Tag Archives: Sales

WIMS Client Spotlight: Biotech Accelerated

At Biotech Accelerated, they strive to bring the best health technology to public and private communities all over the world. They are currently and actively delivering solutions for the COVID-19 pandemic by serving private corporations and federal, state, and local governments globally. Their signature product, an at-home COVID-19 test kit, takes much of the burden off of you.

Why test from home?

Diagnostic PCR Test with documented >99.5% Accuracy.
Purchase to have Test Kits available on hand when needed.
Avoid exposure, lines and delays.
Results available in 9-24 hours from arrival at lab.
Overnight Return Shipping Label & resealable box Included.
Free Telehealth Consultation included.
On-demand text message customer support included.
Electronic HIPAA protected result delivery included.
Results are diagnostic valid for medical procedures, travel etc.
Insurance reimbursable. We provide Itemized receipt and lab form to submit to health insurance for reimbursement.

Biotech Accelerated walks you through the whole process with simple directions and a hassle-free experience. Check out the Biotech Accelerated website to see why their test kit is the right choice for you, your family, and your business.

WIMS Client Spotlight: Industrial Strength Industries

Industrial Strength Industries was founded to address the needs of First Responders, Law Enforcement, and Industrial clients in New York State who seek to include small businesses in their Supply Chain. They are a woman-owned small business with over 25 years of experience. Industrial Strength Industries can assist you in meeting your diversity and small business goals. Their services include expert sourcing and on-time shipping from their network of Search & Rescue, SCUBA, Tactical, and Industrial manufacturers and distributors. Their objective is to service their client-base with excellence.

Past Performance Includes:

– US Air Force
– US Army
– US Marshals Service
– US Coast Guard
– US Navy
– US Department of Homeland Security
– US Department of Alcohol, Tobacco & Firearms
– US Department of Veteran’s Affairs
– US Bureau of Land Management
– US Customs & Border Protection
– US Drug Enforcement Agency
– US Department of Defense
– NOAA
– FEMA

Reach out to them by visiting their website https://industrialstrengthsupply.com/ . They are sure to get back to you in a prompt fashion to address your Search & Rescue, SCUBA, Tactical, Safety, and Industrial needs.

WIMS Client Spotlight: Commercial Carolina

Commercial Carolina brings wisdom, creativity, and innovation to the process of commercial real estate brokerage, investment, and development. Their goal is to offer a solution to your needs while exceeding expectations and deepening your relationship. They strive to achieve the best possible outcome in all endeavors and expect to be judged upon their results. Their firm utilizes up-to-the-minute technology including analytics software, wireless on-the-go connectivity, and client informatics and data mining from providers including Costar, Loopnet, and regional/local commercial listing services.

Services include:

Real Estate Development
Capital Investments
Tenant Brokerage

President Robert Settle has more than 30 years of experience in commercial real estate brokerage, investment, development, and financing. His expertise includes commercial property in the Eastern U.S. with over $200,000,000 + in closed transactions.

As Commercial Carolina enjoys the advantages of technology, they know their success is truly grounded in “old-fashioned”, traditional values and methods. By providing the highest level of integrity and ethics in all matters, they will deepen their relationships and the value of their services with clientele.

Simply put, they will not be out-worked or out-thought by their competitors or out-of-sight when you need them. Check out their website https://www.commercialcarolina.net/ for more in-depth information on what they can do for you!

The Real Estate Branding Revolution – Creating an Immersive Experience

We have seen the benefits of storytelling and branding as a marketing tool to create an experience for companies and people in almost every industry. As of late, we have seen the real estate industry begin using branding and storytelling to create a lasting impression on people to invoke emotions and appeal to their aspirations. But what does this look like and how can it best be leveraged?

Sports teams, athletes, actors, and “influencers” hire marketers, agents, and consultants to carefully curate, promote, and monetize their personal brand to better connect with fans. Restaurants are leveraging their atmosphere/vibe, décor, and community involvement to appeal to customers just as much as they focus on the actual food and beverage offerings. So why not real estate too?

Traditionally, real estate has been a game of square footage, location, and expectation of appreciation to determine value. The best players in the real estate game look past these objective features and focus on the subjective needs of their target market.

This means taking into account, and optimizing, the impact you can have on someone by establishing a memorable experience that will leave them itching to revisit the property, envision themselves living, working, or owning it, and at the very least passing it on by referring it to others.

