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Decision time

Decision time

This article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in March 2012 and is posted here by their kind permission.

 

A business with no sales needs to change or close

 

Challenge

This entrepreneur started a model and artist management company and signed up models, planning to take a commission of their earnings. But there have been few castings and very little income. E-mails to potential clients go unanswered. She asks if she should change her way of finding clients.

Response

This entrepreneur is faced with a three way choice right now. She can persevere, working hard to make a break through, she can quit, or she can change strategy and tactics. When potential buyers do not buy a product or service as expected businesspeople either become bewildered, as is this entrepreneur, or frustrated and angry at the buyers ‘illogical’ refusal to buy. This is naive; the buyer has no obligation to buy from the entrepreneur.

The key question to ask is ‘why would they buy from my business?’ Are the models more talented, or less expensive? Are my services superior to those of others? Users of models have an enormous choice, and will have their favourites. They know what to expect and the like the look of the models they use. If they want a fresh look there will be a large choice from their current agency. So why would they switch from the known and liked to an unknown agency and model?

A difficult question

While this difficult question is vital for the questioner’s business, it is also applicable to any entrepreneur who supplies a widely available product or service. From accountants to garden services, many small businesses are faced with this issue.  If there is no real reason to switch to a newcomer, then that business becomes one of the dreaded ‘me too’ suppliers which offers the same as existing powerful competitors. It is doomed to feed on scraps and reliant on stumbling on clients who are unhappy with their existing supplier. This is not a good business model.

If the questioner cannot think of a reasonable answer to the question ‘why would they buy from my business’ then her choices are reduces to two. If her financial and emotional situation allows she can persevere and hope for a breakthrough; or she can quit. No entrepreneur likes to quit but there are circumstances where it is wiser to take the losses, lick the wounds and come back another day wiser and stronger.

A new approach

The best answer is to change her marketing approach. Sending an e-mail from an unknown new company announcing a service which is already widely available from more established competitors, and then expecting a response is not smart marketing. Decision makers are overwhelmed by too much mail so e-mails from unknowns are ignored, or not even read. The exception is if there is an offer in e-mail of something desirable that they do not now have.

I keep stressing that customers buy to satisfy their own needs, not the needs of the supplier. The newcomer must identify the needs that are not being satisfied now, or those being satisfied badly. To find out what these are she must approach the target companies and ask: “What would they like, but have difficulty in obtaining now?” Is it a certain look? A different level of service? Models who can demonstrate products? Lower prices? If she asks around she is likely to find a common thread and it is likely to be a difficult problem to solve. But if she can address the problem, or even a tiny part of it, she would have something to sell when she makes approaches.

Creativity

She must become more creative in her approach as well. A good tip is to tell customers she will take all the assignments others have difficulty with – last minute assignments for instance. She could structure her services to support upcoming but cash strapped new event managers or agencies.  She definitely needs to network, in person and in the media, to talk to the clients and account managers. She can survive and prosper, but only if she becomes creative and changes her ways.

© copyright Entrepreneur Media SA (Pty) Ltd. All rights reserved. No part of this article may be reproduced, stored in a retrieval system or transmitted in any form without prior permission of Entrepreneur Media (Pty) Ltd.  Permission is only deemed valid if approval is in writing.

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