Security Sales & Integration January 2023 - 58

EXECUTIVE DECISIONS
Big Idea by Ron Davis
5 Business Growth
Points to Ponder
▶ DAVE KAUPPI AND I are old friends. We are
in the same profession - he is a generalist, who
is handling all types of business transactions. So I
guess that makes me and my associates specialists
in just one industry, generally referred to as the
security industry. We both write a column in our
respective industries, we have both written books,
we both conduct seminars, and we both have another
thing in common - we love what we do.
I was reading Dave's latest column, and I was
" I have spoken
with more than
30 primarily
technology-based
companies over
the years that
have faced this
exact situation and
can count on one
hand the ones that
had a successful
outcome. "
- Dave Kauppi
reminded of the fact that regardless of the industry
we serve, we both do essentially the same
thing for our clients, we help them sell their
businesses. I thought it might be interesting to
look at the approach a " generalist " would take,
as compared to what we do in our industry. Here
are excerpts from Dave's column:
Ron Davis is an SSI
Industry Hall of Fame
inductee and President of
Davis Mergers and
Acquisitions Group Inc.
Also known as The Graybeards,
the company is
active in acquisitions and
mergers exclusively in the
alarm business.
58
For frame of reference, prior to embarking on my
merger and acquisition advisor career, I spent my prior
20 years in various sales facilities in primarily information
technology and computer industry related
companies, from bag carrying salesman to district, regional,
and national sales manager and fi nally CMO.
When I look at the company, it is from the sales and
marketing perspectives fi rst and foremost. I am sure
that if I had a public accounting background, I would
look at my clients through those lenses.
Let's look at what might be typical situation. A
company is doing $3.5 million in sales, has a good
group of loyal customers, produces a nice income for
its owner or owners, and has a lot more potential
for salespeople in the opinion of the owner. Some
lightbulb has been lit that suggests that they need to
step this up to the next level after relying on wordof-mouth
and the passion and energy of the owner
to get to this stage.
I have spoken with more than 30 primarily
technology-based companies over the years that
have faced this exact situation and can count on one
hand the ones that had a successful outcome. Th e
natural inclination is to bite the bullet and bring
on that expensive resource and hope your staff can
keep up with the big infl ux of orders. Th e reality is
that in most cases the execution was a very expensive
Security Sales & Integration JANUARY 2023
rdavis@graybeardsrus.com
failure. If you fi nd yourself at this crossroad there are
several factors that you should consider:
1. 80% of sales are produced by 20% of the
salespeople. If you're only hiring one or two,
the likelihood is that you will not get a top
performer.
2. Th e president of the company has no sales
background so the odds of him making the
right hiring decision are greatly diminished.
He will not understand how to properly set
milestones, judge progress, evaluate performance
objectively, or coach the new hire.
3. To hire a good salesman that can handle a
complex sale requires a base salary and a draw
for at least six months that puts him in a better
economic condition than he was in his last
job. So you're probably looking at $150,000
annual run rate for a very decent candidate.
4. If you have not had a formalized sales eff ort
before, you're probably lacking the sales infrastructure
that your new hire is used to. Proper
contact management systems, customer and
prospect databases, developed collateral materials
and sales presentations, sales cycle time
frames and critical milestones and developed
competition feature benefi t matrixes will need
to be developed.
5. Current customers are most likely the early
adapters, risk takers, pioneers, etc. and are
not afraid of making the buying decision
with a small, more risky company. Th ese early
adapters, however, are not viewed as good
references for the more conservative majority.
Sellers in the security industry are far more
fortunate than sellers who retain brokers that
are generalists. For example, our industry has
matrixes that pretty much dictates what the sales
price of the business is going to be. It's usually
a multiple of recurring monthly revenue (i.e.
monitoring, service, etc.). Speaking as a security
industry broker, I can tell you that there are very
many more obstacles than you might imagine
- holdbacks, terms of payment, price of seller
inventory, furniture, tools and equipment, etc.
It's a path that our company has walked hundreds
of times. So, if you are planning on walking
down that path, make sure that the resources
you choose are going to be comfortable for you
and be knowledgeable about the type of transaction
you need.
securitysales.com
http://www.securitysales.com
Security Sales & Integration January 2023

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