3 Steps to Skyrocket Your Company Value Using Brand Expansion
Mo Siegel started Celestial Seasonings in 1969 by hand-picking wild herbs in the mountains of Boulder, Colorado. He turned the herbs into tea, then sold his blends to local health food stores. Quickly the Celestial brand gained traction. It became known as the “tea that’s good for people and the planet.” This unique branding attracted national attention and soon became a household name in stores across the country. As Celestial’s brand loyalty grew, so did their product line. Eventually, they expanded into markets like green, chai, wellness, and iced. Each addition increased the value of their company. So much so, that in 2000 they struck a deal with Hain Food Group to be acquired for approximately $390 million.
Celestial Seasonings is one example of how brand expansion can skyrocket a company’s value. The process was slow but strategic, resulting in steady revenue growth and a multi-million-dollar partnership. Here’s how they did it.
3 Ways to Leverage Your Brand to Increase Your Company Value:
1. Create Brand Loyalty and Trust
A brand is the company’s identity. It’s the product or service delivered plus the emotional benefit offered. Brands create customer loyalty which in return dictates growth rates, margins, and risk. Learn how a strong brand can influence company valuation here.
It took Celestial 26-years to expand their product line. During this time, they built fierce brand loyalty through consistent delivery of goods consumers could trust. When it came time to grow, they already had name recognition and a competitive position in the market.
2. Strategic Brand Expansion
Established brands are better equipped to branch out and add variety. They can take greater calculated risk because of their pre-established reputation. It gives them the freedom to try new strategies that attract niche enthusiasts. A riskier market indeed, but offers the potential for higher margins.
When adding products, though, a few key factors must be considered:
- How does this product align with the mission?
- How much will it cost to add a new product line?
- How will the product be used? Is it an addition or replacement?
- How will the new product increase profit?
Answer these questions first, then start the developmental process.
Celestial started their expansion with green tea. From there, they added new brands approximately every four years – often setting market trends. By 2009 their popularity had grown so much that the demand had them introducing new flavors each year.
3. Branding Partnerships
Strategic alliances help brands penetrate new markets. Together, they’re more likely to endure greater risk and command superior pricing. A combined package and trademark communicates higher value to consumers and investors. Plus, it symbolizes longevity.
In 2013, Celestial leadership took their creativity and innovation to the next level by partnering with Whole Foods, Trader Joe’s, and Sprouts. They developed product lines exclusively for these big-name brands. Their alignment created new cash flow streams on top of current sales. Thus, increasing their bottom-line and company value.
Value, growth, and partnership are all important parts of a strategic valuation. All three should be defined in a business plan, making it easy for investors to see the potential for high returns. Celestial Seasons was able to do this by understanding the value of a strong brand. They set their foundation early and crafted it over time. So, when it came time to leverage their value, investors were willing to pay top dollar – knowing the return would be significant for all parties involved.
Want to know the value of your brand? Colorado-based Quist Valuation has 35-years’ experience with strategic valuations. We’ve helped countless businesses, within all industries, understand the strength of their brands. Our team of experts can walk you through the process and help you determine the true value of your business.
Schedule a consultation with Quist here.
When Anthony decided to start his own software company, he knew he’d need an investor to bring his idea to life. So early on, he dedicated time and effort to position his company for equity financing. In doing so, he had to learn how investors would value his business that had yet to demonstrate meaningful revenue or profitability. At first, the path was unclear. But eventually, he realized three important business valuation drivers that all early stage companies should know. By being able to clearly communicate the value of his company around these value drivers, he was able to secure financing from an angel investor.
So, how exactly did Anthony create value within his business before the ask?
He crafted a value story that was realistic, coherent, and compelling. While Anthony spoke the “language of an entrepreneur” (one around opportunity, optimism, and vision), he knew he had to also speak the “language of an investor” (one around reducing risk and improving returns).
Here’s the secret sauce:
1. Assemble a Strong Management Team
The management team is one of the most important value drivers that a business can have. The key word here being “team.” Commonly, entrepreneurs tie their company’s value directly to their involvement in all operational aspects. Contrarily, investors want to see a group of people who possess complementary skillsets. Specifically, they want to view the team’s ability to work together in setting objectives, monitoring activities, and motivating employees. All of which are qualities that help funders determine the likelihood of future growth and success. Thus, strong teams can drive higher prices.