Many in the industry are now treating their buildings and spaces like they are their own company by creating a brand around the asset that helps to differentiate from competition. Developers, investors, and brokers are leveraging technology more than ever to showcase their properties. Commercial and industrial buildings are now building their own websites, social media, their own videos, and marketing, and much more. Apartments and multi-family buildings are too. Plus they’re integrating CRM systems into the day to day operations to close the loop on leads, prospects, and track referral sources.

Some are now adding virtual and augmented reality walk throughs to show off the amenities, highlight key features, and visualize the surrounding community and more as well. Tenants (and potential investors) can get an even deeper feel for what a space can offer without having to physically be present in the space.

Creating a story surrounding a space to develop a certain desirable atmosphere for people matters more than ever. You are no longer just selling square footage as much as you are selling the ability to solve their problems, meet their goals, and help add value to their life, business, or whatever the case may be.

Building a brand that people want to share is a powerful tool. Creating that reputation of being the place to be essentially markets your space for you. This could be through adding more amenities such as a pool, a gym, a lounge, a rooftop patio, an art gallery, anything to foster an ambiance of originality that can be shared with friends and colleagues. People remember what they have not experienced before, giving you an advantage over competitors if you can differentiate in this way.

All of this adds incredible valuable for commercial properties, office buildings, and apartment complexes. If you can create an immersive impression, it can have an effect like the movie “Inception” that lingers longer after they visit the website, do a walk through, view a brochure, or watch a video. That is when you know you nailed it and is what you should aspire to.

What other approaches are you seeing being used to help tell these stories and create these brands?

Q4 2020: FINISH LIKE A SAVAGE & PREPARE FOR 2021 DOMINATION!

There’s something about Q4 that is always exhilarating to me. Knowing that “the game” is coming to an end, each and every play is more significant, there’s less margin for error. Perform well during this time and you can make up for a lot of previous mistakes and setbacks along the way. Let up or fumble the ball, and you can destroy all the momentum you made thus far. No pressure, right?

All of this is going on while simultaneously a new game is going to begin soon thereafter. Endings are always thrilling, but so are new beginnings after all. The new year coming up is especially enticing given the chaos of the current one. Whether it was a rough year, or an incredible one, you have to just keep looking forward and continue to get better.

Despite the hectic grind I’ve been on lately (pretty perpetual at this point), I wanted to take a little time to revisit and write up a quick/updated “Q4 Manifesto” which is mostly for myself, but then I decided to add a few extra tips for you too, primarily applicable to both your business and professional life.

Don’t wait for January 1^st to start your New Year’s Resolutions, now’s as good a time as any. It’s a misguided practice that usually doesn’t end well anyway. You don’t need an arbitrary start date to work on self-improvement, that should be a daily practice as it is. Why not start right now?
Get AGGRESSIVE – Close out ALL of those pending dream deals that have been lingering. Do much more outreach and lead generation. Don’t dwell on whether you’re annoying people or assume that they already have an expert helping them that does what you do. Push harder!
Think about and plan out ways you can continue to streamline your business & professional operations. This can include CRM, automations, revisiting your tech stack, delegating more tasks, etc.
Try not to eat and drink everything in sight just because it’s the holidays. Maintain (or in some cases start) your workout routine consistently and only indulge occasionally. It’s especially tough given all the parties and networking events, but some balance now will spare you later.
Enjoy time with my family and friends and BE PRESENT. Don’t spend that precious time distracted with your head in the clouds and worrying about things that are out of your control.
Debrief/Reflect on the past year. What worked, what didn’t, what do you need to improve upon? Lay it all out objectively and identify opportunities to get better. While this may seem obvious, it’s crucial.
Strategize for 2021 (and beyond) now. Spend an appropriate amount of time writing out specific goals, sketching out project plans, and dreaming big. From there be mindful, thoughtful, deliberate, and thorough enough to also make your plan realistic while still stretching yourself. Once this exercise is completed, start working on implementing that strategy ASAP to carry some momentum with you.
Add appointments to your 2021 calendar (monthly/quarterly, etc.) now to make sure you schedule the time to reflect on your progress and measure where you’re at along the way to ensure you continuously improve.

