Andrew Rogerson's Blog, page 49

Receivership in business

Kevin Whelan is the President and CFO of The Beverly Group based in Rocklin, CA. Kevin acts as a Receiver when a business is distressed and the current owner is no longer able to run the company.

Kevin explains that generally a Receiver is inserted in various legal disputes by a judge to work as an officer of the court. He says Receivers are independent 3rd party representatives of the court that work to protect and preserve assets while there is a dispute going on. Kevin mentions examples of Receiver situations from real estate to marriage disputes. In noting a particular real estate story, Kevin notes that lenders are frequently not fully aware of what is going on with their properties. He says often proper insurance on a building is not active and this is something he in the past has been able to resolve in his role as a Receiver.

Kevin talks about the distinction between a Receiver and a Trustee. He says typically a Receiver deals with state work and takes a custodial interest in the assets they are working on. He says a trustee typically deals with bankruptcy scenarios and plays a slightly different role.

Kevin also talks about what it is like to come into a business following a court order and interact with the business owner. Kevin says it is quite surprising some of the improvements to a business that can be made by a Receiver once the “umbrella of a legal dispute” is not hovering in the office all the time. Kevin also discusses how the court handles compensating Receivers.

Kevin and I also spend some time speculating on the current market given his perspective as a Receiver. He says they still get a lot of calls in equity cases in small businesses, which proves that the economy is not entirely healthy at this point and still has a ways to go. Kevin and I agree that the economy is better than a few years ago, however is improving quite slowly.

If you would like to hear my conversation with Kevin Whelan, please click here.

The article Receivership in business first appeared on Andrew Rogerson and Rogerson Business Services by Andrew Rogerson

How to Dazzle Prospective Investors

Andrew Rogerson and Rogerson Business Services.

SBA loan performance data in 2015

An SBA loan is of great assistance to the buyer and seller of a business. However, it’s important to check the SBA loan performance data in 2015 to find out which banks are lending; especially in Northern California as not all banks are willing to lend in each industry.

If a first time buyer is looking to buy an existing business or franchise, the primary source of third party lending continues to be an SBA loan. As the economy continues to heal from the Great Financial Crisis that started in 2008, banks are unwilling to make conventional loans to first time business buyers.

The reason may not have anything to do with the quality of the business buyer, their credit score and credit history and their downpayment. It may simply be because the banks that underwrite and approve these loans through the Small Business Administration, receive a guarantee that allows them to offset some of the losses they may incur if a borrower defaults.

SBA lenders under greater scrutiny

Additionally, the banks be they large and “too big to fail” such as Chase, Wells Fargo or Bank Of America or smaller regional banks, community banks or credit unions are under intense scrutiny by the FDIC through the Dodds Franks Act to ensure all the loans they underwrite and approve are done to the highest standard. One of the best things about the SBA loan process is that it’s incredibly detailed and so this forces underwriting to be done at the highest standard or the SBA will not pay the default fee. One of the worst things about the SBA loan process is that’s it’s incredibly detailed and because banks receive such generous payments if there is a default, there’s no incentive for them to write any other types of loans.

Read More: Here is more information about finance/SBA loan to buy a business or franchise.

The Small Business Administration or SBA has its head office in Washington, DC. Spread around the United States are support or regional offices that provide different services including support to the lenders in their region.

SBA loan activity from October 2014 to March 2015

The SBA has a regional office in Citrus Heights, CA. Citrus Heights is located in Sacramento County. Because the SBA is a government agency, they also provide reports to the public on SBA lending. Because I’m very active with SBA loans, I receive a copy of the different reports and you can read this information to help guide you about who is and is not approving SBA loans.

Click this link if you would like to see: Total SBA loans approved by SBA Sacramento office from October, 2014 to March, 2015.Click this link if you would like to see: SBA loans approved by banks from October, 2014 to March, 2015.Click this link if you would like to see: SBA loans approved by county from October, 2014 to March, 2015.

