Laying the foundation: Generate your custom plan for creating a consistentand stable salesvolume.
Feb 1, 1998 12:00 PM,
One of the most difficult problems of the small- to medium-size business isthe highs and lows in sales volume that frequently come along. One day youhave more business than you can handle. Then one morning, you come in andit’s quiet. Payroll and overhead continues. Landlords and phone companiesdon’t care if you work every day at a frantic pace or sit around tellingwar stories. They expect to be paid. The same holds true for every otherbusiness expense. The pressure on owners and management is always intense.I’ve lived through these periods of feast or famine, and when I think backon some of them, I still shudder. I don’t believe that anyone, unless hehas lived through this scenario, can comprehend what a burden this is.
I can remember one occasion of being overwhelmed with business andcomplaining to a friend whose only response was to point out how much moneyhe believed I was earning. What he didn’t see was the lack of qualifiedpeople, the picky large customer whom I couldn’t afford to offend, mycredit stretched to the breaking point, bill collectors calling for money Iwouldn’t have until I finished the work and the sleepless night-hours ofworry.
If I’ve just described a problem that you have also experienced, takeheart; there are solutions to keeping your sales volume more even. If youimplement these suggestions, then when events do head for one extreme orthe other, you’ll find they smooth out much more quickly.
Get to the root of the problemBefore I make my suggestions, it’s important to understand why and how thisproblem occurs. In small businesses, everyone usually has more than onejob. Perhaps the installation guy, when there’s no new installs, will alsorun service calls or stock inventory. The secretary may also be thereceptionist and fill in on a variety of duties.
The owner in a small business is frequently the salesperson or at least oneof the salespeople. The positive side of that is the owner has theopportunity to speak to prospects, hear what their needs are, learn aboutnew marketing from their competition, get an idea of prices being quotedand hear what competitors are offering.
Unfortunately, there are downsides. First, the average small-business ownerhas little sales training or sales experience. Selling is rejection. If youare a top salesperson with a company, you may be selling three out of 10sales presentations, which in baseball terms means a .300 batting average.Your selling failures equate to seven out of 10. Successful salespeopleknow this and always focus on their success rate. Amateurs only see failure.
Second, because of this rejection, the small-business owner (and manysalespeople) will find excuses to avoid prospecting for new business untilthey become desperate. If you wait until one job is complete before youstart looking for another, you’ve just jumped on the sales roller coaster.
>From the time you identify a decent prospect, make an appointment to seethem, give a sales presentation, walk the premises and bid the job, submita bid in writing, call back for a decision, answer objections and actuallyclose a sale, you’ll find that it takes anywhere from two to six weeks.I’ve been on large projects that took several months to close.
On top of that, how many of these proposals do you put out to get one sale?I know we’ve all walked in someplace cold and made a sale on the spot. Ialso know at association meetings, there’s always some big mouth who claimsto close one out of two proposals because he is a super salesperson. That’seither luck or a lie. You can’t run a business based on that.
The hard reality is that although we may occasionally get lucky and beatthe odds, most often, we will need to have pending business being worked atall times, including our busiest installation times. I can see some readersat this point talking to themselves about how impossible this is, that theyonly have one set of hands, that I’m out of touch with small business and,although this may work with bigger firms, it doesn’t apply to them. Withall due respect, that attitude is wrong.
Why some succeedMany years ago, my younger brother got a summer job working at a televisionrepair shop. It was just a one-man shop, but the guy did good work. Mybrother worked there on-and-off over the next few years, and during thattime he and the owner became good friends.
Race ahead 25 years. My brother and I were now partners is a successfulbusiness. One afternoon we were driving through that old neighborhood tovisit a client and as we passed the TV store he’d worked in so long ago, hedecided to stop in and see to his old friend.
It was a bit of a shock and a deja vu experience. Except for everythingbeing badly worn and raggedy looking, the store hadn’t changed. The manstill worked along with a part-time helper, and he basically earned asalary equivalent to what he’d made 25 years earlier.
The only change was that the old friend who once was an optimistic personwas now somewhat sour and pessimistic. His hopes and dreams were neverrealized, and where he once spoke hopefully of the future, he now talked offinding a buyer for his shop so he could “get out of this rat race andretire.” There’s an old joke about some people who have 25 years ofexperience while others have one year of experience repeated 25 times. It’srepeated often because it speaks of a truth.
