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Investment or Expense?

by Karen Jackson | on Aug 07, 2012 | No Comments

It’s a tough smallbiz climate right now. The economy is sputtering; the media is stoking recession fears; uncertainty about the impact of the presidential election is giving everyone dyspepsia; and accessing capital is as hard as ever. So, many CEO’s are clenching their fists around the cash on their balance sheets and not spending money. One might argue that hunkering down with cash is the only prudent behavior under these circumstances.

I’d argue it’s not. The trouble is, when we get tight-fisted with our cash, we stop making investments. When we stop making investments, our companies stop growing. The old adage “it takes money to make money” is as relevant as ever. Investing in people, processes, and systems is both essential to growth and to not being left in the dust by the competition. And the reality is many of those investments can’t be afforded through monthly cash flow.

So how does a CEO decide whether s/he can really afford to let go of some of that cash on the balance sheet? I’ve found it revealing to run both big and small financial decisions through this 2 question test:

1)      Is the expenditure truly an expense or is it actually an investment?

2)      Can we afford NOT to spend the money?

Here are a few examples, with my answers were I sitting in the CEO’s seat.

Example 1:  The company’s marketing materials are junk and it will cost real dollars to hire a marketing consultant to rehabilitate.

1)  It’s an investment 2) We can’t NOT spend the money

Example 2: The sales force is on the road a lot but can’t easily access their corporate systems because they don’t have wireless cards for their computers. The cost to purchase card / plan is out of budget.

1)      It’s an investment  2) We can’t NOT spend the money

Example 3: There’s an opportunity to purchase furniture at a good price from the company down the hall that’s moving. It’s in great shape, clearly an upgrade, and would make our office more attractive.

1)      It’s an expense  2) We CAN not spend the money.

See where I’m headed? I’m suggesting that CEO’s upend their view of expenses – a very now-based way of thinking – and reconsider them relative to the future.  It takes some practice, and sometimes the answers seem counterintuitive, as in Example #2. Clearly wireless cards are an expense, yes? For me, no. They’re investments  – investments in efficiency, real-time information, and employee morale. We can’t NOT have any of those things, so I would write the check.

The tendency to over-scrutinize the P & L for money saving opportunities is fear based rather than growth based. By reframing an expenditure as an investment vs. an expense, and questioning not whether the businesses can afford something but whether it can afford NOT to have / do something, the answers become focused on a future of growth.  By all means, keep a leash on expenses – get downright stingy if you want – but routinely make investments. After all, if you don’t believe enough in your business to take those risks, why should your customers believe in you?

How do you make sure you’re not too tight fisted with your cash? What litmus tests do you use when deciding how to spend?  We’d like to hear your ideas.

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B2B Sales Management Mistakes That Might Prove Fatal

by Karen Jackson | on Jul 10, 2012 | 4 Comments

Small business B2B sales management is a tough, tough task. (It’s not so easy in big business either.  According to consulting firm Sales Benchmark Index, the average tenure of a new sales leader is just 19 months.) In part, it’s tough because small businesses don’t typically have an experienced sales manager. Often that task is left to the CEO, whose expertise lies in their product or service subject matter, not in sales.

Whether you’re the sales manager or the CEO wearing that hat reluctantly, the challenge is surmountable. Get outside help, subscribe to sales management blogs, and don’t make any of these 9 mistakes:

1.    Hire The Wrong Title.  This may seem obvious but it’s a common set-up for failure. Desiring to lure a big producer, you hire someone with the title “VP of Sales” even though it’s a direct sales role. I’ve yet to see a VP of Sales worth their salt go back to carrying a bag – unless they’re getting a big equity position. (Even then, they may no longer have the stomach for it.) They’ll collect their check from you and wait for permission to hire, you guessed it, a sales person. Instead, get clear about your needs, what makes your opportunity compelling, and go find a compatible person for your organization. He or she is out there; you don’t have to settle.

2.    Fail to Define a Go-to-Market Sales Plan.  “Go sell something” is a poor directive but it’s a pretty standard marching order. Writing a clear sales plan is hard, but essential, work. How else will your reps clearly understand their target markets, ideal customer profile, value proposition, positioning? How can they create smart tactics when they don’t clearly understand the goal? How will you decide where their energy is best spent, which opportunities to seize and which to pass on? Without a clearly defined plan, you’re guaranteed inconsistency at best; chaos at worst.

3.    Ignore Sales Process.  Without process companies fail to capitalize on best practices or manage their resources in the most productive way. By understanding the customer’s buying cycles and creating a related sales cycle with stage specific activities and milestones, you’re able to analyze sales activities and outcomes, take actions that influence buyer behavior, and uncover where sales people need additional support and training. Without process, forget about a realistic forecast; you’re left with lots of wishing and hoping.

4.    Neglect Metrics or Accountability Structures.  The adage “what gets measured gets managed” couldn’t be more true in sales. First identify key performance indicators, then create sales metrics that better influence outcomes, motivate individuals, and make forecasting more predictable. Include your team in developing these to gain buy-in. They’ll understand that by managing to those metrics their success is far more likely than without them. It’s not baby-sitting, it’s management. Big difference.

5.    Treat Your Reps The Same.  The sales manager is a coach. Like any team, the players need different levels and type of attention. Does s/he need help with skills, mind-set, time-management?  You won’t know unless you meet them where they are as individuals, and respond accordingly. Applying the same management techniques to everyone will not create equality; it will create frustration and missed opportunities to grow your team members. Keith Rosen’s book Coaching Salepeople Into Sales Champions offers some excellent guidance.

6.    Substitute Your Comp Plan for Management.  Slashing pay for a poor performer doesn’t solve your performance problem. It simply lures you into a false sense that the individual isn’t costing you too much. You’re kidding yourself. They’re costing you dearly through unexploited territory, wasted energy by support staff, and team morale. If you can’t manage a rep to better performance, release them. Quickly.