To get an SBA loan approved is a formal process. There are many forms to complete and you will need to have a good credit score, a good credit history and a downpayment of about 20% of the amount you wish to borrow if you are buying an existing business or franchise with an SBA 7(A) loan.

If the funds are to buy an existing business, the lender will want to see management experience in that industry.

If you own a business and are thinking of selling, one of the steps I take is to get the business pre-approved for an SBA loan. This means I contact SBA lenders, provide background on the performance of the business and they do an analysis to see if the business meets their lending criteria. If it does, they provide a written confirmation. It does not mean the lender will definitely approve a loan but’s its half of the process that is then matched with a buyer when they show an interest to buy the business and wish to get an SBA loan. If you have questions, give me a call on 916 570-2674.

If you wish to buy a piece of real estate with a building you will want to get an SBA 504 loan which requires a downpayment of 10%.

If you have questions about getting an SBA loan to buy a business or sell a business, give me a call on 916 570-2674.

The article SBA loan performance data in 2015 first appeared on Andrew Rogerson and Rogerson Business Services.

Recent sale of businesses increase 6 per cent

According to the quarterly Insight Report recently released by BizBuySell.com, it shows the sale of businesses increased 6 per cent. The report also shows the businesses sold saw an increase in their financial indicators including the highest reported median cash flow since BizBuySell started tracking data in 2007.

In simple terms, the health of businesses continues to improve and as a result, those that own a business and wish to sell, it seems a good time to find a buyer for the business.

This quarterly report had some additional highlights and these include:

The economy continues to strengthen and this is seen in the median revenue of small business sold. In the first quarter of 2014 the median revenue was $400,000. In the first quarter of 2015 the median revenue was $442,000 or an increase of just over 10 per cent.The increase in median revenue saw an increase in the amount a buyer was willing to pay. The median asking price of a business was $200,000 while this grew to $225,000.Between 2011 and 2012 the number of businesses sold was on average approximately 1200 businesses per quarter. Between 2013 and the first quarter of 2015 the number of business sold was on average 1800 businesses or an increase of approximately 33 per cent.The types of businesses that are selling are retail (includes restaurants, bars, liquor stores, gas stations and convenience stores)at 48.5 per cent, service businesses (includes laundromats, dry cleaners, medical, dental, beauty salons and auto repair shops) at 38.9 per cent, manufacturing at 4.6 per cent, internet at 4.4 per cent, wholesale at 1.8 per cent and construction at 1.6 per cent.

If you would like to see the above information as an infographic simply click this link.

If you would like to see the full 2015 First Quarter Insight Report, simply click this link.

The take away from the above would be that it must be a good time to sell a business. That conclusion is reasonable but the more important piece to remember is that selling a business is simply much more than making it available to buy on a website. There are at least 24 steps to sell a business. Critical steps include planning the sale of the business, conducting a thorough search to find the right buyer, putting together a deal that works for both buyer and seller and then transitioning the success of the business from the seller to the buyer.

The steps include making sure it is properly valued, documentation is prepared to show exactly what’s for sale including any important terms or conditions to the seller and this information is only shared with buyers that are qualified to buy. Qualified to buy means the buyer should be willing to sign a Confidentiality Agreement, have a cash down payment and the ability to qualify for a third party loan such as an SBA loan if the seller does not want to carry the balance of the purchase price as a sellers note.

If you would like more information about selling a business or medical practice, valuing a business or buying a business or buying a franchise, please visit my website Rogerson Business Services.

The article Recent sale of businesses increase 6 per cent first appeared on Andrew Rogerson and Rogerson Business Services.

Emotions and buying a business

Emotions are part and parcel of our everyday lives. The emotion of fear or indeed the emotion of worrying that we may have to respond out of fear influences so many of our daily decisions.

Often the emotional response of one fear triggers another emotional response to another fear. For example, if we drive to work and fear we will be late it triggers a response to drive faster. Once we realize that this is what we are doing, now the fear of getting a speeding ticket kicks in or worse, the fear of having an accident. So now we get more fearful as we are not sure what we are supposed to do as we are totally conflicted.