Small-business people will open a one- or two-person business, find aformula that works and never change. If the owner ran service calls 15years ago, he still does. If his partner did all the invoicing 15 yearsago, she still does today.
In order for any small business to grow, change becomes necessary. Themethods and strategies that work very well in a one- or two-person businessmay become cumbersome and difficult in a 10-person business.
Growing a business past the mom-and-pop stage means being a coach, not aplayer. It means showing others what to do, how to do it and letting thembecome skillful on their own, never taking the job back because they didpoorly the first time but simply coaching and encouraging them until theyachieve success.
Several reasons keep people from following this strategy:
Fear: Somebody not doing the job exactly the way they would do it. They maylose a customer. People won’t relate to the employee like they do to theowner. They are afraid to trust someone. Fear of loss of control.
Money: They don’t earn a lot and feel if they do it themselves they cankeep the extra money for themselves.
Time: They think they have no time to hire and train. They are alwaysrunning around putting out little fires all day, rushing from one crisis tothe next.
Ignorance: Perhaps the biggest problem is that they just don’t know enoughabout recruiting, hiring and managing other people. They may have had noopportunity for management training before starting up a business.
Age: When people tell me they are too old to change their ways, I hear themsaying they are too lazy or afraid. I teach part-time at a majoruniversity, and most of my students are adults with jobs. They arefrequently my best students. I have great respect for any adult whosacrifices his evenings or weekends to learn.
It amazes me when I speak to small-business people that many really thinkthey are experts at everything even though they’ve never been trained in orstudied business. It’s as if divine intervention has anointed them withthis mantle of vast knowledge.
I do, however, respect people who can admit they really don’t know all theanswers. There’s no reason for embarrassment if you don’t know something.As I tell my classes, there is no such thing as a dumb question, justpeople too dumb to ask a question. Smart people were not born that way;they got their knowledge by asking lots of questions.
Getting off the roller coasterThe secret to keeping your sales coming in consistently is simple. Beforeyou do anything else each day, have some time set aside for sales work,either prospecting, making sales presentations or closing pending deals.
If you can’t sell, then get someone with you who can. In small businesses,it’s difficult to hire even a low-performance salesperson. Some solve theproblem by taking on a partner who has the ability to sell. A word ofwarning-a partner should put some of his money up for the business. Whenpeople have no financial investment, they will drop out the minute thingsget a little tough, no matter how much they promise. When their money is onthe line, the motivation to make the business a success skyrockets.
Another concern-never do this with someone who is confident he can sell buthas never made successful outside sales calls. Only consider someone with aproven track record in outside sales that you can verify. A lot of peoplerun around calling themselves salespeople because they were sales clerks ina retail store or took telephone orders. That isn’t genuine selling. Youneed someone who knows how to dig up prospects, visit them and make aconvincing sales presentation, and then have the courage to close the sale.
Don’t quote jobs in a way that puts you under pressure. Inexperiencedsalespeople will exaggerate how quickly they can complete an installationor perhaps promise to throw in expensive and time-consuming extras at nocharge. The worst is when you price jobs just above cost. Instead of using goodselling strategies (which they may not even know), fear of not gettingbusiness has them giving away all the profits.
Although you must price competitively, have a bottom line at which you’llwalk away. Living from one marginal job to the next is a sure guarantee ofstaying small. You can’t grow a business without having money for itsgrowth. Either learn how to sell at a fair and reasonable profit or findanother line of business.
Also, any task you do repeatedly should be delegated. That doesn’t mean yousit around while someone does the delegated work. It means you use thatsaved time to do things you can’t delegate, such as selling and pricingcomplicated jobs.
If you work alone, here are some ideas:
Find a secretarial service nearby that will type proposals and letters fromyour notes and make copies.
Use copy centers for any volume of work. Even if you own a copy machine,standing around feeding papers for any period of time instead of focusingon critical tasks is a mistake.
Examine whatever you do each day and what would happen if you were to quitdoing certain tasks. If nothing bad would result, have the courage to quit.If the answer is the task needs to be done, try to do it less frequently.
