In the United States, approximately 29 million businesses exist, and nearly 21 million of them have no employees. With that in mind, who is selling for these companies?
The dilemma: Should the owner of a micro or small business with no employees sell for the business or run the business?
The following story outlines this dilemma, the impact it can have, and what to do about it.
In the small town of Orting, Washington, is a small residential home building business. It’s your typical construction company operated by a husband and wife team, plus their construction su-pervisor and receptionist. When I first met the owners, business was so good they were building one or two houses at a time and had other excited customers waiting in line. Demand was so good that the owners decided only to build locally, so they actually turned down opportunities from potential customers outside their immediate area.
One night, when I was having dinner with the owners, I asked, “How do you sell your homes?” It was a simple question really, but I was curious about what the sales process looked like in a company with three primary employees and a subcontracted crew.
“Well,” the husband replied, “I am the one who does the bids. I am the one who ultimately deals with the incoming calls and meets with potential clients.”
“Do you have a sales background?” I asked.
“No, but I really don’t need to sell. I have customers calling me looking for my services,” he proclaimed.
“Okay. But how do you find customers?” I asked.
Again he said, “The customers find me through word of mouth and a few well-placed ads.”
This response seemed odd to me, but who was I to argue? I was in sales in the printing industry, and he was in the construction industry, yet his answers sort of gnawed at me. I kept thinking his company seemed like it was in a risky situation. But again, who was I to question? He was a successful business owner, and I had never owned a business. He had the nice house with a view, a sec¬ond retirement home overlooking the water, a new convertible for the weekends parked in the garage, vacations every year, money and wine flowing, and all was good. And I am pretty sure at that time he was making a lot more money than I was. I remember thinking I was missing out. Why didn’t I own my own business?
While I am happy to report that today, this company is still building homes, but there was a time when business was not as good.
That dinner took place around 2007. As we all know, in 2008, the US economy did a pretty big nosedive that affected many businesses nationwide. As you may also remember, it hit new home construction very hard. The housing market collapsed, and people walked away from homes everywhere. This crisis resulted in a flood of homes on the market and caused the prices of existing homes to fall to a point where one could get a pretty nice house at a price that was better than building one.
As the owner was finishing up the last two houses he was building, he was getting a little uncomfortable because the line of potential customers was not just smaller—it was gone. All the potential cus¬tomers the company had turned down because they were too far away were looking pretty attractive, but they had either already moved forward with other builders or put home-building plans on hold until the economy improved.
Like every other business, it was time to cut back. The first to go was the receptionist. A once-required position was now an expen¬sive luxury. The next position cut was the construction supervisor.
With no homes being built, no crews were needed, so there was no need for a supervisor. The owners took over these roles. The next victim was the beautiful convertible car in the garage. And finally, and probably the most painful, the nearly finished retirement home had to go. However, even after cutting all these costs, there was still no money coming in, so these cuts were simply buying time until the economy improved. It would be a long wait.
I think by now you get the picture. It was a painful situation all the way around, and I am sorry to say there were many more of these stories all across the United States.
Why did this happen? Could anything have been done to prevent it? Sure, a crystal ball would have been nice, but those are in short supply. No one can stop the economy from doing what it will do, but is it possible to be prepared for such a situation and survive? The answer is yes. Many businesses were hurt, but not all went out of business.
First, let’s look at what went wrong for this company:
- The owners were confusing “sales” with “revenue.”
- The owners were not trained in sales and did not have a pipeline of future work in place.
- The owners had one product line, i.e., new construction, no remodels.
- The owners never had a “need” to think about sales since business was good.
- The owners did not see the “risk” based on the assumption that the economy would always be good.
- The owners did not have or know how to build a sales process into their business.
- By the time the owner felt enough pain to try to solve the problem; there was just not enough time to “build” a sales pipeline to solve it.
Bottom line, the owners felt the good times and the demand would always be there, and if “sales” came in by themselves, why go look for customers?
This situation illustrates the biggest small business dilemma: As the owner, should I sell today or run the business today? The owner is an expert and understands his or her “business,” but often the owner is not trained to sell. How should this situation be resolved?
- Should the owner run the business and try to sell?
- Should the owner try to sell? Then who will run the business?
- Should the owner concentrate on running the business and hire someone to sell? This is an expensive option.
- If the owner does have a sales background, who will run the business while he/she is selling?
Unless you are one of those owners who has the good fortune to have a sales background, the following list of to-do items will help you prevent this situation in the future:
- Find a way to educate yourself about the sales process. Many books and classes are available for those looking to learn about sales. If possible, also find a friend in sales; they can help too.
- If you will sell, look for a mentor. This can be very helpful.
- Do your research so you know whom you would actually approach to sell your products.
- Decide if you will sell or if you will hire someone to sell for you.
- Practice, practice, practice.
While these ideas are not simple, neither are they terribly difficult. Finding time in your busy schedule is probably the most challenging. But if you invest the time now to better understand sales and how it can generate revenue for your business, you will be in a much better situation the next time the economy decides to head south or a competitor opens an office near you.
Greg Andersen is a speaker and the author of Small Business Sales, WTF (Without The Fear). He works with small business owners to help them understand that using the power of sales is the best strategy for growing and protecting a small business.