Emotions and buying a business

The emotional response to buying a business or buying a franchise also presents many emotional moments of conflict. For example, when a buyer starts out on the journey to buy a business, the buyer has their own set of emotions. They say to themselves “I want to buy a business because I think I can be more successful at what I am doing.” Plus “I have the skills and confidence to be successful. All I have to do is find the right business to buy.” These positive emotions are soon tempered by the emotions of fear. “Can I trust the seller and what they say? Are the financial statements correct? Will the landlord approve me as a tenant? Will I qualify for a loan to buy the business? Will the employees like me?” Plus many more emotions and questions which then create that conflict I mentioned earlier with questions such as, “Is it the right time in the economy to go into a business? Is this the right business for me? Is the business in the right location?” And more.

The toughest part in the emotional journey to buy a business or buy a franchise comes during the negotiations. The main reason for this is that most business buyers miss the key word which is the very word itself called ‘negotiations.’ Negotiations by definition will be stressful. Driving a car to work and perhaps being a little late is something that does not take too long to know one way or the other. Plus, we have been there before so there is familiarity with the situation. However, the negotiations to buy a business will evolve over a period of time and it’s something that both the buyer and seller have not done too many times before and may be doing it or the first time adding further stress to the situation. It also helps to remember that negotiating to buy a business is not a sprint but drawn out over an extended period of time.

Read More: Here is more information about the steps to buy a business.

Andrew Wasynczuk is a member of the Harvard Business School. Andrew joined Harvard in the spring of 2005 and in conjunction with his co-author Colleen Kaftan wrote a background paper called

This background paper made the following observation which I think is exactly the same for both buyers and sellers trying to negotiate the buying or selling of a business.

“Our MBA’s generally feel like they are very ill-equipped for negotiation, whether that’s dealing with a landlord or buying a car – let alone the business situations they will be getting in to.”

Emotions in negotiations

Instead of trying to suppress or manage your emotions during a series of negotiations, consider the following. They will make you more effective which at the end of the day, is probably the best you can hope to achieve.

Accept the other party will also have their own set of emotions. That is, it’s not just about you.Under most circumstances, if either party moves to a place of anger in the negotiations that can be a big negative. Therefore, try to avoid it.There is a place for anger if it’s used correctly as it can demonstrate passion and conviction. For example, if one party puts forward a ridiculous offer then it would be appropriate to respond with something like “I don’t see how that will get the job done.” In this case, the negotiations are not sincere and fair which are two important elements in a negotiation.Always try to enter negotiations with a positive attitude. This approach will generally lead to better outcomes as both parties are agreeable and conciliatory which builds a level of trust and hopefully respect. These are two important elements to achieve to get a result that works for both parties.Good negotiations aim to achieve a win-win. If one party wants to buy and one party wants to sell, trying to achieve an outcome that works for both parties is the right goal.If one party appears too greedy, that will bring a negative tone to the negotiations. The negative tone adds friction to the conversations and lessen the chances of an outcome that works for both parties.There is a tendency to believe that both parties need to remain rational in the negotiations so emotions are held in check. However, deciding whether one or the other party is acting rational is too subjective. What’s more relevant than acting rationally is acting fair and reasonable.

A good strategy in negotiations is not to take the approach of stripping away or suppressing all emotions. This is because it can’t be done. Emotions are what sets the human race apart plus emotions convey how the brain is processing information and how the heart is internalizing and either accepting or rejecting what’s happening.

Read More: Search our database of businesses for sale.

Emotional Intelligence

A successful negotiator often possesses a talent of “emotional intelligence”. Emotional intelligence can include reading body language, tone of voice or situational awareness, that is, being able to tell it’s the right time to take a break to give both parties time to reflect on the different conversations and talking points they have been sharing. If you don’t consider yourself strong at “emotional intelligence,” it can be useful to have or hire someone with that skill.

Equally, if you don’t consider yourself good at negotiations it can be useful to hire a third party; especially if you are buying or selling something not only of high value but high emotional importance. This is part of the reason I enjoy being a Certified Business Broker.

