What is your greatest strength as a CEO? Sales? Marketing? Operations?
Whatever you do well, you need to know that it might one day become your Achilles’ heel. As owners, we tend to invest in areas where we know we’re weak. We realise we have limited resources with regards time and money, so we tend to put our efforts into the areas where we’re most vulnerable.
The result of this is that many founders under-invest in areas where they have natural strength. Two of the most common functions are sales and marketing. Most owners are decent salespeople, so they figure they can compensate for a weakness in generating revenue through force of personality and sheer will.
But determination only goes so far, and you may reach a plateau where your greatest strength becomes the very thing that’s holding you back.
How Gold Medal Service got stuck on the plateau.
Mike Agugliaro is an electrician by training and a natural salesman in practice. He’s a gifted speaker, and his warm personality makes him a magnet for customers. When he started Gold Medal Service with his partner Rob Zadotti, they didn’t invest much in sales and marketing. When Agugliaro was interviewed on the Built to Sell Ratio podcast, he admitted the extent of their marketing in their first decade of operations involved pinning a business card on the corkboard of the local coffee shop. Hardly what you’d call laser-sharp marketing, but it seemed to work.
Over 12 years, the business grew slowly to around $700,000 in revenue, which was when Zadotti announced he was leaving. The news made Agugliaro re-evaluate what they’d been doing. He realized they had been massively under-investing in sales and marketing. The business card on the corkboard wasn’t going to cut it.
Agugliaro convinced his partner to stay, and together they started investing heavily in sales and marketing. At the time, Yellow Pages were still the primary way homeowners found service providers, so they invested in a double-page spread. They tried radio, fliers, and just about any marketing technique they could measure.
Then the partners started to think of their trucks as giant rolling billboards. Agugliaro’s wife did some research and discovered that humans are hardwired to notice the color yellow. Agugliaro and his wife reasoned that humans must have evolved to avoid bees, so they added black lettering. Gold Medal’s 65 trucks were bright yellow and black and became a mainstay on the streets of New Jersey.
The investments in marketing paid off, and Gold Medal went from $700,000 in revenue in 2004 to a whopping $32 million in sales by 2017. Months later, Sun Capital acquired Gold Medal for a significant premium over the 5 x EBITDA multiple typical of the home services industry.
The moral of the story?
Your greatest strength can help you start a business, but you ignore it at your peril. You may be tempted to underinvest in your strengths, which is when they can become a hidden liability. As your business grows, you may need to invest in areas you never considered necessary in the past. Sales and marketing techniques are evolving all the time. So what worked in the past won’t necessarily work now. To build value in your business you need to look at your strengths, and build on them.