A few specifically for you:

Get and implement a CRM already! Seriously, how many times do I have to say it? If you need to spend some time asking a few questions on how to get started, reach out to me, that part is, and always will be, on the house.
Start a blog, a podcast, video/webinar series, whatever. Leverage content marketing to develop and enhance your brand and get your business’ name out there.
Finally start that business you’ve been day dreaming about for years now.
Or at least start working on that side hustle you’ve been planning.
Identify an organization you’re interested in and get involved in the community. This could be philanthropic or civic, doesn’t matter as much as simply taking action and giving back.

There are plenty of others I’m forgetting. And I will likely revisit this some more over the next few months to continue tweaking it.

What are some of your Q4 goals? What about your 2021 goals? How can we help you achieve them? Please let me know, would love to hear from you!

The State of Technology & Innovation in Real Estate

The integration and adoption of technology into every industry is inevitable, even in industries that are traditionally relatively slower to adopt like real estate. Tech developments are enabling professionals in the space to be able to facilitate easier, faster, efficient, and more secure deals for all parties involved. Below are some of the emerging technology trends that are being integrated into real estate now, and in the coming years, many of which have been accelerated by the outbreak of COVID-19.

Augmented Reality & Virtual Reality

The AR/VR spaces have seen tremendous growth, and it seems with the onset of COVID-19 the demand and urgency to roll out these capabilities has only increased. With the need for limited contact during the pandemic, restricted travel, and work from home trends, it is only natural that AR/VR trends will continue to surface in the real estate industry.

AR/VR technology increases the efficiency of managing tangible spaces and properties. Buyers and investors can view homes, office spaces, apartment complexes, industrial properties, office buildings, etc. without having to physically visit these properties. This saves time and money. The benefits are plentiful and include:

Virtual tours to advance remote property viewing,
Increased efficiency of property marketing,
Web and mobile applications for easy accessibility (even if a user does not have a headset),
Detailed investigation of properties that saves time,
Potential to remotely cover all stages of the negotiation process,
More dynamic and real-time collaboration with architects, developers, GC’s, and brokers,
Ability to build out a space, input secured tenants, and decorate a potential property, and
Many other use cases and capabilities are being developed daily.

The increasing popularity of real estate mobile apps and websites to search for properties will only be enhanced by AR/VR technology. People are closing deals and investing in properties/land without even physically seeing properties and are saving time in eliminating those properties that they would otherwise waste view in person.

CRM, Automation, & Business Intelligence

CRM programs are still in an early stage of adoption in the real estate industry despite being around for a while, and regardless of having proven their incredible value to companies in every industry. This industry relies on, and has a heavy emphasis on relationships, so the value to having a great system is immense. In addition, the more a firm and its professionals can automate the sales and marketing process to supplement their activities, the more likely they will be to grow.

Further, not just helping with the management of relationships and sales but tracking and referencing data can really set firms apart as well. For example, “Business intelligence derived from big data is already one of the biggest trends in property management. It can empower a real estate application affecting the process of interaction of property owners, agents, and customers in the app. BI provides various tools for the optimization of decision-making. Business analysis algorithms are applied to get intelligent predictions defining the relationships of app users. Then, it is easier to give an answer to the question about what is going to happen. Reviewing internal data and analyzing business processes, BI is increasing your data-driven real estate business. With business intelligence software solutions, you can optimize your operations leveraging and processing all incoming data.”

Artificial Intelligence & Machine Learning

AI and ML have a bit longer of a way to go yet compared to the other trends, but they’re likely a lot close to widespread adoption then you’d think. An article from Forbes, highlighted some of their potential use cases:

“Right now, property search sites rely on simple preferences like location and size to display properties for sale; in the near future, however, AI may enable these sites to recommend properties based on additional preferences, personality traits, and values.

AI will also be able to help predict pricing trends more accurately. This type of technology would look at historical trends in the market for an area, but might also take into account area crime, schools, transportation, and marketplace activity.

It may also make the buying experience faster and easier. Companies are already creating ways to digitize the entire homebuying experience — no more reams of paper to read and sign at closing.”

Crowdfunding & Fund Syndication

Purchasing real estate, especially in the commercial/industrial sector, obviously requires a large amount of capital, which creates high barriers to entry. Syndication through crowdfunding, (along with blockchain mentioned below) allows for part-ownership in properties. Similar to how crowdfunding has become popular for those wanting to invest in start-ups without the traditionally large amounts invested by private investment firms and angel investors, you can now crowdfund to invest in properties too. This easier access enhances the trend towards a “sharing economy” where expenses are distributed, yet relationships flourish, through sharing the tangible things that traditionally single people or businesses would own. This is further evident in the business space through the popularity of coworking spaces.