If you would like more information about buying a business please visit my webpage Buy a business or buy a copy of my book Successfully buy your business.

For more immediate help with buying a business you are welcome to send an email to Andrew Rogerson or give me a call on 916 570-2674.

The article Emotions and buying a business first appeared on Andrew Rogerson and Rogerson Business Services.

Basic business valuation traps

Time is our most precious commodity. We hope to spend it wisely so we have more of it to do the things we love. Getting a business valuation is not high on the list of “doing the things we love.” Plus we don’t do it very often, it appears very confusing, and nobody seems to know what they are talking about are some of the common reasons to look for a quick solution when valuing a business; that is, it’s a problem and nobody has time to fix problems.

Possible solutions to value a business

There also seem to be easy solutions. For example, go online, fill in a few fields, push a button and you have the answer. Another solution is to talk to a friend of a friend who sold their business a few years back. A third solution is to get the Rule of Thumb as it applies to the industry your business is in, apply it to your business performance numbers and you get a good approximation of the value of your business.

Almost without exceptions these methods simply don’t work and they can be dangerous.

Read More: Here is more information about how to value a business.

Two similar businesses – one big difference in business valuation

Not sure I am right? Consider the following as it is a real example.

Company A and Company B have an EBITDA of $6 million. Company A is valued at 5 times EBITDA or $30 million. Company B is valued at 7 times EBITDA or $42 million.

Why the difference?

The usual items to check in a valuation include:

The international, national, regional and local economies.How well the company penetrates into each of the above economies.Ownership and senior management.Number of employees.General location of the business.How many USP’s (Unique Selling Positions) and how well they are exploited.Processes and procedures.Gross revenue.EBITDA.Asset allocation including Capital Equipment needs.Technology and its impact

Click this link: To see a sample business valuation or medical practice valuation.

The important number is the Growth Rate

Not mentioned in the list above but the most important of the data points in this example is the Growth Rate. This explains why Company A has a value of $30 million while Company B has a value of $42 million.

Basic business valuation other factors

In the above example, one item was important in the final business valuation. However, when a business seller and a business buyer come together to negotiate, a number of new factors can now come into play. These new factors include wrestling with items such as the amount of the buyer downpayment, the amount of the seller’s note, if the buyer wants to do an earnout, equity v debt and lots of other transaction terms and conditions.

Business valuation conclusion

Arriving at the correct value of a business is not a simple process. It involves analysis of data, asking lots of questions, asking more questions to those answers and applying data to support the valuation. This data is not available for free but must be bought from companies that spend time to collect the data. This data includes market comparables specific to an industry code or what are called SIC or NAICS codes. Equally critical is using the right data. There is no point comparing a company, for example with $800,000 in annual gross revenue against a company with $25 million in annual gross revenue. Plus there are many other points of comparison to get an accurate business valuation.

If you would like more information about valuing a business to buy or sell, please visit my webpage Buysiness Valuation.

For more immediate help, you are welcome to send an email to Andrew Rogerson or give me a call on 916 570-2674.

The article Basic business valuation traps first appeared on Andrew Rogerson and Rogerson Business Services.

Employment Training Panel grants

Employment Training Panel grants are job training funds providing reimbursements for employee training costs. Grants range from $15/hour to $26/hour per employee, depending on the business size and type.

Since the Employment Training Panel program began in 1982, California employers have been reimbursed in excess of $1 billion for training workers in more than 80,000 businesses.

The Employment Training Panel is a state agency funded by California employers through a payroll tax. Businesses determine their own training needs and develop action plans for such training, which they submit through an application to the Employment Training Panel panel for review.

Applications may involve expansion of an existing training program or assistance in the implementation of a new program.

Acceptance of applications for the next round of Employment Training Panel funding will begin on May 1, 2015.

