When to sell and when to walk away
You’ve got to know when to hold ’em, Know when to fold ’em, Know when to walk away, And know when to run The Gambler, Kenny Rogers
Kenny Rogers was not referring to selling when he sang those famous words many years ago, but he could well have been. Whether you are an individual salesman, an entrepreneur building your business or an organisation intent on improving profits you should consider the words of the old gambler.
There are certainly sales that you should stick to, even though they do not close easily. There are others where you should realise that you have no realistic chance of success and yet others where the effort to close them is not worth the return you will get. There are definitely sales opportunities you should run from as fast as you can. As the old gambler advised in the song, the difficulty is in knowing which sales opportunity is which. Continue reading
This article was written by Ed Hatton, the Start Up Coach for the South African edition of Entrepreneur magazine, as the My Mentor column published in May 2013 and is posted here by their kind permission.
That terrible time when it looks like the business cannot continue
There comes a time in almost every business’ life when failure seems inevitable, and the entrepreneur fears that they are unable to continue. His or her self confidence nose dives. Prospects for success or even survival appear to be extremely limited and a sense of hopelessness sets in. It is a terrible time, and often happens within the first year of operations, sometimes near the launch.
There is a real basis to this fear. Businesses frequently fail and start-up businesses are especially vulnerable, with many never getting beyond the first year of operations. Entrepreneurs may not have the skills, knowledge, risk taking ability or drive to manage their businesses profitably.
The key to managing through this stage is to decide rationally whether the business is really doomed or whether the entrepreneur has just hit that painful wall that left so many others bruised and shaken but stronger and thriving. Many business owners quit in despair at this stage when with the right tactics they could have succeeded. Decisions have to be made only on facts and stripped of emotions, pessimism, and blame. This is extremely difficult for an entrepreneur to do alone at a time when they are swamped by doubt about the whole business concept, their own abilities and their fears of the consequences of failure including catastrophic financial loss and shame. This is a great time to have a mentor to turn to.
An old business saying suggests that the best loss is the one taken early. If a rational analysis of the state of the business shows that there really is no likelihood of the business succeeding then plans must immediately be made to close the business with as little damage as possible. It is not smart to continue to ride a failure into yet more debt and broken promises.
Finding out why
An assessment of the current situation is vital, write down cash resources, sales prospects, market reaction, product and service quality and fitness for purpose and all the things a buyer would look at it he were thinking of buying the business.. These must be compared to the business plan to see what has changed. Why were the expected returns not made? Are the causes fundamental or can they be reversed? Be certain that the real causes have been identified; this is not a place for rose tinted spectacles. Once the causes of the distress are identified it is a whole lot easier to make a close or survive decision. Often the crisis is brought about by something as simple and reversible as the failure of marketing promotions to attract potential customers, deviating from plans to satisfy unreasonable demands by early customers, trying to attack too many markets or spending too much time on product development and not enough on selling. This is where a mentor can bring an impersonal outsiders view, especially if the mentor has experience in managing similar situations. Continue reading
You have the idea, but what are the steps needed to turn the idea into a business
I meet and communicate with many people who have an idea that they think can be turned into a payable business but do not know where to start, and many such ideas never become enterprises, which means no new economic boost or jobs, and we need both to take the focus from large organisations and ever increasing government bureaucracies.
So here are a few steps to convert ideas to enterprises.
Who will buy it?
Without sales there is no business and yet too many start ups have only an optimistic guess at sales income. To reduce the risk of early failure the target market has to be clearly identified, it has to have the disposable income to buy the product or service and it has to be one that the new business can communicate with and sell to.
Break that sentence down into its components and you will see the need for a whole lot of research, thinking and planning. The advantage of doing this is it is easier and less expensive to communicate the values of a product to a tightly defined market and much easier to attract them to the ‘storefront’ – whether that is an actual store, an internet site or a salesperson. Continue reading
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 October 2012 and is posted here by their kind permission.