Blockchain

Blockchain is most often associated with cryptocurrency, but it is reshaping business practices in traditionally non-tech industries. Blockchain does not necessarily change how real estate business is done; however, it serves to mitigate many of the challenges that arise in real estate negotiations, creating a safer and more efficient approach for the industry.

Fraud has existed in every industry that uses paper contracts. Why try to develop fraud detecting software or practices instead of just getting rid of the real problem: paper. So-called smart contracts can link digital property ownership to the blockchain, preventing any altering of material terms once they are encrypted. The documents become impossible to forge as the cryptography keeps them safe.

Although records are impossible to forge, they are not impossible to update. Typically, up-to-date, and relevant property information can be difficult to obtain when dealing with real estate paperwork. Also, it often must be paid for. Blockchain, however, provides all the historical data on properties and relevant updates in real time, preventing the need for any intermediaries to provide and verify relevant information.

Real estate deals involve many different individuals: notaries, bankers, real estate brokers, and others. Blockchain allows the buyer and seller to reduce the time needed from some of these respective individuals for their deals.

Drones

Marketing has become less about specific products/capabilities and more about storytelling, creating an emotional attachment to material things. Creating videos using drones can help tell the story of properties while maintaining a cost-effective marketing budget. Different angles give a better big picture look into what a property can offer.

Furthermore, drones can also assist in estimating the value of a property. Not only can you see surrounding properties, but you can get a better feel of the surrounding community. Drones can be used to spot potential risks or maintenance issues, providing a more thorough evaluation of properties.

Conclusion

This article just scratches the surface here, as there are many other technologies rolling out related to construction best practices, architecture, maintenance, materials, marketing, etc. The industry is ripe for further disruption and optimization which presents incredible opportunity for those that embrace it and make the most of these emerging technologies.

Written By: Mike Simmons and Evan Shirreffs.

5 Ways Family Offices Can Optimize for the Present & Future

Over the past 50 years, the amount of family offices has grown to an estimated 3,500-5,000 as ultra-high-net-worth (UHNW) investors have increasingly used this approach to leverage and manage their wealth. Whether it be through Single-Family Offices (SFO’s), Multi-Family Offices (MFO’s), or a combination of both through syndication, wealthy families have seen the advantages of customized structures that meet specific needs and go much more in-depth than just financial investments.

With family offices varying in size, scope, purpose, and operation, it’s impossible to define the specific actions family offices should take, but it is possible to highlight key themes and challenges that most family offices face and offer advice on how to deal with common situations that arise. The increased level of sophistication for these investors has created a need for constant communication and transparency to ensure everyone involved in deals is on the same page and held accountable to achieve the desired results.

Vision – Clearly Communicate Goals to Foster Alignment

Family offices need to communicate their goals and alignment to all players involved, from their internal teams to management at their portfolio companies and everyone in between. With varying scopes of family offices, the common goals tend to surround income, total assets, and legacy. There is a varying degree to which these topics are discussed and articulated among family offices. Mapping out priorities that articulate the desired purpose and direction for the family’s wealth will encourage proper decision making and the right strategy. The proper structure of the family office can then ensure that governance framework, operating processes, teams, and advisors are set up in a way to support the family office’s purpose and values to achieve specific goals. Further, it will help identify the right KPIs/metrics to track and measure against as well.

Operations – Set up the Proper Delegation of Duties

Once everyone knows and embraces their role, family offices can then fill in the gaps where they need help, making the whole process much simpler and clearer. These gaps can be filled through streamlining operations via outsourcing. Outsourcing to specialized agencies not only provides expertise and more eyes on what matters, but it also allows family office executives to focus on the areas they’re passionate about.

Deal Flow – The More Opportunities That Come Your Way the Better (if it is manageable)

The best deals typically come through referrals, but there are also plenty of solid opportunities that come in via cold calls, emails, pitch events, or online databases stacked with potential investments. No matter the source, access to these deals is paramount to succeeding in the private investing world. A few sources we have found useful are AngelList, PitchBook, LinkedIn, CrunchBase, etc.

In more of a nontraditional move, family offices can also find deals and collaborate through equity crowdfunding. A capital raise can start as Reg CF and later convert a round to Reg A. Start-ups are increasingly seeing the value in crowdfunding to raise initial capital as it helps to validate their business model and market fit. With less regulation than private equity, investors can also benefit from getting involved and take more ownership of great ideas at an early stage.

