How to Build Your Digital Billboard Plant for the Next Owner
I was always taught that every good business plan should include an exit strategy. Hopefully you have given it some thought as you grow your digital billboard business.
To begin, we must recognize that the billboard industry of today is not what it was 5 years ago, when a purchase offer might be received soon after an installation. The days of building up signs solely for the purpose of a quick sale to a larger company are gone. Consolidation has slowed because it is more difficult to access investment capital than it was 5 years ago. Small operators must now build to operate and be willing to hold on to their signs longer.
That said, there are still consolidations and sales happening, and when the time does come to put your business or assets on the market, you want to be positioned to offer an attractive package for potential buyers. Here are some things to keep in mind in the development and operation of your digital billboard plant that may make your business more marketable in the consolidation market.
- Paperwork: Have everything in order. This sounds pretty basic, but not having your ship in order can cause a sale to stall. Leases, permits, structural drawings, LED display manuals and current sales contracts should be organized and indexed for easy due diligence. Nothing slows down or kills a deal like having to search for these key documents.
- Structure/LED Quality: Did you go cheap on your structure or LED unit to try to save a few bucks on the front end? This can sour a deal in a hurry. If the buyer feels that the signs may have structural issues or the LED board will have ongoing service issues, they may reduce their offer or decline the sale all together. When you build a billboard, consider the perspective of a buyer who may one day wish to acquire your assets. Will they want to buy what you've built?
- Aspect Ratio/Size: A wise operator will build industry standard sizes rather than an eclectic mix of billboard shapes. Having industry standard sizes and aspect ratios dramatically reduces ad design time and makes the signs more marketable to national advertisers. A buyer will be less interested in a network of mismatched sizes. Try to keep your structures and your LED faces uniform.
- Market Area: Are your signs spread out in ones and twos in multiple markets and states? This can make them hard to manage. It's true that digital has almost eliminated operational concerns related to geography and distance, but sales management is another story. If you can offer multiple signs in one market or region, you can create an economy of scale and this type of well-defined territory will be more likely to attract a buyer.
With any business venture, you want to make money while you build it and want to be able to make money when you divest. Having a solid plan when you build your billboard business will help you to meet both of those goals.