Succeed Magazine – www.succeed.co.za – April 2009
With the downturn in the economy an increasing number of businesses are looking for ways to buck the trend. According to Bill Gibson, chairman of Knowledge Brokers International, the first place to start a turnaround is in sales. “It is difficult to raise capital when your business is struggling,” he says. “Really, the first place to start turning the business around is in sales.” He explains that the more short-term capital you bring in the more time it buys you to turn the company around.
“The smaller deals will maintain the cash flow while you are waiting for the bigger deals which will ultimately bail you out.” In start-up businesses cash flow is everything. “You will not survive with a long-term plan to turn around the business. You have to think short term,” he says. “Short-term income will give you the necessary cash flow to sustain you until your long-term income can be achieved.” This leads to the question, what does it take to bring money in?
Gibson highlights the following:
- If you are going to turn your business around you must increase the number of people you contact. It is the law of averages – the more contacts you make, the higher your ratio of success will be.
- You must increase the number of ‘right’ people that you contact – there is no point contacting people who have no money.
- You need to increase your closure ratio. For example, if on an average your team closes 30% of their contacts. Set a goal to go up to 35% during a turnaround phase.
- You must increase the size of your individual sales. Often you do not need more clients, but rather more business from existing clients. This means taking the time to ask these clients the right questions to maximise your cross- and up-selling opportunities.
- The frequency of purchases per client needs to be increased. They must buy more often. If you give good service, and you are unique about what you do, you may increase your market share.
- The frequency of times you contact the same clients must be increased. One study showed that eighty percent of sales are not closed before the fifth call to the same client, so do not give up.
These are the important areas that need to be focused on. There should also be a fundamental shift in the way a business is run. “If you are trying to turn your business around, you may need to work up to 90 hours a week and more – you cannot do a turnaround on the same hours that you have been working. Even if your business has been comfortable you must now treat it as a start-up.”
You need to look at how to increase the number of hours that salespeople are in contact with clients as well. All sales administration and writing up of orders must be done after hours. “Do not fool yourself,” he says, “you may find that salespeople are only in contact with clients two hours a day, and the rest of the day they are tied up with administration.” When you are trying to turn a company around, you must be in front of clients more often. “Salespeople should have at least three early morning appointments a week during these times. These could be at 6:30am or 7am. By the time 9am arrives you have had a period of productive time already, and have gained momentum.” Sometimes it is about working smarter. “Seventy percent of all sales appointments for the upcoming week should be booked in advance by the Thursday before. This way salespeople end that week with direction, and start the following week with momentum.”
He believes that during hard times everyone in the organisation needs to be sales orientated. “Some companies insist that all the people in the company, even if they are not salespeople, have to handle accounts whether they help with admin or setting up appointments. This creates a culture of sales in the workplace. It is about pulling your whole team together towards one goal.” He points out that this may result in a situation where every single staff member has to phone up a list of clients every day, and thank them for their business, ask them if they need any assistance, and then make a few offers.
“Shopping centres wait all day for passing trade and 60% of the time they are not doing anything. They should allocate time each day to phoning clients.” Focus on what is important. “Your accounting and marketing department are suddenly less important than sales, so focus on what is important,” he says. “If you have savings, ignore it and sell like you need to pay the salaries that month. This will create a sense of urgency.”
When you are turning a business around the owner should be one of the top salespeople. “The management need to be out there selling. They have business presence, and this is much more powerful than a sales pitch. It is one of the key characteristics of top producers.” Business presence can be acquired. “Salespeople can associate with businessmen and businesswomen, attend business presentations, and study what is going on in the industry that they are targeting. If their client is selling merchandise, they should go and study merchandising before they make contact.”
These are the fundamentals of turning your business around through sales. It involves a change in the culture of the company and starts at the top. There is still money to be made, but you need to make sure that you are the one making it.