Syndicate Investments to Reduce Risk, Increase Upside, and Achieve Economies of Scale

Most family offices already co-invest through syndication with other family offices. Yet this only increases the need for transparency from all firms involved: the family offices, their teams, portfolio companies, and any outsourced agencies that are involved in establishing a smoother operation. Syndicating deals allows you to reduce the downside by committing less capital, it increases the amount of relationships/resources that the target company can leverage, and it also enables each family office/fund to be able to split expenses when appropriate.

Finding and deploying the right consulting firm is a key example of this, due to the essential need for trust and objective parties when dealing with a large amount of wealth from a small number of sources. If family offices do choose to outsource certain operational functions (like marketing, sales, finance, etc.), a firm that provides constant communication and quick action to resolve issues is necessary. With the right external agency, family offices can concentrate on the roles that align with their purpose and passion with respect to running a successful operation. Not to mention, they save even more capital by not having to hire full-time positions to do what these outsourced specialists have been doing well for years.

Succession Planning – Always Keep an Eye on the Future

Succession is one event that family offices must have even though it can be uncomfortable. Having a contingency plan in place allows for smooth transitions and operational stability across the board when the time comes. This could mean planning for the transition from one generation of principal(s) to the next, or from one family office executive to the next. CEO’s tend to be in their position for an average of approximately 5 years. For family offices, managing directors and executives tend to hold these offices for 10 years as they have established a rapport with the investor families. This means that much more of the operations are in the hands of the family office executives than in traditional businesses.

When succession occurs with these individuals, it can be tough for the family office to stay on course if objectives and procedures have not been communicated. Understanding the role of the family, the family office, the portfolio companies, and any external firms in the event of succession is key in mitigating risks and obstacles that can cause disruption. With less regulation and oversight regarding practices of family offices, a lot more is done on an informal basis, leading to the possibility of overlooking key operations. With a clear and defined plan, it provides an easier transition when any type of succession inevitably occurs.

Conclusion

As you look to scale your operations, investments, and grow, there are clearly a variety of routes to take. The key is determining the route that best fits your family office’s vision, the portfolio companies you want to invest in, and then ensuring that all parties involved, whether in-house or external, all understand and are committed to executing it.

Written By: Mike Simmons and Evan Shirreffs.

THE PRIMARY MISSION OF WIMS CONSULTING IS TO HELP YOUR FUND AND ITS PORTFOLIO COMPANIES GENERATE A HIGHER ROI NOT ONLY INTERNALLY, BUT ON BEHALF OF YOUR INVESTORS AS WELL. WE CAN ASSIST WITH SCALING YOUR INVESTMENTS TO HELP INCREASE VALUATIONS IN ADVANCE OF ADDITIONAL FUNDING ROUNDS, LIQUIDITY EVENTS, EXITS, OR IPOs. WE CAN PROVIDE A LOT OF DIFFERENT SERVICES, CREATE AND IMPLEMENT A ROBUST STRATEGY, AND EXECUTE EACH TACTIC, BUT EVERYTHING THAT WE DO TRULY BOILS DOWN TO THAT ONE SINGLE OBJECTIVE OF ADDING MORE VALUE TO YOUR FIRM.

Enterprise Level Salesforce.com CRM Implementations for Mid-Large Companies

My firm, WIMS Consulting, has been providing CRM implementation services since its inception (and personally I’ve been leading them for 15 years now). We have been platform agnostic (we work with all of the primary platforms, including Salesforce.com, Zoho, Hubspot, Microsoft Dynamics, and Insightly among others); however, the firm has recently taken measures to beef up it’s partnerships and team in order to deepen its focus on delivering more large scale enterprise level Salesforce.com projects.

We have helped many companies of all sizes with their CRM implementations (from startups to enterprise level), particularly leveraging Salesforce.com and Zoho, and we will continue to do so. But the massive shift in approach that mid to large-scale companies were forced to adopt throughout 2020 really highlighted operational challenges, issues that a well-functioning Salesforce program would do wonders to mitigate.

When properly implemented, Salesforce will have an incredible impact on sales and marketing, operations, communication (internal and external), automation, and so much more. You can take one look at their stock performance and see how much value they provide to their clients.

Not only are we aiming to build out Salesforce programs from scratch, we are also highly capable of jumping into existing iterations that have gone a bit off course and helping to right the ship. Or we can come in after the initial phase or two and help your company supercharge it to take the functionality to the next level.

