Thoughtful Thursdays - Look before you leap

Sales are excellent and thoughts of opening a second location begin to creep into your thoughts more frequently. Your customers are encouraging you to expand. To top it off there is a space available in an area that appeals to you and preliminary research indicates this could be a great spot to be located.

Before you make any commitments to expanding your business, ask yourself one important question.

Can the original location run successfully if you are not there?

If you are not able to leave location number one to run on its own, the business is not likely ready to expand successfully to a second location. Have all the bugs worked out before venturing forward, you can not afford to be distracted while getting a second location on its feet.

Think back to when you first opened for business. How much time did you spend starting up and getting to where you are today? Many businesses struggle after expanding because they were not ready and the owner ends up with two under performing locations that split time commitments.

Don't let your vision be clouded by unrealistic expectations and false visions of grandeur. Take the time and be sure your processes and procedures are well documented and working. Talk to other business owners who have successfully grown to multiple locations and seek their advice on the subject.

Don't take anything for granted and increase your chances of a successful expansion.

Good selling,
Richard

Thoughtful Thursdays - Networking or not working?

I read an article in today's Toronto Metro (the daily magazine for commuters) titled "New approach to networking". It focuses on networking for employment opportunities, but obviously applies to marketing activities as well.. After all the only difference between a job search and looking for new customers is the product that is being offered.

The article reports on the book The Power of Who, by Bob Beaudine.

I am not sure the "new" approach is really new, but the theory is sound. Spending more time networking with the people you know will likely pay off faster than attending events where you do not know anybody. Don't stop expanding your network, but work on the people you know first.

Start by making a list of everyone you know, and that means everyone, then pare the list down to your friends.

Friends like, and are willing to help their friends out. It seems simple, but I can't tell you how many times I have to remind my clients to work their own network before going out to find another.

If networking is important to your business, you may find the article interesting. I have to say that in the first year of operating my own business, 100% of the customers came as a result of tapping into my existing network. That network grew again through contacts made from the new customers. I rarely attend "networking" events these days with any expectations beyond hearing a speaker present on a topic that interests me..

My suggestion: Grow from who you know.

Good selling,
Richard

Thoughtful Thursdays - Managing Sales Growth

Congratulations for exceeding company sales projections again for third quarter in a row! Even better news is that the growth trend is expected to continue.

 

So what will you do with this increase in cash flow - or is your cash flowing better? When was the last time you checked? Too busy to do it, assuming that it must be good because the top line is growing?

 

Assume nothing, especially when it comes to cash. There are questions that require answers:

• Do you know how the increase in sales activity has affected your variable costs?
• Operationally, are efficiencies what they need to be?
• When was the last time you reviewed business operations?
• Has fast growth created "hidden factories"? These are wasteful inefficient activities that may develop as a result of unchecked growth, in the name of getting product out the door to satisfy customer demand?
• Are your accounts receivable current?
• Are they increasing faster than sales? This is not good.
• Are your accounts payable current?
• Do you know why your business is growing so fast?
• If your growth is due to your customer's growth, have you run a credit check lately
• Do you know why they are growing?
• Is your customer list growing faster or slower than sales might indicate?
• How is your sales force dealing with the increase in business?
• Are they reaching capacity?
• Do they need help?

It requires more than good sales numbers to have a sustainable and profitable business. Each of the pillars of your business; Marketing, Operations and Finance, need sound management.

Block off time to review and analyze each part of your business on a regular basis. It will pay off in the long run.

Good selling,

Richard

Thoughtful Thursdays - How many selling days do you really have?

Today's thought is about how much time a new business owner really has for selling. In order to achieve sales forecasts, time must be dedicated to sales. In a previous post I talked about how Time Flies.

If there are two numbers I see underestimated on a very consistent basis by new entrepreneurs they are the number of prospects it takes to identify a potential customer, and the length of time it takes to close a sale.

