Billboard loans blog is migrating from google to wordpress.

I have migrated this billboard loans blog  from the google blogger site directly to my new wordpress website so you won't find any new posts on this site.  You can access the new billboard loans blog directly via www.billboardloans.com.  I have loaded all the old blog content onto the new site.  You can sign up at the new site to receive direct blog feeds.  If you have questions send me an email.

13 Billboards Key Component of Campaign To Defeat Union Shop

Here's an interesting Reuters article about how 13 billboards were a key component of the successful campaign to defeat the United Auto workers attempt to represent workers at Volkswagen's sole US factory.  Volkswagen wouldn't let the anti-union group campaign on company premises, so the anti-union group bought 13 billboards in town so that workers could see their message driving to and from the plant and so that people in town could view their message.

Don't be shy about publicizing the effectiveness of billboards in getting political messages across.  Midterm elections are in 6 months.

Five Questions for Scott Spector

As a billboard owner and lender I know the importance of insurance.  I had a lending client who's digital billboard was wrecked by a fire in the building next door.  My client replaced the board quickly thanks to insurance.  Scott Spector of the Libsco Financial Group has been meeting the insurance needs of billboard companies for more than years.  He is an associate member of the Independent Billboard Operators Association.  You can find out more about Scott Spector's services at www.libsco.com or by contacting him (847-763-5324 or SSpector@Libsco.com).

1.  How did you start insuring billboards?  20 years ago I had a client who needed insurance for his billboards to get a bank loan.  There was no one out there helping the small business owner with billboard insurance.

2.  Why is insurance important for a billboard company?  A company or individual should always carry liability insurance  just in case something happens.  In regards to billboards I am sure you would want to protect your investment if something happened to them.  We also insure for the monthly rental value if somethings happens to the billboard.  If companies have employees or independent contractors it is the law that you have to carry workers compensation.  We also work with companies to make sure they obtain correct certificates of insurance from companies that work on their billboards.

3.  How are billboard companies unique from other companies when it comes to underwriting insurance?  Location, location, location.

4.  What info will an insurance company want to see to underwrite insurance?  Location, the value of the billboard and rental value.

5.  What is the most common mistake small companies make when it comes to insurance?  Companies or individuals don't think that they can obtain insurance for their billboards for the monthly rental value if something happens to the billboard.

New www.billboardloans.com website launched.

Today is the launch day for the www.billboardloans.com website.  The website describes the lending activities of several income funds run by Dave Westburg, John Weller and Jim Penney.  The website also talks about the lending process and highlights recent lending transactions in addition to hosting Dave's blog on billboard loans.  The www.billboardloans.com name reflects the fact that Westburg, Weller and Penney are focusing most of their lending and investment banking activity on the outdoor advertising business.

Five Questions for Emerson Schwartzkopf, Editor and Publisher, Out of Home Magazine

Five Questions For Emerson Schwartzkopf, Editor and Publisher, Out of Home Magazine

As a niche business there are very few sources of information on the outdoor business.  Most of us are too cheap to spend the thousands of dollars is costs to join the OAAA.  This week I was delighted to discover a digital magazine dedicated to the out-of-home business.  It's called Out of Home Magazine.  You can subscribe for free to the monthly magazine and a weekly newsletter by registering at the magazine's website.  The magazine is published by Emerson Schwartzkopf who has a 25 year career covering the outdoor-signage industry, including stints as editor of Sign Business Magazine and Digital Graphics magazine.

1.     Emerson, how did you get involved in the outdoor business?

It came as part of the territory when I first joined Sign Business Magazine in 1988. I ended up watching nearly all the major technological changes for on-premise signage and out-of-home, from computer-cut vinyl to digital printing to serviceable outdoor LED displays. I spent most of the 1990s doing hands-on testing of cutters and the first poster-sized printers, as well as tracking ink and substrate development.

2.     What's the history of Out of Home Magazine?

Bob Klausmeier founded Out of Home Magazine in the early spring of 2013. For more than two decades, he sold and assembled signage components, and also represented one of the larger constructors of electronic signage and billboards. His depth in all aspects of outdoor media gave him insights to build a very interesting magazine. I’ve been in the background since the first issue, providing editing and, later, a presence in regular industry news roundups with the Out of Home Weekly and instant updates via our Twitter account. When Bob found a great opportunity last year with an industry supplier, I was glad to step in and take over the magazine.

3.     Who is your target audience?

Out-of-home is a coordination of a pretty diverse lot of people in creative, production and delivery, so it’s more of an effort to bring together readers from many areas. First among equals are, of course, the media companies/owners and the industry suppliers. However, the changes in OOH technology are going to bring clients much closer to the action, so we’re also reaching out in a significant way to agencies. We’re also keeping close with digital-signage networks, because evolving technologies are merging more products into the same delivery mix.

4.     What made you want to be editor and publisher?

Somebody once asked the writer P.J. O’Rourke why he became editor of National Lampoon in its 1970s heyday, and he gave a simple answer – “because I could do what I wanted and nobody could stop me.” I like being in a position where I can be creative and offer something that people want to read.  You need to recognize your responsibility – I’m not going to blow things up just to, well, blow them up – but you can also have fun and give people something that’s worth their time.