I’ve been harping on the importance of CRM programs for about a decade now, yet it still hasn’t caught on the way it should. 2020 was the year that changed this. Like with most technology, competition, economies of scale, and innovation have driven costs down significantly. Not only are they cheaper, but the functionality and value has simultaneously increased dramatically. It’s why acquiring and implementing a CRM program is my #1 recommendation for every business, regardless of industry or target market, if you’re looking to increase revenue.

Most importantly however, is that the ROI (return on investment) will more than make up for the expense.

One of the most important features, especially right now, is that Salesforce helps you automate your sales process. The more automated your sales cycle and follow up efforts can be, the greater volume of deals your business will be able to close. Further, the more accurate data you have about your sales cycle, the more deeply you can analyze it to gain insight that will not only help increase revenue, but ultimately help you improve:

Close rates,
Customer service and retention,
Length of sales cycle, and
Forecasting efforts and projections.

While implementing Salesforce can be a significant commitment initially, if your company does it right (which engaging us significantly increases your odds of that), the benefit to your business is invaluable. With 2020 in the past, now is the perfect time to start planning and conducting your due diligence to start 2021 with yet another New Year’s resolution.

We’re here to help if you need it!

3 Ways Restaurants and Breweries Can Boost Marketing During COVID-19

The restaurant and brewery industries are ones that COVID-19 has hit hardest as customers have literally been ordered to stay away from these establishments for months now. However, this does not mean that it is impossible to find ways to profit. Here are 3 ways to boost your restaurant and brewery marketing during COVID-19.

Update Your Online Assets

Your customers still want to eat your food and by now, they are most likely tired of cooking from home. They’re wondering whether you’re open and how they might benefit from one of your meals. Let your audience know how they can order from you by updating the following assets:

Website
Social media platforms
Google My Business

We have seen various methods of still serving customers, including curbside pickup, carryout, and home delivery. Update your website so it’s immediately clear that you’re open and offering one of these solutions. Provide your new hours and any specials that may be offered to help families in need during the pandemic.

Social media accounts can help highlight any new specials that you may be offering. Provide encouraging stories that point followers to the easiest way to get your food. In the “About” tab, make sure to reflect these added specials, new hours, and delivery methods.

Update these same changes on your Google My Business page so anyone looking you up online or in Google Maps discovers your new ways of doing business.

Be Empathetic About COVID-19

You know where every single one of your customers is right now. You know what each person is thinking because you are going through the same thing. You understand their fears and concerns about the future. Provide them empathy and comfort by personifying your business as much more than a business, but as people too. Marketing is not simply advertising; it is sharing your story with customers about why you are a business they should align themselves with.

You may fear that you’re taking advantage of a negative situation, but if you show value, customers will come. If you do it correctly, then you can become a shining light of hope for you customers.

Help customers understand that it’s acceptable to celebrate even during a pandemic. They simply should do so safely by social distancing. Help them understand that you’re here to provide comfort food and celebratory food to brighten their day a bit.

Offer Something Other Than Food & Beverages

We already know that margins are small in the food and beverage, so focus efforts on developing other avenues for revenue. Get creative and ask yourself what else you can offer. For example, how can you use gift cards or merchandise to increase overall profit during COVID-19?

Offer incentives for customers to purchase gift cards to give away to friends and family. It helps increase your revenue immediately and gets more awareness into the community that you’re open for business. In addition to giftcards, you can sell merchandise via an online store on your website.

There’s no need to see your restaurant or brewery suffer during COVID-19 if you get creative and proactive about your marketing. Don’t go on the defensive. Get on offense and become an inspiration for your local community.

Private Investment Funds in 2022: Focus on Optimizing & Streamlining Existing Portfolio Company Investments to Grow amid Volatility

The whirlwinds of 2020-2022 rattled businesses across the country, and it was no different for the private investment/fund industries. Even prior to last year, trends were moving toward funds (private equity, venture capital, family office, etc.) establishing platforms that focused on a suite of key business functions, such as business development, marketing, finance, PR, etc. to assist their portfolio companies with scaling their operations. Some funds have stood up internally¹, while others have engaged external strategic partnerships.

