I'm reading the newest book by Jim Collins, "Great by Choice," and I can't get enough of his work. His research is unlike any other business writer I know of.
One observation he makes that really caught my attention is the premise that great companies should first fire bullets, and gather as much empirical evidence as possible before firing cannonballs. In other words, invest in small, controllable tests before the market (or opportunity) forces you to invest significant money and resources. That sort of test-and-improve mindset allows businesses to take modest risks without big downsides before committing to a make-or-break decision that could profoundly affect the company.
I was thinking of the digital billboard industry while reading this, specifically about independent billboard operators who are considering installing a digital billboard. The reason most independent operators delay leaping to digital typically is because the market hasn't forced them to or because operators don't feel they are ready to make the investment.
Operators who aren't competing with digital billboards in their market yet, will be soon. It's only a matter of time. For that reason, it's a good idea for independent operators to make at least a modest investment in digital and use it as a hedge against future competition.
Operators who are not yet ready to make an investment in digital should consider jumping in with a small billboard. If the thought of a 14-foot by 48-foot board is daunting, consider investing in an 11-foot by 22-foot poster-size billboard. These boards often can cost less than $80,000.
While this is still a significant investment, it may be one of those controllable risks that all billboard operators should consider seriously before the market forces you to go all-in.
Getting into digital in a small way will allow independent operators to get comfortable with marketing, selling and programming the billboard. A small digital billboard also will demonstrate the kind of revenue multiples a larger billboard will generate when the time is right to invest further. Most digital billboard locations get five to 10 times more revenue than a static face.
In other words, while preparing for the future, independent operators can make a very nice return. Not a bad way to prepare for cannon fire!