The biggest reason most people don’t delegate is that they fear the jobwon’t be done the way they would do it. If Ray Kroc, the founder ofMcDonald’s Restaurants, had felt that way, we never would have eaten aMcDonald’s meal. They wouldn’t exist. If you have people working for younow, here are some additional thoughts on delegation:
Don’t worry if the task isn’t done the same way you’d do it. The key is toget the job done with no problems. You may find employees coming up withsuggestions on how to perform the task more effectively.
Allow people a chance to make mistakes without undue criticism. It’s onething to coach people, but it’s quite another to insult, demean or belittlepeople. Be sure you explain what results are expected and give enoughinformation.
Don’t fall into the trap of, “By the time I show them what to do, I can doit.” Remember, the time it takes to teach someone to do a job is wellinvested if you don’t have to do that job in the future.
When small-business people think of hiring help, they rarely think of thelabor pools I’m going to suggest. These people often have difficulty infinding employment, yet many are highly qualified. These people will oftenbe highly motivated to do a good job:
Housewives: There are all kinds of women at home with small children whohave excellent work histories and would love an opportunity to work again.If you need help on a limited basis and can give them flexible hours,you’ll find plenty of people.
People with disabilities: There are many people with handicaps who wouldlove an opportunity to earn income. Although they may not be able toperform many jobs, there is still plenty they can do. In the last company Iran, I hired a gentleman in a wheelchair to do telemarketing from ouroffice. It was a little inconvenient because we had to make some physicalchanges to accommodate the wheelchair and he only could work part-time, butit was the best investment I ever made.
Retired people: Another group where many have hands-on experience doing thework you need done and would love to do useful work.
A brief word of caution—you don’t hire people because they have kids athome or are retired or have disabilities. The key is finding the rightperson for the right job. Look for experienced, qualified people to dowhatever you need done, and keep an open mind if they turn out to behandicapped, retired or have kids at home. A good source may be handicappedorganizations and retirement organizations.
Moreover, poor time management is often the difference between success andfailure. Some common ways people waste time in a business are insufficienttime scheduled for prospecting, excessive interruptions, doing too muchyourself, perpetual fire-fighting, a lack of objectives, too muchpaperwork, leaving tasks partly done, procrastination, lack ofself-discipline and constantly switching priorities.
Time available to sellBecause this article is designed to help you find time to expand yourbusiness, the prime reason for all of this activity is to be able to go outand sell. Therefore, we start with the hours you are going to commit tonothing but selling activity. There are only three kinds of sellingactivity we count for this:
Face-to-face sales calls including travel time. This is where you have anappointment to call upon a prospect.
Telemarketing for appointments (or in some situations, actually selling bytelephone).
Cold calls. You simply knock on doors.
Prime selling time is extremely limited even for full-time salespeople, letalone individuals who must also be responsible for a business. For anyperson who is sincere about earning an income from selling, this time isalmost sacred.
In general terms, here’s a breakdown of prime selling time for asalesperson selling to business firms: Mondays through Fridays, 8:00 a.m.to 11:30 a.m. and 1:30 p.m. to 4:00 p.m.. People generally take lunchbetween 11:30 a.m. and 1:30 p.m.. Selling to executives after 4:00 p.m. canbe more difficult.
Depending upon what other duties are calling to you, I’d suggest startingwith 10 to 20 hours per week of selling activities. You won’t really getresults with less than 10 hours. If you can schedule more than 20, by allmeans do so.
Schedule your non-selling work hoursSimply everything else you do is scheduled on a time sheet, includingsales-support activities. For instance, let’s say as part of atelemarketing program you’re going to mail out 15 to 20 sales letters to alist of suspects. You then plan to wait three or four business days andcall these people during your prime selling hours. Any time you spendlooking up addresses at the library, ordering printing, designing orwriting the letters or addressing envelopes is considered a sales-supportactivity. That means the time spent is part of your non-selling work hours.
Although these are sales activities in a sense, they can’t make you a dime.The only thing that will really make you money is making the sales calls.If you don’t get in front of people, either in person or by phone at least10 hours or more per week, nothing I say can help you. All the salessupport activities, all the good intentions and all the excuses in theworld are meaningless.
Good luck and good selling.