It’s no secret that starting and sustaining a business in the campaign consulting industry can be challenging, and especially so for small to mid-sized firms. The difficulty of maintaining cash flow between cycles and the market dominance of a few political and public affairs powerhouses can push smaller shops and vendors out of the game.
Campaign consultancies often diversify their business model by adding corporate clients or supplement their political work with lobbying and advocacy projects for a steady flow of revenue year-round.
In the innovation-focused startup space, however, earnings aren’t everything. In fact, many startups are quite upfront about the fact that they don’t make any money. In some cases, maybe they never will. Startups can afford to do this because instead of building a long-term sustainable business model with solid P&L statements, founders are looking for the exits.
By adopting an exit mentality, where the goal is to build an organization with the intent to eventually get acquired and exit the market, startup founders enjoy the freedom to devote all of their resources toward development, iteration, and improvement.
Of course, today’s startups are carried to the shores of acquisition by waves of capital investment. Most campaign firms, on the other hand, eat what they kill. They’re dependent upon the revenue they take in from the candidates and campaigns that they consult in order to pay the bills and reinvest in their businesses.
Political professionals and firms don’t need piles of funding, though, to adopt—and ultimately profit from—a startup-style exit mentality. In fact, by structuring political firms with a potential exit in mind, professional campaigners can improve their own products, provide better services to their clients, and help drive innovation across the industry. Here’s how:
Identify your unique value proposition.
The exit mentality starts by prioritizing the value add, and then building an organization that maximizes that unique value proposition. Campaign firms generate revenue by servicing clients and helping candidates get elected. Focusing solely on providing services doesn’t necessarily improve the quality of those services. Nor does it make a company particularly attractive to potential buyers.
Instead, identify your most important assets and design a business model that improves and amplifies those features. A fortunate consequence of this “acquirability” centered approach is that it necessitates measurement, testing, and iteration, which produces a better product for the candidates and campaigns.
Focus on the fix.
Almost every campaign firm “does things differently,” or at least they’d like to think they do, and market their services accordingly. It’s one thing to have a unique approach to campaigning, but it’s another thing entirely to solve a problem that candidates and campaigners face. The big players in the expanding political-tech space, to their credit, know this well and have developed some truly game-changing platforms and software.
Innovation doesn’t have to be earth-shattering to add value. Where you encounter a problem or pain point in the campaign industry, instead of accepting it (or avoiding it) make an effort to find out if other political professionals share in your frustration.
If there’s enough appetite for a fix, consider what a potential solution might look like and if it would be possible to bring a solution to market. Introducing a new product or service, even an imperfect prototype, demonstrates creativity and ingenuity. Candidates, campaigners, and potential buyers alike will appreciate the effort.
Carve out a slice of the market.
Campaign consulting firms that adopt an exit mentality might have to re-think their revenue model. It can be tempting to have your firm boast of its full-service bona fides, but founders looking for an exit might be better served by narrowing their scope.
Startups that prioritize innovation and customer acquisition over immediate revenue are better optimized to provide high quality and cost-effective service. By validating the value of their work by the number of campaigns they work with, campaign firms can attract attention from potential buyers.
Buyers might be interested in acquiring a proprietary tool or asset that you created. They might be interested in adding talent, and your team shows promise. Buyers might be motivated to gobble up the impressive client base that you’ve aggregated.
Dante Vitagliano is a partner a co-founder at Pinnacle Campaign Strategies.