What types of training can be supplemented with Employment Training Panel funds?Training related to a wide range of skills, including computer, manufacturing, management, customer service, sales training, and general businessTraining conducted in classrooms and laboratories or via video conferencing or computersSpecific trainer to trainee ratios must be met, ranging from 1:10 for advanced technology training, to 1:15 for new hire training, to 1:20 for general incumbent worker trainingDoes my business qualify for Employment Training Panel grants?

Most California businesses, regardless of size, qualify to receive Employment Training Panel funding if they meet one of the following core program criteria:

They are subject to the Unemployment Insurance taxThey face out of state competitionThey are part of a priority industry, which includes manufacturing, biotech/life science, IT services, media/entertainment, goods movement and transportation logistics, agriculture, healthcare, construction, and green technologies

If a business does not meet any of these criteria, it may apply to an Employment Training Panel special circumstances program.

Which employees can we receive funding for?Employees who work at least 35 hours a week can participate under an Employment Training Panel agreement; however, frontline workers typically make up the bulk of the training funding agreement.Employment Training Panel post-retention wage requirements must be met. This varies by county, ranging from $12/hour in high unemployment areas to $16+/hour in high cost areas.How quickly are Employment Training Panel funds received?ETP funds are released as they are invoiced by the businesses, as follows:25% of the average cost per trainee once the employee has completed minimum training requirements (eight hours)50% of the average cost per trainee once the employee has completed training (up to 80 hours for small businesses and 200 hours for large businesses)25% of the average cost per trainee once the employee has met the 90-day retention period

How can you take advantage of the Employment Training Panel program?

Contact Keith Brama at kbrama@romoincentivesgroup.com to assist in defining your training needs and to prepare an application for Employment Training Panel funding in time for the May 2015 application review.

For more information you are welcome to send an email to Keith Brama with Romo Incentives Group in El Dorado Hills, CA or call him Toll Free: 866 941-8383.

The article Employment Training Panel grants first appeared on Andrew Rogerson and Rogerson Business Services.

Massage Green Spa

Massage Green Spa is now available to buy as a franchise opportunity in Sacramento, CA and its surrounding counties.

Massage Green Spa is the original concept put together by Allie Mallad and opened its first unit in Dearborn, MI in 2008. Five years later they reached their 500th spa and by 2015 it’s planned to open 1,000 Massage Green Spa locations nationally.

Part of the success of the Massage Green Spa model is the franchise business model utilizing developers and franchisees to open and build the brand.

Massage industry facts

According to the American Massage Therapy Association, 39 million adults in America get at least one massage every year. In addition, the reasons for a massage are:

Stress/relaxation – 33.33%Medical – 33.33%Pampering – 16.67%Other – 16.67%Benefits of a massage

The purpose of a massage and bodywork is that it touches every system of the body. It also promotes healthy living, prevents illness and injury and speeds recovery. Additionally, it specifically targets:

Relieving back painBoosting the immune systemReducing anxietyLowering blood pressureTreating migraine headachesDecreasing carpal tunnel syndrome symptomsEasing post operative painAlleviating side effects of cancer

Interestingly, it has also been proven that companies that offer massage therapy to their employees have significant increases in human resource retention, job satisfaction and improved customer service metrics. Companies like All State Insurance, Best Buy, Cisco Systems, FedEx, Gannet (USA Today), General Electric, Hewlett-Packard, JC Penney, Kimberley-Clark, Texas Instruments and Yahoo all invest in annual massage campaigns for their employees

Massage Green Spa franchise opportunity

There are an extensive range of franchise opportunities in different industries. What is attractive about owning a Massage Green Spa franchise as well as its strategy to outpace its competition includes the following:

A membership-based business model,Easy cost of entry to own and operate a franchise unit,Easy real estate service to find the right location(s),Low operation overhead,Beautiful and distinctive retreat design,Multiple revenue streams,Personal and professional growth in the wellness revolution,Combining massage therapy with the eco-friendly environment that improves both internal and external health.Your investment in a Massage Green Spa

Each Massage Green Spa location will have its own costs. This is to ensure each Massage Green Spa location meets the minimum standards and protects the integrity of the customer experience.