Focusing on pricing will pay dividends to start up entrepreneurs
This entrepreneur asks where he can find help in setting prices for advertising space on digital displays and which procedures he should to follow before deciding on the right prices.
Setting the most appropriate price is important but not easy to do. It needs at least as much attention as any of the other ’4Ps’ of marketing. Start up entrepreneurs traditionally spend most of their effort on product development, put time and thought into marketing promotions and sales channels and not enough time and effort on pricing. Price is important in almost every buying decision so it can be as crucial as the product features in securing the sale. Continue reading
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 September 2012 and is posted here by their kind permission.
Leaving the security of the corporate world to start your own business requires more thought than expected
A prospective entrepreneur asks how he can make the transition of leaving full time employment in the corporate world to make a career as an independent IT consultant. He does not have enough funds to cover expenses in the early months.
The entrepreneur must have a very clear idea in his or her mind why they want to take this step. Some of the right reasons are a desire to make much more money, to build something lasting, to taste business ownership or to enjoy creativity which is stifled in the corporate world. Wrong reasons include an inability to get on with the boss, grievances about underpayment or a desire to work less. If these or similar thoughts are the reasons for going alone it may be better to change attitude, or change jobs.
A crucial part of the transition from the corporate world into self employment is having or generating the funds to pay for essentials in the early months. This means either having an income stream or having access to money from savings or borrowings. In either case it is wise for the entrepreneur to have a lean, low cost lifestyle, and cut out any extra expenses. Pay off debt, close accounts and trade in the high cost vehicle, but do not cut to the point where there will be pressure from the family to return to the corporate world.
The best strategy is to make these changes well before the start up is launched, and save the excess so that a reserve is available when there is no corporate salary. At the same time initial customers can be developed and serviced out of business hours. Do not take a loan to support living costs. Continue reading
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 July 2012 and is posted here by their kind permission.
How to turn an idea into a business without someone stealing and using it
This entrepreneur has a business idea, which he believes will be profitable. He is not sure who to talk to or how to go about starting up a business based on his idea. He asks if it is possible to secure a patent or other protection to prevent others from taking his idea.
This is a common situation for many would be entrepreneurs with a great business idea. To develop the idea service providers and funders must be approached and this brings a risk of someone using the idea.
Intellectual property protection through patents, designs or copyright may provide some of the answer, but are not always applicable. For instance a patent applies to something that can be represented by a drawing, model or prototype. It must be new and involve an inventive step. Patents do not apply to computer programs and the presentation of information. Copyright covers written or artistic works and images, but not the ideas underlying them. A legal action against a patent infringer is likely to cost hundreds of thousands of Rand, and could take years to complete. Continue reading
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 February 2012 and is posted here by their kind permission.
Having one large customer is wonderful – until something bad happens
This entrepreneur has printed training manuals for a large national company for 18 months. He purchased additional machinery for their work, although there was no contract in place. Recently the orders have dwindled and the new machinery stands idle. The buyer now places orders with a friend. The entrepreneur asks if there is any way he can complain about cronyism.
Most small businesses dream of having at least one really large company as a customer. Big orders mean rapid growth and the cost of sale is lower than dealing with many small businesses. But there are disadvantages – entrepreneurs entering deals with very large organisations should consider Porter’s ‘Five Forces’ model, where the power of customer is identified as a competitive force. Continue reading
This article was first published as a Sanlam Cobalt Business Tips article. Sanlam great resources for entrepreneurs – I suggest you subscribe.
Take this light-hearted, but important test to see how your business is doing in providing great customer care.
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 November 2011 and is posted here by their kind permission.
Entrepreneurs need to think creatively about their capital needs
My challenge is finding capital. I am a full time mom with no income or assets, so a bank loan is out. I’ve consulted family members with my business plan without success.