7.    Saddle Your Reps with Non-Sales Activities.  Every position has a certain amount of administrative work, but it’s mind-boggling how much non-sales activity small business reps get saddled with. If you want reps to sell, give them time to do so. Look at your processes and identify what activities could be off-loaded to a less skilled, lower paid headcount.

8.    Skimp on Tools.  Are your reps on the road but they’ve no access to your servers through their mobile devices? Are they travelling regularly but don’t have a wireless card to access 3G networks when no wi-fi is available? Are Post-Its, lists, and disconnected spreadsheets substituting for a CRM tool? Don’t think of these items as nice-to-haves. They are keys to productivity, sanity and morale, which make them investments, not expenses.

9.    Undervalue Continuous Recruiting.  It’s really hard to hire good sales reps, and it doesn’t get easier when the pressure is on to fill a spot. When territory is open there’s a tendency for management to settle on a sub-optimal candidate. Be disciplined to continually interview and recruit for the role. Put the word out with business partners and maintain an on-going search through LinkedIn and other social media platforms. Target individuals who work in your industry and court them. They may not be ready to move today, but when something changes, they’ll call you first. Equally important, you’ll learn tons about what the competition is doing and what others perceive as risks / opportunities in the market.

B2B sales management is hard, but essential in an organization’s ability to drive revenue. Without customers, there’s no reason for a company to exist. I can’t think of a better motivation to improve sales management skills.

Please share mistakes you’ve made, suffered, or witnessed so we all can learn.

 

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Surprising Reasons Why Sales Process Matters

by Karen Jackson | on Jun 04, 2012 | 8 Comments

Last week I was talking with the CEO of a small software company struggling with driving revenue. Looking for a possible solution, she wanted my thoughts on where in the sales engine she might zero in. When I mentioned lack of defined sales process as a typical culprit for lagging revenue growth, she remarked, “I don’t see that as an issue for us. I’ve hired very experienced sales people; they certainly ought to know what to do.”

Uh-oh.

Many small-biz CEO’s, particularly those without sales backgrounds, perceive sales process as little more than lowest common denominator management. The rationale is, if they hire seasoned sales people (hard in itself but that’s a different conversation) then they shouldn’t need to create a sales process. After all, isn’t the purpose of creating a sales process really just for baby-sitting?

The answer is no.

At its most basic level, creating and following a sales process does ensure that everyone is following a best practices approach to sales. It also creates a method, particularly if a CRM or other reporting tool is utilized, for sales people to organize themselves, and for management to track and measure activity. All well and good and valuable. But, if that’s the only rationale, then this CEO may be right to think she can do without.

When B2B companies ignore sales process, here’s what they’re really choosing to live without: data. Data to inform any number of strategic and tactical decisions, to identify trends, to help us answer questions like:

  • How well do we really understand our clients’ buying process?
  • Where in the sales cycle are we having difficulty closing?
  • Is there something we could do differently to push our prospects into the next stage?
  • Are we jumping stages therefore finding it hard to close?
  • What’s the quality of our pipeline?
  • How predictable are our forecasts?
  • What danger are we in of elongated sales cycles?
  • Where can the cycle be shortened?
  • Are we chasing the wrong leads?
  • How efficiently are we deploying sales and support resources?
  • How can we refine our tactics for better results?
  • What customer stakeholders are we failing to convince / convert?
  • Do we understand the key moment when a prospect will become a customer?
  • Have we become “proposal happy?”
  • What skills training do our reps need right now?
  • How quickly can we bring new hires up to productivity levels?

Top-performing sales engines utilize well-structured and repeatable sales processes that leverage best-practices and identify true milestones in the buyer’s journey. The process isn’t a baby-sitting tool, though it’s true that the process helps each of us stay focused and disciplined. Rather, it’s because the process provides key data that elevates the performance of the sales person and the entire organization. If you can’t answer the questions above, it’s time to start thinking process.

 

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Build It to Sell It

by Karen Jackson | on Apr 09, 2012 | 7 Comments

Build your company to sell it. Seriously. Build it so that it’s worth more than your competition, so that suitors are lining up, so that you can sell at an enviable multiple and never work again. Now that I have your attention, which group of CEO’s are you in? continue reading »

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Keys to Hiring Great Sales Talent

by Karen Jackson | on Mar 21, 2012 | 6 Comments

Small business owners frequently lament about their difficulty in hiring great sales talent. It’s not easy to do, in part because a sales person is likeable, easy to be with, and their interview is probably their best sales job. Most small business CEO’s don’t have sales roots themselves, making it harder to know what they’re looking for and how to probe. continue reading »

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It’s About The Experience

by Karen Jackson | on Mar 05, 2012 | 4 Comments

These four words from Howard Schultz of Starbuck’s [SBUX] fame should keep CEO’s up at night. OK, leaders of those rare companies with a one-of-a-kind product and a significant barrier to entry can go back to sleep. Everyone else better stay up until they understand how important those words are to the health of their company. continue reading »

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6 Places To Look When Your Business is Stuck

by Karen Jackson | on Feb 21, 2012 | 8 Comments

Each day I have the privilege of working with business owners who’ve decided they want something more. Something more than that feeling like they’re running on a treadmill, expending a ton of energy, muscling their way through the hard parts, but not exactly arriving at the destination in mind. And it really is a privilege, because it’s not easy for CEO’s to ask for help, to set aside ego, to reveal that perhaps we don’t have all the answers, or have gotten too close to the issues to see them objectively. I know. I’ve been there myself, and confess that there were days I’d gladly swap jobs with the UPS guy. continue reading »

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