5.     What are the biggest trends you see impacting the out of home business?

Technology is going to provide more ways to deliver a message, but every incredible digital thingamajig is going to call for a greater focus on the basics of out-of-home business: capacity and measurement. Managing the growing amount of space that can be filled is going to really ratchet up the challenge for media providers as to where and what and how they sell. And those spending the money – the agencies and their clients – will demand more and more details about OOH consumers and crafting some complex strategies to get every penny out of media that’s getting more and more flexible.

Why You need Billboard Insurance

Sign insurance is important.  The digital billboard on the right was destroyed by an electrical short.  One of my lending clients had a digital board damaged by a fire on an adjacent property.

Regular billboards can be damaged by storms and hurricanes.

Lenders will require you to carry three kinds of insurance.  (1) An umbrella corporate liability policy for $1 million which will cover you from lawsuits related to the operation of your business,  (2) A replacement policy on each of your boards which will pay for them to be replaced if they are damaged or destroyed.  (3) Key man life insurance which will pay off the lenders loan in case you die.  This is especially important to a lender if a business is dependent on a single individual.  It also makes sense for you as a business owner.  Do you want the lender wrangling with your spouse over how your business should be run when you die or would you rather have the business pass into your estate free and clear of all debt?

Insurance is cheap.  My $1 million corporate policy costs about $115/month.  In addition I pay about $16/month per billboard for a $25,000 replacement policy.  Digital billboard insurance costs more because digital boards are 5-8 times more expensive than steel.

Small Business Ad spending to increase 10% in 2014

Here's a link to a Media Life Magazine Article which predicts that small and medium sized businesses will increase their advertising by 10% in 2014.  Much of the increase is going to online/digital but I suspect that savvy billboard operators will be able to capture a share as well.  The study's author finds a high use of facebook among small and medium sized businesses.  If your outdoor business is not using facebook you"re missing a cheap way to tell your story to potential advertisers.

What Info Will My Lender Initially Want to See to Consider a Billboard Loan

Here's a list of things which your lender will want review to decide whether to make a billboard loan to you.

1.  Personal financial statement - You will personally guarantee the loan.  Your lender will want to know if you have assets outside of your billboard company to provide support and a source of repayment if things don't go well.  Lenders call this "having a secondary source of repayment".

2.  A one page summary of how much money you want and for what.  Be specific.  It shows you are thoughtful and disciplined and that you don't waste money.

3.  A balance sheet and income statement for your company for the last two years, the interim period of the current year and the interim period of the prior year.  The interim statements are important so that the lender can see current year trends.  Also interim statements help a lender to compute your trailing twelve months performance so that seasonality is taken into account.

4.  A value of your company.  Your lender wants to know that the collateral for the loan is worth more than the value of the loan.  4-6 times gross revenue is a reasonable figure for most 14 by 48 billboard companies.  Be prepared to site the source for your value metric (this blog, www.signvalue.com or www.outdoorbillboard.com).  Your lender will want to see value pegged to a rule set by a third party, not a number picked out of your head.

5.  A one page summary of your signs (location, size, lease term and rate, ad contracts and rate).

6.  A one page management bio for you listing your education and work experience.

Risks of Legal Non-Conforming Billboards

Here's an interesting newspaper story about the risks of owning legal non-conforming billboards.  A legal non-conforming billboard does not comply with existing zoning rules but has been grandfathered because it was constructed before the rules were put in place.  Most zoning rules forbid you from replacing or repairing non-conforming boards so you need to take them down if they get damaged.

A November 17, 2013 hurricane damaged 15 billboards in Kokomo, Indiana.  The Kokomo Board of Public Works and Safety has ruled that the billboards must be removed now that they are damaged because they are non-conforming.

How can you mitigate the risks of owning legal non-conforming boards?

1.  Diversify your billboards geographically so they won't all be damaged by a single storm.

2.  Diversify your billboards across different legal authorities so that all of your boards won't be impacted by a single township's ruling.

3.  Spend money to hurricane or tornado proof your boards so they survive a storm without damage.  One of my clients in Florida hurricane-proofed each billboard.  He changed the design of his signs so that the vinyl posters are suspended over a frame rather than on a solid steel face sign.  A hurricane will blow off the poster and blow through the sign but leave the frame of the sign undamaged.

Lending Standards Are Easing - A Little

The federal reserve surveys senior bank credit officers four times a year about whether their lending standards are tightening, stable or easing.  Here's a table summarizing the trend in bank lending standards for small businesses over the past 10 years.  The table shows that after tightening during the three years of the recession (2007-2009) a few banks have begun to ease their lending standards.

Federal Reserve Survey of Bank Lending Practices

Date	Tightened	Stable	Easing
Oct-13	3%	86%	11%
Oct-12	2%	89%	10%
Oct-11	2%	90%	8%
Oct-10	4%	86%	10%
Oct-09	14%	86%	0%
Oct-08	74%	26%	0%
Oct-07	10%	90%	0%
Oct-06	7%	85%	8%
Oct-05	0%	94%	6%
Oct-04	2%	78%	20%
Oct-03	0%	84%	16%

My experience reflects this trend.  I rely on bank lines of credit to finance my companies.  Credit was easy to obtain prior to 2007.  The world changed during the 2008 recession.  My banks almost doubled the cost of my lines of credit.  A couple of my banks ceased making new loans.  In the last year it has gotten easier to finance my lending companies.  I started doing business with a new bank.  My existing banks have been easier to work with.  My borrowing costs, however, are still higher than they were prior to the 2008 recession.