Taking a leap year as it has the extra day to that might be devoted to sales, there is a maximum of 366 days to sell.

From this point on, you begin to loose potential selling days to:

• Weekends
• Statutory holidays
• Vacation time
• Sick days
• Personal days
• Professional development
• Business operations - this will increase as sales increase
• Administrative tasks

Well, I am sure you get the point. My suggestion to all is not to let the average number of days for sales fall below 2 per week.

The sooner sales are achieved and positive cash flow is consistent, thoughts can be directed to ways of buying time back by outsourcing business activities. The result will be more available time that can be dedicated to selling.

Good selling,
Richard

Thoughtful Thursdays - Sales and business management

In most new or emerging small ventures the owner is responsible for managing all aspects of the business. No surprises here.

As discussed in an earlier post titled "Do you manage your sales activities?", time is the resource that the new business owner often runs out of first.

Today's thought is about managing your sales force activities from a business management point of view. As sales manager, you work closely with other members of your management team; marketing, operations and finance.

Exceeding sales expectations is a cause for celebration yet requires and benefits from detailed analysis, just as much as the opposite situation of having a sales shortfall does.

• What affect are your actual sales having on cash flow forecasts?
• Are accounts receivable being received on time?
• Will enough cash be available to pay for forecasted expenditures?
• Do activities have to be postponed or can they be accelerated?
• Are your costs of sales higher or lower than expected?
• How will this affect your planned activities?
• If activities have to be postponed, or can be accelerated, what effect will that have on achieving future sales?
• Is the excess or shortfall significant enough to warrant re-forecasting?
• Are you prepared to scale up or pare down?
• Are you set up to hire contractors or employees?
• Have your operational costs been accurately estimated?
• What affect is that having on profitability?
• Is your business profitable?

At any given point in time it is critical to know where you stand with respect to the following:

• Sales revenues
• Accounts receivable - what money you are owed
• Accounts payable - what money you owe other

There is an interesting case study about a business that experienced dramatic early growth. This sounds like a good situation, and if well managed it can be.

Click here to view the Ivey Institute for Entrepreneurship case study.

Good selling,
Richard

Thoughtful Thursdays - Dealing with the stall

What do you do when your potential customer keeps putting off giving you the or

All questions have been answered and concerns addressed, but they just keep stalling and you feel like you are getting the run around.

There has to be reason for the objection, but you have yet to uncover it. Here are a few suggestions that might help discover the reason and accelerate the decision making process:

• Review your calls, re-confirm the situation with your prospect and reinforce the value of dealing with you - make sure you have not missed anything.
• Did you ask for the next order? - Don't laugh, this happens more often than you might think!
• Confirm the timeline and make sure your expectations are reasonable - do they have inventory to work through before they change suppliers?
• Do you have to be set up as a new supplier in their system? Is there any additional information they need to get from you about your company?
• Develop a call to action that will result in an overt benefit if they place the next order with you.
• Do you know if the incumbent supplier has been able to make a counter offer? Are you getting the 'last look'?

Good selling,
Richard

Thoughtful Thursdays - High Quality for a Low Price

During recent conversations with potential new business owners I was impressed that the majority spent time talking about the importance of providing a high quality product or service to their customers. If they did not know it at the time, they were beginning to get an idea of value.

I say beginning, as the majority I refer to had difficulty or did not clearly relate quality to value. In most cases they were undervaluing their product or service.

Entering the marketplace with a strategy of introductory offerings equating to pricing slightly below the market is reasonable and often used. What many new business owners forget to do is tell their customers what a great deal they are getting and that the introductory price was just that - introductory.

Be sure invoices show the true value of the product or service. If a discount is offered, have it listed as a separate line item.

The likelihood of a new small business being the low cost provider is rare, and taking business on price without consideration of the consequences can be devastating for a business. You do not want to have your introductory price turning into your ongoing price. If this is what happens, your customer does not appreciate the value of your product or service, and that is a topic for another day.

Good selling,
Richard