Making money is the goal of building or buying a billboard sign. However, if you don’t know what you’re doing you can actually lose money instead of making it. So what are the top six ways to screw up your billboard investment and make it go from cash producing to cash losing?
Be unrealistic on your budgeting
The first issue with any potential billboard deal is if you are working from an accurate budget. While “seat-of-your-pants” is fine for ballparking economics, it’s not a workable plan on actual dollars when it comes time to finalize ground leases and sign contracts. You should prepare no less than three complete budgets to be safe: 1) the worst case 2) the realistic case and 3) the best case. You need to be able to survive the worst case and to find the best case attractive enough to risk the worst case scenario. A great billboard deal springs forth from a great budget.
Have a faulty ground lease
When entering into a ground lease for a billboard, there are several items that are imperative. One is that the amount you are offering is in-line with the amount you can rent the sign for. Another is that you have the right to cancel the lease if you can’t rent your sign. And another is that the property owner cannot cancel the lease either at all or at least only in the event of development requiring removal. All of your profit is dictated by the ground lease and a bad one is a disaster.
Blockage of your sign
The kryptonite to any billboard is blockage – anything that makes it impossible to read your sign from a reasonable distance. It might be a building or a tree, or maybe a new median highway wall. The point is that you have to get a handle on all these risks before you buy or build the sign because when one happens it’s too late. In some cases, you can enter into agreements with neighboring property owners to trim back trees and other issues. But you must plan all of this ahead.
Not know how to rent the ad space
Renting ad space on a billboard is all about knowing where to find advertisers and how to market to them. It’s not rocket science – but it’s much more than just putting your phone number up on the sign and waiting to get a call. Billboard owners are like matchmakers, constantly trying to find the right tenant for the sign so that they will renew year after year. This is an art form that can save you a fortune in time and effort, and also make it possible to pay your bills.
Overbuilding or underbuilding your market
When building or buying a billboard, it’s important to “keep up with the Jones’” when it comes to size of the sign. If all the other signs are 14’ x 48’ in size and yours is 8’ x 32’, then it will make it really hard to find an advertiser – who wants to be the tiny sign on the block? You can really screw up your deal if you fail to get a grasp on the correct size and just build what’s convenient or what you guessed at. There’s nothing more depressing than trying to rent a billboard in which everyone asks “why is it so small?”
Not following safety protocols
Billboards are dangerous to work on because they have extreme height and overhang dangerous things like buildings, power lines and concrete. Many a billboard career has been impacted by taking shortcuts on safety and having someone get injured, with the resulting litigation. You can insure your way around these type of problems for the most part, but it will potentially make you lose your insurance and lacking the correct safety equipment may make it hard to sell our sign to another sign company down the road.
Billboards can be a great investment or a total disaster – take your choice. Make sure you know what you’re doing to so that you can have only positive experiences and financial returns. There’s no reason to take unnecessary risks as the path to success has been well documented.