2. Develop an In-Demand Product or Service
Increased demand and opportunities for growth are the first two things investors look for in business. They want to see specific cash flow strategies and a diverse customer base. Companies with a single client accounting for more than 10 percent of overall sales is a red flag. Those who have plans for new products and product lines get viewed more favorably. Investors also like a marketing plan that tells a good story. They should be able to see upfront the problem solved and the unique business solution. Essentially, investors want assurance that the business has momentum. The best way to assure them is a written plan documenting a clear strategy for growth.
3. Define and Document a Clear Growth Strategy
A well-written business plan and brand strategy can increase the value of a company because it helps investors see the risks and rewards. Good plans document all systems including automated and manual procedures that generate revenue and control expenses. They also list the methods used to identify and track customers, as well as, deliver products and services. Standard business procedures and systems that are well-documented add value to the final asking price.
In conclusion, it’s the business owners job to tell the company’s story. Craft a tale that shows value using the three strategies listed above. A company that demonstrates limited risk and real returns can attract investors at a premium price even in the earliest stage of business.
To learn more about early stage valuation drivers, join Quist at Colorado’s Longmont Startup Week, July 24 through 28. Entrepreneurs, wanna-preneurs, intrapreneurs, creatives, techies, inventors, business owners, and investors are all invited to attend as our guests. Register for our presentation “The Art and Science of Valuing Your Startup” on July 25 at 9 AM here.
FOR IMMEDIATE RELEASE
Boulder, CO. – May 22, 2017 – Legislature recently passed a bill that helps keep business in Colorado as well as protect and grow jobs. The bill supports the development and implementation of Employee Stock Ownership Plans (ESOP). Colorado- based Quist Valuation, is bringing their 35-years’ experience with ESOP implementation to assist local businesses through this process and to correctly prepare for the associated state-driven revolving loan program.
An ESOP is a company trust fund. Essentially, the company contributes new shares of its own stock or cash to buy existing shares making it an employee-owned company. Employees receive a percentage of shares which increase with seniority. A process called “vesting.” When employees leave the company, they receive their stock at fair market value. Also, an ESOP protects the business and keeps it local upon an owner’s sale or retirement.
Colorado’s new bill is modeled after a 2012 Iowa Law. Today, there are 174 ESOPs in Iowa covering 83,872 participants. Colorado has 110 ESOPs covering 33,926 participants.
Most companies use bank financing to start an ESOP, but attaining funds can be challenging. Thus, under new legislation, the Colorado Office of Economic Development and International Trade (OEDIT) will be responsible for: 1) educating local business about ESOP, and 2) facilitating a revolving loan program to help small businesses transition into employee-owned companies.
In addition to the OEDIT initiative, Quist will be supporting these efforts by assisting companies to determine if an ESOP is right for them and how to leverage this new revolving loan program. A custom valuation will identify the advantages and disadvantages for the business. Interested business owners can contact Quist to schedule a discussion with an expert analyst, today.
Quist Valuation was founded in 1984 and has grown into one of the nation’s leading independent business valuation and securities analysis firms. The team consists of expert Chartered Financial Analysts, Accredited Senior Appraisers, and Economists. Together they guide public and private companies and investment entities through the intricacies of financial reporting, corporate finance, tax compliance, and related litigation support.
Learn more at www.quistvaluation.com.
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Shina Culberson- President
3 Steps to Skyrocket Your Company Value Using Brand Expansion
Mo Siegel started Celestial Seasonings in 1969 by hand-picking wild herbs in the mountains of Boulder, Colorado. He turned the herbs into tea, then sold his blends to local health food stores. Quickly the Celestial brand gained traction. It became […]
Continue reading →
Top 3 Valuation Drivers that Help Land Early Stage Investors
When Anthony decided to start his own software company, he knew he’d need an investor to bring his idea to life. So early on, he dedicated time and effort to position his company for equity financing. In doing so, he […]
Continue reading →
New Colorado Law to Provide Funding for Small Business ESOP Program
FOR IMMEDIATE RELEASE Boulder, CO. – May 22, 2017 – Legislature recently passed a bill that helps keep business in Colorado as well as protect and grow jobs. The bill supports the development and implementation of Employee Stock Ownership Plans […]
Continue reading →