Below is a summary of the range of costs required to open one Massage Green Spa location. If a franchisee wants to open three locations, the $45,000 franchise fee would total $90,000.

Massage Green Spa summary of investmentType of ExpenditureAmountInitial Franchise Fee$45,000Leasehold Improvements$10,000 – $85,250Initial Lease Payment$5,000 – $15,000Furniture and Fixtures$10,500 – $20,000Equipment including Point of Sale and Set-up$3,500 – $6,000Signage$3,500 – $7,000Travel and living expenses while training$2,000 – $5,000Security and Utility Deposits$500 – $1,000Grand Opening Advertising$6,000Opening inventory and supplies$1,000 – $3,500Insurance$1,000 – $1,500Miscellaneous Opening costs$1,000 – $4,000Three months working capital$10,000 – $15,000Total estimated initial investment$99,000 – $214,000Unique feature

Being an absentee owner allows you to have ownership in the Health & Wellness industry while diversifying your investment portfolio! Absentee Ownership is not common in this industry but because the Area Developers are also a Business Management Company called “The FM Group” they offer the experience and expertise to manage all the details of ownership and allow you to just enjoy the service you are rendering to others while being profitable all at the same time.

Read More: Here is more information about buying a franchise.

Who qualifies to buy a franchise

Just like any business or franchise opportunity, buying a Massage Green Spa will not work for everyone. It also has to work for the Area Developer of Massage Green Spa. Very briefly, they are looking to meet potential franchisees if you have a lot of the following.

A passion about health and wellness and helping others to learn and live a healthy lifestyle in a growing industry.A minimum cash investment available to invest of $80,000 and a minimum net worth of $200,000 in assets to use as collateral for a loan. This is to cover the costs to open one location of approximately $215,000 subject to variation depending on the final location.If a third party loan is necessary such as an SBA loan, the appropriate credit score, credit history and business management experience to qualify for a loan.Ability to attend the training necessary to educate you on the necessary aspects of owning a health & wellness spa.What differentiates Massage Green Spa from competitors?

The Massage Green Spa concept is based on results-oriented treatments, which are viewed more as a necessity rather than a luxury. Massage Green Spa does not offer hair services and instead, focuses exclusively on the health and wellness of the spa experience.

The typical “high-end” massage and spas are located in a hotel or resort setting. However, Massage Green Spas are located in communities and lifestyle centers in a day spa setting with the pricing structure significantly lower allowing more guests to experience the spa on a more regular basis.

Next steps to buy a franchise

If you would like more information about owning and operating your own Massage Green Spa franchise in the Sacramento area, please give me a call on 916 570-2674 or send an email to Andrew Rogerson. I’ll then email some additional information for you to review and decide your next steps.

The article Massage Green Spa first appeared on Andrew Rogerson and Rogerson Business Services.

Hal Johnson and LeadershipOne

Hal Johnson, from LeadershipOne based in Sacramento, joins me as my guest on 105.5FM and Money 2.0. Hal talks about the work he does at LeadershipOne and his new book entitled ‘The Game Changer.’

LeadershipOne is a consulting firm that deals with the business transition needs of family businesses when the original or older key manager steps down or passes away.

One of my first questions to Hal was how LeadershipOne handles the departure of what often is the founding or key person in the family business. Hal’s answer was that LeadershipOne creates a plan for the most orderly transition possible for the business. He says they have both a living plan and a death plan, with three key areas addressed to enable the smoothest transition.

These three key areas are:

Ownership Transfer – Making sure the transition is as tax friendly as possible with the properties being transferred to the next generation.Entity Governance – Making sure the governance process involves a board of directors or advisory board.Management – Preparing the new management members to manage the businesses.

According to Hal, LeadershipOne assists all types of family businesses; from agricultural and manufacturing to construction and service companies.

Hal says LeadershipOne’s involvement with the process really depends on how much the family has prepared their members to move the company from one leadership generation to the next. Specifically, management expertise is crucial in assessing that the next generation is capable and ready to fully take control of the business. Hal says the more the family members have already prepared, the less they will need to guide them.

