Business Building

One of the most significant hurdles that I have seen small and medium business owners face is the one of sales.  They manage to get the company just so far themselves, or maybe with the assistance of someone that is halfway competent in sales …and then they hit a wall.

What do I mean by a wall?

Well, they get to the stage where they need to incur major new expenses for the company to fulfill on work at the next (higher) level of professionalism.  They now have to charge more, in order to have the ability to have the equipment, expertise and the general infrastructure to do the work properly.  In short, they suddenly have to bear the costs of putting in place a professional and procedure driven organization with internal quality standards.

It may be that they have to suddenly invest in some large capital items.  Items that cost more than their own annual take home, as the owner.  They probably already have some debt and are closely watching their credit scores with the national agencies.

Of course, this is a big deal to a small business owner.  This is all new to them.  They have to figure it out by trial and error or through the well meaning input of a few semi-experienced friends.  Usually, all of this has to be done organically (i.e. without an injection of capital from outside investors or banks - after all the burden of proof is on the business owner who has never crossed this growth chasm before) and from a base of customers that are used to paying for the core cost of producing the goods or services and with not much additional expenses for marketing, sales and legal advice built into the price.

Suddenly this is no longer the "no-brainer" sale to the business decision makers with the Client bases that they built the company on.  They actually have to make a compelling business-driven case and be actively identifying the pains of the customer.  So they actually have to acquire new levels of sales skills and processes.  Dang.  Where from?

There are many "schools" of sales.  Many of them deliver results …of a sort.  Some of them are very focused on the short term/immediate results - "get them in the door and close them" mentality.  The belief here being that this proves the sales person is "doing what it takes" and is doing the all the key selling basics and producing measurable results.

This is also a plate spinning way to do sales.  Necessary, especially at first, but not what the business owner should rely on as their only sales strategy.  It is also easy for average sales people to hide out in the activity and blame mediocre results on "the market", because they can prove that they are doing "the basics".

Every business owner when faced with this transition can hire a new sales person, that months later they let go because the results produced do not yet cover the costs of the sales person …and then stay in this cycle of hire and fire, essentially sinking more and more money into the roulette wheel of hiring a good sales person.  Fortunately there are better ways to screen the potential sales people.

This is still a critical transition for a business owner to make.  It involves an emotional shift from their original price based selling - where they were purely selling their knowledge and skills, with a minimal costs base and hence it was price compelling for Customers that did not want the increased security of a larger and more professional organization.  This is also the trap though.  The business owner is not charging enough for their goods or services, and hence cannot afford to take on the expenses and put in place the infrastructure that a larger and more solid organization must naturally incur.

This is a critical test for any business owner - are they willing to push through this barrier?  To grow into a business that they can truly choose their role in (based on what they inherently like to do as a personal activity) then this is a must.  But it involves new risks that they have never encountered before.  Hence new risks that they are not proficient at managing.  They may not be able to increase the prices to existing customers and hence they will need to find new ones with new pricing levels that will support the investment and expansion that is required.  This will mean that they need to create and refine a message, measure its impact and constantly tweak and refine it.