude. The reason why these ideas don’t work is they focus the energy of the company on negative objectives and goals. This will never work on boosting good morale in your company as I believe that people are basically good and negative goals do not attract top talent.

   Customers rarely appreciate or respect a business that expels its efforts into bashing the competition and it often ends up driving customers out your door and to them. The reason for this, I believe, is the desire for people to form their own opinion. Even worse if they like the competitor better then you your trust with them goes right out the window.

   When you put your time instead into innovating and progressing your company and focusing on great service, that tends to be a far more fatal blow to the people you’re competing with then coming at it from the negative view point.

   If you develop a reputation for being aggressive, it’s very similar to walking into a bar and proudly proclaiming you have a black belt. Eventually you will run into a challenger you can’t beat and will get wiped out.

   Taking this even further, you can end up in a fight that’s so close it stagnates into a dead lock and neither side wins except for cutting each other’s throats and spending large amounts of time and resources on the stalemate.

   This can degrade down a very slippery path rather quickly. Price wars, Sales galore and anything and everything you can think of just to win without even remembering why you started the business in the first place. My advice is to be aware of your competitors and stay on a friendly basis with them as much as possible.

   We are starting to witness this ever more frequently with the Chinese manufacturers of hardware. It’s astonishing sometimes what people will say or do to get you to give them your money instead of it going to one of their competitors. I believe this will become more and more prominent in the hardware industry and will soon become extremely common in the liquid business as people fight for the all mighty dollar. One thing I am proud to say is I have stayed on pretty good terms with most companies and industry executives (although not all). This has resulted in deal making being much easier to complete.

   The last point to make is what you do when they are simply out to get you.  The toughest “crow” I have had to swallow over the years is to accept losses from errors, omissions, sabotage or theft from customers, competitors or even staff. Often the law is on the side of the criminal in the short run because the amount of time and money spent far outweighs what you lost in the first place.

   It is usually best to just walk away and accept whatever losses were present and avoid them in the future.

   I do believe that if you run your business with integrity and professionalism it will be very difficult to create enemies.

   I hope this was an interesting read and maybe there is a tidbit in there that can help you out.

 

Jeff Berda

jeff@jccorporate.com


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