Like many other small to medium companies we are also being tested in the economic conditions – delayed payments, delayed sales decisions, delayed cash inflow. I would like to share some thoughts on how we can counter this situation. We are implementing many of the following to gear up for the rough weather. I hope others find this useful and hopefully some others can provide better suggestions:
1. Dont put complete faith in investors for cash flow
Its good to be a funded company in this environment. However, I would like to caution my fellow entrepreneurs that unless you have the money in the bank dont count on it. Many investors release payments in tranches over a period of time (say 5-6 months). Assume the worst case – investors may not able to release the latest tranche when the time comes. Its not because they dont want to give, its just that may not have the cash to give. Remember, investors (such as VCs) themselves raise funds from other investors. With the current cash crunch, its better to be prepared for the worst (and given the current economic uncertainty “worst” case is quite likely to occur). Dont make the mistake of planning your execution based on cash you “definitely” expect to get next month (or even next week). Treat investor cash as an added “bonus”. This particularly applies for services based companies which usually should be able to do well without investment as well.
2. Laser Focus on BD
Sales is the life blood of business. Put all your energies on actually meeting sales targets. Have daily sales update calls. Change the incentive structure – reduce the base salary and instead add two layers of bonus structure. Maybe if they achieve 50% of their targets they will get their original salary. When they achieve 75% they get more. When they achieve 100%
their total payment is actually much more than what they would have got before. The idea is – your competitors are as desperate as you are, without concerted sales efforts there is no way you can tide this crisis. In fact increase mktg/ sales budgets. If something is working in mtkg double the investment in that – of course make those investments in the right areas and in the right people.
3. Everyone should sell
This is an offshoot of the previous point. Think of ways where everyone (including admin, technical) contributes to sales. Often it takes an yr or two for small companies to consistently predict revenue flows. During this time everyone is figuring out the right value prop that sells. You will invariably find a few sales people who are actually meeting their targets and many who are not. Follow the 80/20 rule and cut down the sales team which is generating only 20% revenues. Instead rope in admin, development to augment the star sales people. Admin can make calls, fix up meetings. Technical folks can accompany sales and provide compelling arguments to convince the customer. This will ensure that your number dogs get more time to actually focus on meeting numbers and not on how to convince customers.
There are other obvious mantras to be implemented. They have received wide coverage and everyone knows them so I wont expand on them:
1. Cash is king
2. Prepare for the worst
3. Cut your workforce to the bone. Its better to cut more than cut less. In fact cut so much that you have money left to hire the best.
Hope this helps.
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I like your idea of ‘everyone should sell’ but to make it work it is essential to have a workforce that is the best. It is only the best that can truly multitask no matter what function they are in: admin, techincal, sales..
As you have so rightly said: Pare down the workforce to the best and then hire only the best.
One important addition I would like to make: be clear on your goals. Too often companies get confused. The MD will understand sales growth is required but sales growth in core competencies should only be focused on in these bleak and growing bleaker times.
And ultimately, a lot of process inefficiencies/ deficiencies can be overcome with inspirational leadership. A good leader, as Confucius said, is one who has the confidence of his people.
A good article!
Different strategies work for different companies. Obviously the implementation depends a lot on the culture, the processes you have established and the business you are in.
1. For us cold calling is a well oiled process with clear mesgs, qualified databases and performance metrics. The end goal is to fix up a meeting with the relevant customer stakeholder for the on field sales person and schedule follow-up meetings, not necessarily to sell the service. The idea behind shifting some admin folks to sales is to increase the number of leads/ meetings for the on field sales team. By also fixing follow-up meetings they free up more time for the sales guys to actually think about the meeting and not the logistics of the meeting.
Obviously this strategy does not work for specialized sales. It works only for something where the value prop is crystal clear and the skills can be easily taught.
2. All companies whether professional or not, need to adopt innovative strategies to come out strong in a downturn. Branding something as “mom and pop” and hence not professional is premature. On any day, I would rather be a “Mom-and-pop” shop and survive the downturn rather then be “professional” and go bankrupt. As long as I am not doing anything illegal, I am very happy to be a profitable “mom-and-pop” business.
3. I think that employees are far more mature than we give them credit for. If you are very transparent about the situation and communicate with them on a regular basis, people are more than happy to “help out”. In fact for us, the pollination between technical and sales is working out much better than expected.
4. Anyway the idea behind ” everyone should sell” is much more fundamental. At a very fundamental level, a business exists to make money. Whether you sell computers or sell dosas at the street corner, the idea is to create wealth. If you take that as the objective, its very clear that everyone should focus on “making money” – and sales is at the forefront of that. When things are bad everyone should be focused on the core objective only.
all your ideas are good and worth implementing but,i dont think i would buy your idea of “Everyone Should Sell”.
I am surprised to read this because professional companies dont indulge in such a practice.When we recruit a person we have defined KRA’s in mind and suitable employees are thus selected.
Now when you say Admin and others will do sales calling etc there are many inherent problems with this.
1.Employees dont expect this change in function which is completely off their skills,hence they do the job because of pressure of losing job which in turn will effect the quality.
2.Employees carry a negative impression of the organization and tend to brand the company as mom and pop store and there are chances that this will be shared with others and will be known slowly in the market which is a negative aspect for the image of the company.
3.Skills of Admin will not be sales oriented,By giving sales responsibilites to them the message being sent out is sales can be done by anyone,unfortunately i have seen this mentality by a lot of organizations (one of my past employer had this attitude of shifting people into sales function which proved to be counter productive).The truth is sales needs a methodical and logical approach and is not a skill which can be done by anyone and everyone.
I would rather ask all the employees to take a reduction in their salaries by citing the problems whatsoever rather than shifting people into functions they are not skilled.