My business idea is to supply a niche market with, latest technology imported equipment. I’ve done market research this business seems very promising. But where do I obtain initial capital?
Getting finance to start a business is very difficult. Whether the investors are family members, finance houses, venture capitalists or angel funders, start up capital is scarce and difficult to secure. This gets worse if the would-be entrepreneur his little or no surety, has not previously run their own business or has no relevant business experience. But good entrepreneurs are a hardy lot, and used to finding solutions to intractable problems, so they do find ways to start businesses despite these problems.
Before answering this potential entrepreneur’s question I would like to pose one of my own: If she had sufficient money to start this business would she commit the funds, even if it was all she had? How sure is she that the business idea will work? If there are question marks then the entrepreneur should go back to the business plan and research more and test the concept to reduce the risk of failure. Few funders will finance a business where the entrepreneur would not risk her own funds. Continue reading
Humble shopkeepers can give lessons in marketing strategy
I recently read an article about the lives of Somali shop owners operating in a Cape Town township. They lived a very stressful life, with the continual fear of xenophobic attacks from community members, and the criminals who used the simmering xenophobia to provoke attacks and loot their stores. Insurance is not an option for them.
They described how they chose their location in the poorest sections of the communities. Residents have almost no income, and so travelling to a distant shop consumed too much of their discretionary spend, and they wanted the lowest prices for staples. Unit sales were small values, and at times a shopper would appear with a single coin. All he could buy with that would be one cigarette or a sweet. And he made the most of his purchase – choosing a sweet then changing his mind for a cigarette then rejecting the cigarette and choosing some gum.
The Somali shopkeepers treated him with dignity and patience, knowing that shopping was a rare treat for him. Many local shopowners would have chased him away. Going to a supermarket was simply not possible for this customer.
They chose their target market location carefully, selecting areas which put them in considerable danger and not very pleasant circumstances, but free of competition, and better able to service their customers. And then they gave wonderful customer service to even the least significant customer, treating him like a millionaire. How many entrepreneurs have been as visionary, and how many can say hand on heart that they treat all customers with equal respect and service? Continue reading
How do you get noticed if you have no money?
Imagine a business with expenses rising, the turnover static or falling. The entrepreneur realises that the business simply has to find new customers, but there is little or no money available for marketing. What should the business do next? In desperation maybe the entrepreneur has thought of doing something like:
Sadly the outcome is likely to be a poorer and sad entrepreneur. One time advertising may bring a few enquiries occasionally but is almost always a waste of money. The post is probably collected by a messenger who will discard the flyer, and a prettier web site will not bring more enquiries if nobody visits the site.
A smarter way is for the entrepreneur to realise that if he has limited funds, he needs to reach the people likely to buy from him as efficiently as possible; he cannot afford to market to people who will never be his customers. It is amazing that this simple piece of logic is so often ignored. The very first step is to identify who his most likely customers are, and then to figure out the best way he can communicate a marketing message to them. For most businesses in this situation this will be a highly focused message, getting to the right people with as little as possible waste. Sometimes this may be as simple as forming an alliance with a non competitive supplier to the target market. This would apply to photographers, event managers, courier companies and many more – maybe almost every business. To make this work the alliance must benefit both parties. The allies could agree to introduce each other to their customers, share exhibition or other marketing costs or offer bundled products. Continue reading
Moving a business to a new location can be like starting all over again. By Ed Hatton
An entrepreneur moved his event management and wedding planner business to a new province where no-one knows his business. He needs to attract clients but isn’t sure where to begin. He has been distributing pamphlets, but so far no-one has gotten back to him.
This entrepreneur had a thriving business doing wedding planning, parties and corporate event management and then he moved to a different province. When he started operations in his new location he realised just how much personal reputation and word of mouth had meant. In the new location he is unknown and potential clients are wary of entrusting important events to him.
