Small Business

Selling Your Ideas

One of Canada's Fastest-Growing Companies reveals how to find the right buyers for your brilliant concepts

Written by Michelle Warren

Green Grass One
Mississauga, Ont.
Five-year growth: 726%

The founders of Green Grass One were confident they had a lucrative business model. They would offer pro shops at golf courses the retailing expertise and buying power they needed to compete against big-box golf stores. And GG1. would offer golf-equipment suppliers higher sales and freedom from chasing pro shops for payment.

Now, all GG1. had to do was convince its potential partners of that.

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The Mississauga, Ont.-based firm’s co-founders — James Lowe, Kevin McCafferty and Doug Walker — had spent many months during 2003 calling and meeting with pro-shop operators. Some were keen on the plan, but most were undecided or skeptical. GG1.’s partners knew that buying-club ventures had flopped after failing to convince the industry to adopt a new way of doing business, and that they were proposing far more than just a buying group.

The partners opted to take a bold gamble: that they could, in a single meeting, get the pro shops to buy in to their plan en masse — or suffer a fatal loss of momentum. They invited 45 pro-shop operators from the Toronto area to a presentation and open discussion over lunch that would make or break the company. “We figured it would be more compelling to have the discussion in a group setting because of the peer pressure,” says Lowe, GG1.’s president.

The lunch brought the firm’s key target group together to hear GG1.’s case, see how convincingly Lowe answered their questions and get a sense of which way the other golf courses were leaning. The partners knew they couldn’t take a mulligan if the lunch bombed. If they didn’t leave the room with a large majority of the pro shops on board, the golf courses would deem GG1.’s venture another failed attempt at a buying group.

GG1. faced a challenge that confronts every firm pitching a new business model: how do you convince a critical mass of your target to buy in? It’s not enough to point out your model’s advantages. You also need to reassure potential clients by responding to their concerns and offering compelling reasons why they should undergo the upheaval such a change would entail. Above all, you need to create a bandwagon effect: hey, everyone else is jumping on board; so should you. To do so, you need to get key influencers to buy in first, then surround the skeptics with believers.

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The pro shops flocked to the lunch because GG1. was promising relief from their biggest pain point: Golf Town. Few golf courses boast retail specialists or procurement heads. Instead, the courses’ general managers usually oversee operations, while golf pros — who know their swing but not necessarily merchandising strategies — double as shopkeepers. This meant the pro shops were no match for the launch of Golf Town in 1999. The big-box chain soon lured golfers away with enticing prices, selection and incentives such as a club trade-in program.

“The whole game really changed,” says Jeff Dykeman, director of business development and brand for the Canadian Professional Golfers’ Association (CPGA). “Golf Town catered to a market that wasn’t really being serviced well.”

GG1.’s co-founders — former colleagues at management consultancy A.T. Kearney — got the idea for their firm when a contact at the CPGA told McCafferty about the beating the pro shops were taking. The partners saw a chance to help the pro shops fight back by providing an array of retail-management tools, such as merchandising and customer-service training, as well as centralized marketing, accounting and payables management to suppliers. And GG1. would charge fees to suppliers but not the pro shops — eliminating a key stumbling block for the latter.

Yet, Lowe says, it wasn’t his presentation of this plan that swayed the crowd over lunch. Rather, it was his two aces in the hole. One was that industry giant Callaway Golf had just agreed to sign on — provided GG1. could guarantee enough golf-course members to make it worthwhile. Lowe’s announcement of this coup at the lunch impressed pro shops seeking proof that suppliers saw GG1. as credible.

Callaway gave its conditional “yes” only after GG1. showed that it wasn’t out just to extract volume discounts. Instead of the usual approach — wooing all 150 major golf suppliers — Lowe’s firm guaranteed exclusive deals with a small number of them. Suppliers would grant volume discounts up front. But they would subsequently pay rebates — an incentive to pro shops to push the supplier’s products hard — only if sales to GG1.’s members rose in the first year. (They typically grew by 35% to 75%.)

GG1. clinched the deal by explaining that it would pay each supplier weekly for its total sales to pro shops and take over the job of collecting from them. GG1. took on the risk of not getting paid because it calculated, correctly, that suppliers and pro shops alike would see having GG1. manage payables as the decisive advantage of its plan.

GG1.’s other ace in the hole was that in its earlier one-on-one meetings with pro shops, it had won over several operators well respected by their peers. The partners chose a date for the lunch only after first checking with these operators that they could make it, trusting that they’d speak up in support of GG1.’s proposal.

GG1.’s keenest advocates didn’t disappoint. “The real kicker was who was in the room — three or four very vocal, very supportive key influencers with a lot of credibility,” says Lowe.

The energy level in the room climbed steadily, and at the end of the lunch, the operators conveyed verbally and with enthusiastic handshakes that they’d been won over. GG1.’s victory was confirmed soon after, when 40 pro shops signed up. On the supplier side, six others quickly followed Callaway’s lead.

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In the first year, GG1. limited its network to 40 courses, deliberately running in the red while it proved its concept. The results impressed pro shops in the rest of Canada so much that since then, GG1. has grown entirely by referrals and word of mouth.

“Green Grass One’s biggest advantage is that they came to the table with a set of tools covering the whole retail-management side of things,” says Dykeman. “They have some great services that have helped every facility improve their business.”

GG1. now services 324 on-course shops and generated revenue of $25.1 million in 2009. It has deals with 18 suppliers, including Callaway, Nike, Norman and PUMA, and is the No. 2 buyer of golf merchandise in Canada. The only gap in its network is in Quebec, where GG1. has just two members, because Boutiques ProGolf, a Brossard-based buying group founded in 1980, dominates that market.

Having almost saturated English Canada, GG1. is embarking on new paths to growth. It’s running pilot programs to widen its relationship with golf courses by extending group buying to 50 more categories, such as insurance, utility costs and employee benefits. And, later this year, GG1. plans to launch in the U.S., which has nothing like GG1.. Lowe says the company will “ideally” by 2015 have a share of the 4,000 independent golf courses stateside similar to what it now has in Canada. He’s counting on the benefits GG1. has delivered in its home market to make U.S. suppliers and pro shops receptive to his pitch.

“We still think our biggest moment is yet to come,” says Lowe. “We’re going to do it all.”

Originally appeared on PROFITguide.com
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