Can an individual take on a huge billboard company and beat them at their own game? Yes, it’s been done a thousand times. So how can the small guy beat the big guy? In this episode of the Billboard Mastery podcast we’re going to harness the strategies that allow you to use the weak points of big companies against them and give you a continual edge.
Episode 5: David And Goliath Transcript
We all know the story from the Bible of David and Goliath. Goliath, the giant warrior, and David who's a fraction of his size. Goliath with all of his armament and his sword. David has nothing but a Slingshot and we all know how the story ends. David defeats Goliath.
This is Frank Rolfe, the Billboard Mastery Podcast Series. We're going to be talking about how the small guy can actually beat the huge company when it comes to Billboards. It's a topic that I've always been interested in. When I started out in the industry, obviously, I was nothing. I was a nobody. And here I was taking on giant companies, trying to beat them to get ground leases, to build signs and to buy signs and to rent the ad space.
So how do you do that? How does someone starting out ever take on a big company? Well, here's some of the reasons you can do so, and you can win. Number one, just because you're small doesn't mean you can't bond with the property owner or the advertiser. Bonding is a special force of nature. It's when people just naturally like each other. So, when you bond with somebody, it means you consider them more than just a person, but they're more kind of a friend or someone that you want to help.
It's a whole lot easier when you're a small guy to bond than big companies. Big companies, they come off kind of stiff, kind of sterile, not a lot of fun, but the small guy definitely can step in there and be themselves, and property owners and advertisers just like that. Everyone likes the theme of the underdog. So, first off, it's much easier from a bonding perspective to be small than it is to be large. So there's the first tool you have in your favor is simply the fact that people are going to like you more because you can be yourself and you are yourself more than someone in a big company role where they can't be themselves because they represent the company. They're afraid about liability for the company.
Number two is speed. When you work at a big company, you can't make snap decisions. You have to take any decision, typically, and run it through a committee. Billboard companies are no different. If you want to sign a ground lease with someone to build a sign, you've got to run that through a real estate manager at the big company, or at least some kind of committee that meets periodically to go over such items. Same as if an advertiser wants to rent the sign, but wants a little bit reduction in price. You don't have the authority to close the deal. You can't say, "Okay. Yeah, I'll go with a lower price." Again, you have to run it through a formalized committee. This takes lots of time. The small guy can make an immediate snap decision.
Property owner says, "I'll sign your lease right now, but I want 21% of the gross instead of 20." If you want to do it, you can do it. The big guy has to say, "Well, let me go back to the office and let me talk to my boss, and we'll run it through a committee and I'll get back to you here in a couple of weeks." By the time that guy gets back to him in two weeks, I've already had it under contract for 13 of those 14 days. So, once again, being small gives you a lot of extra speed, and speed is an essential component to closing things. That's one of the fastest things in the world. I have a plaque on my wall that says, "Time kills deals." It means that life is all about a sense of urgency. Big companies have no urgency. It's not their money. They don't really care. So, from a speed perspective, once again, the small guy wins.
Then you have desire. Just your enthusiasm. Well, when it's all your stuff, when it's your money, of course you're going to be enthusiastic. What about the guy with the big company? How much ownership does he have in that sign? How much money does he get if it succeeds? The answer is not much, so therefore he doesn't have the same enthusiasm, the same drive that you do. So, when it comes to a desire perspective, once again, you crush them because you really, really, really care. This is your future, your financial future. You want that money. You want that stream of income. The guy at the big company, he just lives for the weekend. He doesn't really care. What happens Monday through Friday. He's more than happy to [inaudible 00:04:24] something. He doesn't really care if he gets signed up or doesn't. So once again, small guy wins.
Then you have the issue of overhead. Obviously, this is one area where David really beats Goliath because Goliath, big companies, have very large overhead. And as a result, they aren't willing to work on billboard to have smaller margins. They want to have a much higher profit percentage than the small guy does. So, therefore, they have to pass on deals the small guy can do. Good example would be the big companies that always say they want to be at a 15% of gross is their maximum lot rent, ground rent for the sign. But the small guy, he may be happy with 20 or 22%, or even 25%. Why not? It's still completely profitable.
Why is the big guy stuck at that one figure? Why can't they get that one figured out of their mind? Well, because they've run the numbers and because they have so much overhead with that big building and the receptionist and all the stuff, they have to have so much money per sign just to cover overhead. If you don't have the overhead, you don't need it. That could be just extra profit to you. So once again, you can take on, as a small guy, many, many deals the big guys have to pass on or they indirectly pass on because they can't bid to compete with you because they got to have too big of a margin built in.