In the first half of 2020, a slowdown in new deals was caused partly by valuation discrepancies between buyers and sellers, resulting in a 63% decrease in activity in the Americas region² after the onset of COVID-19. According to a PitchBook report, U.S. private equity exits dropped by 70% (1^st 6 months of 2020 compared to year-ago period) because private equity firms marked down portfolio companies; they chose to hold investments rather than sell them³. Although this may sound alarming, a study by consulting firm Willis Towers Watson showed that despite a drop in exit transactions in the first half of 2020, there is little evidence of forced exits at least³. Furthermore, private equity firms raised $348 billion in the same time frame, which is only 10% shy of what they raised during the first half of 2019².

If funds have the capital raised but are not deploying it because of the risk of an unfavorable valuation or investment, the question must be raised: what have they been doing in the meantime?

In addition to simply boosting investments for current portfolio companies, funds are increasing aid in the strategic side of these businesses as well. “Increasing returns during ongoing fiscal and geopolitical uncertainty pushed top executives from PE firms to maintain focus on value and digitalization, and a commitment to developing the organizational and business models of their portfolio companies.”⁴ Many funds have turned to delegating these duties to outside firms.

Outsourcing operations, sales, marketing, and other core functions provides a new perspective for funds. With another set of eyes on current investments, funds can squeeze every penny of revenue out of their portfolio companies to boost chances of success. Outsourcing allows current portfolio companies access to the same professional team as their fund, which consolidates consultants, agencies, people, and expenses for a more efficient operation filtered through a single entity.

Furthermore, with investment funds specializing to extreme degrees these days¹, funds can focus on what they have specialized in, while letting the collaborative agency facilitate other aspects of the business. This allows them to keep the main thing the main thing so they can keep investors happy and informed, as well as assist their portfolio companies with more high value activities.

Not only does outsourcing provide more expertise with experienced professionals, but it tends to cost less than hiring someone within the fund or directly at the portfolio companies to manage these responsibilities. VC start-ups are staying private for an average of eight years longer than they would have back in 2000. It only makes sense to provide them with an experienced team for business development, marketing, and more. Without a team, the firm must manage all of this themselves or, for example, hire a business development manager. The average venture capital business development manager salary is nearly $80,000, not to mention additional benefits and expenses. Eight additional years of paying this salary (not including escalators and other contractual advancements) raises that investment to $640,000 allocated towards one person, when a team of experts can be hired to do an even better job.

Over the last decade, the appeal of going public has decreased as companies do not want to deal with inevitable scrutiny after releasing financials and other information. There has actually even been a shift of public companies switching back to private, with 8 out of 10 of the largest buyouts being Public 2 Private (P2P)⁴. Many companies would rather stay private, or be bought out through M&A, than to receive heat from the public. If a start-up does not go public, having that business development manager can continue as a growing yearly expense (regardless of value), even if the business isn’t in a growth or blitzscaling stage. Similar to the recession from a decade ago, companies are thinning out and hiring more contractors because it is a more manageable and flexible commitment.

Further along this line, “We are starting to see some changes that may signal a strategy shift by private equity to help struggling portfolio companies amid the crisis. Additional stake purchases by private equity investors are up by count and volume compared to same period last year and second- and third-round funding’s are also up from last year. Both are ways to inject cash into companies that need it most now.”⁵

In volatile times, more of the focus should be on what can be controlled. “Leaders should identify digital innovations such as business intelligence, big data analytics, machine learning, and business processes automation to help companies evolve and gain the skills needed for better performance and outpacing the competitors.”⁴

While not every business model is 100% perfect, and there are pros and cons to each, there are certainly many advantages both financially and operationally to leveraging a consulting firm to assist funds and their portfolio companies with scaling. Regardless of whether the macro environment is volatile and capital is tougher to come by, or when conditions are great and capital is flowing freely, running a tight ship focused on streamlining, growth, and ROI will always be in style and appreciated.

Written By: Mike Simmons and Evan Shirreffs

References:

1) https://tomtunguz.com/is-venture-capital-worth-the-risk/

2) https://www.institutionalinvestor.com/article/b1mqkqqx3g0k5v/Private-Equity-s-Answer-to-a-Frozen-Deal-Market

3) https://www.pionline.com/private-equity/private-equity-deals-tumble-20-2020s-first-half-pitchbook

4) https://bspeclub.com/2020/04/17/private-equity-2020-outlook-the-start-of-a-new-decade/

5) https://news.bloomberglaw.com/bloomberg-law-analysis/analysis-how-is-private-equity-optimizing-the-downturn