Part of the above approach, according to Hal, is that LeadershipOne develops close working relations with the family business members involved. He says their goal is to become a “trusted advisor” to the family, which does not happen overnight. He says that relationship and trust is cultivated by getting to know the members involved and understanding what their goals are. Hal says they bring a lot of experience and expertise to this exact process.

Hal mentions that LeadershipOne has worked with such family businesses as the Sierra Nevada Brewery and the InterState Oil Company.

Hal also discusses his book Game Changer, which highlights the importance of planned structured one-on-one meetings to evolve powerful relationships between family business associates, general communications, business processes, delegation, accountability, building business culture, and more. He says the One-on-One Meeting system, outlined in the book, enables this. Hal says one of the primary reason businesses fail is that the business grows but people do not. He says the One-on-One mentoring and coaching system addresses that issue.

If you would like to hear my conversation with Hal Johnson, you are welcome to listen by clicking here. Hal was my second guest in this episode. The conversation begins at 26.50 minutes into the recording.

The article Hal Johnson and LeadershipOne first appeared on Andrew Rogerson and Rogerson Business Services.

Lessons from Companies Dealing with Controversy

Marketing is hard enough under the best of circumstances but creating a positive marketing campaign for a company with a controversial past can be near impossible. Some advertising firms have been able to pull it off with amazing finesse. Some have just dug the hole deeper.

Company: Monsanto

Controversy: Monsanto has been in the limelight of controversy from the beginning with its development of the artificial food sweetener Saccharin in the 1970s. Currently, they are portrayed as the super villains behind the genetically modified organism controversy.

Spin: Monsanto has suffered from marketing myopia, a term first coined by Harvard business professor Theodore Levitt. Until recently, the biotechnical giant has virtually ignored the protests around their GMO practices. Recently, Monsanto placed an ad in the December issue of Parenting magazine that encourages readers toward bee-friendly product use. This ad is a direct response to allegations that their GMOs are responsible for much of the bee population decimation.

Did It Work?: Too soon to tell but Monsanto has a long history of spinning negative publicity into a marketing success.

Company: California Fish and Game Commission

Controversy: In 2012, the president of the California Fish and Game Commission (Daniel Richards) submitted a photo to an outdoor magazine of a cougar, taken during an Idaho hunting trip. Traditionally an environmentally conscious blue state, California residents blasted the commission, part of whose job it is to protect threatened creatures. To make matters worse, the president’s response was that he broke no rules.

Spin: The commission’s marketing response was to force the president’s resignation. They also began to push hunter safety programs to stay in the middle between hunters and conservationists.

Did It Work?: Yes. A rapid fix to any negative issue is a solid PR strategy. Even if it is only an apology, having it come quickly is the best tactic. Six months after the incident Richards was ousted.

Company: Walmart

Controversy: The business model of this supergiant revolves around low wages and undercutting local businesses until they close. In recent years, each time that Walmart has attempted to open a new store, it has encountered protests.

Spin: Walmart has launched a series of advertisements, painting the company as an American organization and playing on the jingoistic nature of some Americans.

Does It Work?: Not really. A study published in Administrative Science Quarterly showed that the protests of Walmart make it easier for Target, Walmart’s competitor, to enter the market.

Company: Yankees

Controversy: The Yankees are arguably the most hated baseball team in America, accused of buying their team’s top players. If everyone loves to root for the underdog then hating the 27-time World Champion is natural.

Spin: The New York Yankees highlight the New York aspect of the team in all of their marketing. They link the team to just one more aspect of being part of the best city in the world. They embrace the term “Haters gonna hate.”

Does It Work?: The Yankees have a huge fan base and revel in the antagonistic rhetoric of their detractors. This makes them some of the most enthusiastic and ardent of the baseball fans.

The article Lessons from Companies Dealing with Controversy first appeared on Andrew Rogerson and Rogerson Business Services.