That's a common issue you see in the oil and gas industry. There are these wells, they're called stripper wells. These are wells that get down to only about a barrel a day or a barrel a week or even a barrel of month. The big companies cannot operate those kinds of stripper wells, so they'll sell them off to individuals they can handle it with their overhead. The same is true with billboards.
Next, creative thinking. Now, often, when you're out there in the Billboard arena, you're having to think on your feet, you're having to move fast to do unusual things. Big companies can't. Everything has to fit in a certain box. So, let's just, for example, I'll give you the example of one sign I did. Great location, major highway next to a building, but the problem was the landowner wanted it to be only in the space from the edge of that building to the edge of the property. There was not much room at all. Not much room at all.
Typically, between those two components, the big company would need to build a standard monopole sign. They would need 15 to 18 feet in width. He didn't have it, not even close. He had about eight feet. So, the big company couldn't figure out a way to fit the sign on there. However, I could. Told the guy would build a back-to-back I-beam units and including lights, it would come out exactly to eight feet in width.
The big company said, "Now, wait a minute. I still want to do it, but I'll have to put my big old monopole out in the parking lot of the building. And I'll just have the sign overhang the building." Well, that isn't what the property owner wanted. He was okay to get the billboard income, but he didn't want this big old ugly thing out in his parking lot. He wanted it nestled right between the side of the building and the property line, so you wouldn't see any of the poles or any of the other parts of it.
So, I was able to get the location because I could do creative thought. You see that over and over again with signs, both when you're trying to build them and also when you're trying to rent the ad space. So many times, I'd go to the meeting to try and rent the ad space. I might have the McDonald's and the McDonald's would say, "Well, you know what? I'll go ahead and rent the sign if you can get someone who will share it with me."
I remember once I did a sign, it was a whole group of merchants in a downtown area. I shared all of them together. It was like 50 people. They each had to put in very small amount every month to pay the bill. Big company couldn't do it. They'd say, "Well, gosh, no. I've got to have just one person signed the ad lease. I can't have 20 people sign the ad lease.
Also, maybe you get creative on the term of the ad lease. Maybe the ad lease typically is one year term, big company has set on that one, change it. And why is that to be a year? Guys wants to do eight months, well then, do eight months. So again, when it comes to flexibility, creativity, small guy always beats Goliath because Goliath can't move quick. Goliath is big. Goliath takes him a long time to maneuver. So, once again, small guy can wins.
Finally, small guys have a lot more patients than big companies do. Now, if you could find a Billboard location out in an area where the town is growing out in concentric circles of development, and is going towards where your site is, you can do incredibly well with that. That's always been a great strategy with Billboards.
Just go outside of the town a little bit where there's a lot more available locations, build your sign and just wait. And over time, things will grow out your way. The rents will go up. It all works out magically well. Big company can't wait that long. They want performance today. They can't have any kind of customizable deal. They want it to happen right now. This year. Can't make it happen this year? Well then they can't build it.
So, once again, when it comes to patience, you have an advantage on them because they don't have any patience. It's your money at stake. If you say, "Well, I'm going to build this side and I may not hit my goals on revenue for three years, may take three years for the town to grow out my way. But after that I'll be golden." Well then, you can do that, but the big company can't, that Goliath can't. He has to get approval from his boss, approval from the committee. And they'll probably say, "No, we don't want to wait three years. Are you crazy? We'll wait three months."
So, what you'll find over and over again in the Billboard business is, basically, the small guy really has the advantage on the big companies. The big companies, the Goliath, is more afraid of the David than vice versa. Now, I know it seems odd to everyone. You say, "Now wait a minute. I thought in America, the big company always has the edge." Well just look around you and look what's going on with big companies. How many of the companies today that are really growing fast are startups? Tons of them. Look at Tesla. Tesla is valued now more than Ford and General Motors and all car companies in the US combined. Once again, David took on Goliath and beat Goliath.
And it's not just them. In every industry segment in America today, you have big companies being toppled by small people. And that's because people, when they're starting out, when they're small, they have certain advantages. And those are the advantages that allow David to topple Goliath. This is Frank Roth with the Billboard Mastery Podcast Series. Hope you enjoyed this. Back again soon.