The business must be started again in the new location. As before, he has to build a client base and a solid reputation to provide a platform for growth. He has the advantage of being experienced in running events and weddings, so he does not start quite as ‘cold’ as he did originally. Against this are a number of part-time wedding planners and event managers who are established and compete with him for business. Continue reading
Picture a large, rude, aggressive and menacing doorman, who did his best to intimidate customers into turning away from your business and upset those who persevered. Few businesses would want him harassing and insulting their customers and stopping them from buying, and yet so many do put rude, insulting and harassing barriers between themselves and their customers, making it difficult and demeaning for customers to approach them.
Even your business may have allowed some of these horrors to creep in.
The most common insult is the vanishing telephone message. The switchboard operator, if there is still such a person in the business, no longer takes messages nor does she know when people are in, on leave or in meetings. The customer needing information or wanting to complain is put through to an extension that (tick one or more) rings endlessly; goes to voicemail with the message is never returned; tells the customer to call on a cell number which repeats the process; or is diverted to another extension which also repeats the process. All levels of government and many very large businesses are even worse than this. If you haven’t done so recently, listen in as a friend tries to reach your sales or production manager, query a delivery or find someone who can explain a product feature. Then fix the problem. Customers who want to talk to your business are actually good news, not the nuisances some staff members and managers seem to think they are. Continue reading
Working smarter to plan increased turnover without needing new business
Most businesses would like to increase their turnover, but often struggle to do so. One reason is businesses simply set a growth target with no focus on where that growth should come from, or why people would buy more from the company. Increasing turnover means more sales to existing customers, more new customers or higher prices, and for now I will focus on growing existing customers.
Selling more by being a great supplier
Before you even start to think about selling more to customers you have to examine if you really understand your customer’s goals, plans, needs and likes, and if the communication channels are open at the right levels. If you are dealing only with a junior buyer who gripes continually about your quality, prices and service don’t expect any of the stuff below to work. Start again and build a relationship of understanding their culture, needs and systems. Then deliver what meets those requirements. Get the communication channels working effectively at the right levels and address their concerns promptly. Then you can think about growing your business with them.
This article was written by Ed Hatton and first appeared in January 2011 Shop sa, the official magazine of the Stationery, Home and office products Association. The Association is fortunate to have a journal of this quality serving its members; it is a great and informative read.
Developing the sales team to gain a major competitive advantage
When you evaluate your business, listing your competitive advantages, or the even more specific Unique Selling Propositions (USPs), are they all price, product or service related? Are they sustainable?
About now some readers of this article may be thinking “Oops, I know I should look at that one day…” or “In my business everyone is the same, price on the day is the only difference…” If either of these thoughts reflects your position I suggest you stop reading and examine why your customers buy from you. If you really are a me-too business with no differentiation in the eyes of your customers, and yet you are still making sales, you are taking huge risks. If you don’t know why customers buy from you, then a change of circumstances outside your control, and perhaps even outside your awareness could have catastrophic consequences for your business.
Most competitive advantage positions relate to a product or a particular type of service. FedEx’s famous “When it absolutely positively has to be there overnight” or Debonairs “If it’s cold you don’t pay” are examples or service differentiators and Pastel’s “Nine out of ten Accountants recommend Pastel” or Audi’s “Vorsprung durch Tecknik” suggests product excellence. Price is often used – “Lowest price or we will refund the difference” is the essence of many price based differentiators. Commentators have used these slogans to show examples of USPs, and if your company can find a real and sustainable USP or two it will be in an exceptionally powerful position. Many companies have to settle for a more limited competitive advantage – being noticeably better than the competition even if that advantage is not unique.
How about developing the sales force to deliver a competitive advantage?
A team so professional, so knowledgeable and so able to solve customer needs that customers choose this company primarily to secure the services of the sales team. Services can be copied, product advantage is usually fleeting and the lowest price is the hardest of all to sustain, but the best sales force in a sector is a USP in the true sense of the word. What needs to be done to get to that position? Continue reading