Sales Challenges and Responses
In addition to the sales objections discussed in Chapter 6, our research revealed seven broad categories of challenges faced by early-stage entrepreneurs. These have to do with getting appointments, selling experience or skill, selling resources, competition, accounts receivable, organizational ability, and ethics.
Getting appointments. As we discussed early on, it can be quite difficult to get that first meeting with a potential prospect. Oftentimes, entrepreneurs underestimate this difficulty, which can lead to unreasonable expectations. Amma Serwaa Lartey, cofounder of One Hen Inc., an NGO that instills the entrepreneurial mindset in elementary school kids, had this to say on the subject:
Getting a meeting was the greatest challenge. Everybody we’ve actually met with has said “yes” on some level, so it’s getting the meeting. Once we actually get a meeting where we could show them everything from the classroom, the product the kids make and for most people it’s a, well so far it’s been a yes.
This challenge is twofold, therefore; there is not only the external challenge of getting the meetings, but also the internal challenge in that entrepreneurs must be realistic about the time it will take and not lose motivation when difficulties and delays arise.
Selling experience or skill. Selling is hard even for seasoned salespeople; on the other hand, one doesn’t have to be a born salesperson to excel in sales. The basic knowledge and skills can be learned, and oftentimes it comes down to one’s perseverance in the face of rejection that determines his or her success. Rejection is easier to handle for someone with at least one sale in hand because previous acceptances validates the existence of a market and brings the hope of future clients. But what about the entrepreneur still in search of that first sale? He or she must be able to maintain that positive mindset even when the rejections start to pile up. They must also be able to look at rejections objectively, determine the reasons for them, and what, if anything, they must do about it. Damian Gray of Insite Motion Media, USA, was faced with the challenge of quantitatively connecting his value proposition to clients results in terms of increased sales:
The big challenge was with our value proposition. We could not directly tie our service to increasing sales. We pitch our customers by telling them that our service will help them increase the number of visitors to their website and help them increase the conversion of those visitors. So saying that to a company [means] more people will come to my website and out of those people, more of them will pay me for my service. That’s a very valuable proposition, however we cannot … hand them any matrix, and … you got to spend a lot of time in either education or inspiration to convince them that this is going to get the results that you are telling them. I think that’s the biggest challenge that we face; we continue to face the challenge.
Mark Casali, cofounder of Synapse, found it most difficult to identify prospects:
You know, this is still the challenge—finding people to reach out to. I mean, the e-mails only go so far. How do I meet people? How do I even know who to contact? Today, Paul and I have some availability, and we know we should be selling, but who do we go sell to? And we don’t have the money to do any kind of advertising budget. It’s really limited to picking our target and taking, you know, a calculated approach.
For Sagi Brink-Danan, cofounder of Perfuzia Medical, USA [a company developing a new modality for treating chronic wounds, diabetic foot ulcers, pressure ulcers, burn, nonhealing wounds], the greatest challenge was shifting gears from performing clinical trials to actual selling. “The transition from research and development, and from clinical trial to selling was … huge.”
For Joe Gustafson, founder of Brainshark USA, the most difficult task was:
“…finding the right people. You had to find those visionaries, those innovators that would be expansive in their thinking to apply a new way of doing things … To find the ways to get it involved in the work process because if we only had one supporter, then things would start to flow.”
Selling resources for growth and scale up. There will be many tasks and challenges competing for the entrepreneur’s attention, particularly at the beginning of a new venture. This makes it difficult to spend the necessary amount of time on selling, particularly when these challenges are compounded by limited financial resources. Myriam Moreno, the founder of Mymoji, a jewelry company in Mexico, was unable to meet the demand for her products because the decision to increase SKUs in spite of small lot sizes was not matched by adjustments to the production strategy. Julieta Vera, founder of an eye care and surgery firm in Mexico, was handicapped by insufficient selling time and the inability to build a professional sales team capable of engaging decision makers in medium and large health care establishments and insurance companies. The same challenge was faced by John Grayson of Genuine Interactive, USA. Their initial sale staff had not worked out well because they would go into the pitch without first gaining a deep understanding of the prospect’s needs and what they had tried (successfully and unsuccessfully) in the past. Genuine’s desired model of selling was to use a consultative approach that allowed for conversations that really engage the prospect, for example:
…if a client comes to us and says, “I’m trying to generate leads,” we [would] say, “What type of leads? What have you tried in the past? Have you thought about using Facebook? I see that you’re doing a business-to-business sale, so have you thought about using LinkedIn and doing targeted profile advertising? How can we use video to communicate in a better way your strengths and highlight and basically bury your weaknesses?”
Market dynamics and competition. There are also many factors outside an entrepreneur’s control that can negatively affect business; for example, changes in the regulatory environment. Also, the actions of direct and indirect competitors can either increase or reduce the perceived value of a product. The latter case will make it harder to elicit positive responses from prospects and in some cases will make a budding idea obsolete or otherwise uncompetitive before it even hits the market. Rafael Davila, founder of Meda Ratan, an upholstery furniture restoration firm, faced steep competition after the United States signed a trade agreement with Mexico and China entered the World Trade Organization, and within just three months he was out of business. In the United States, Mike Norwood faced similar challenges. His firm, Type-U, which offers health care facilities and tools for their patients for managing diabetic conditions, had to contend with competitive offerings even before the launch of his service, which was still at clinical trial stage.
…The so-called health and wellness space is incredibly and increasingly cluttered. So I think the hardest part is really differentiating yourself, especially for a platform that isn’t going to be free. There’s a ton of apps out there that are free. So for us to be charging per member or per patient, on a monthly basis … we have to validate that our proposition is far more powerful than just adding an app amongst all the clutter out there. So I think it’s just really [about] offering something that not only gets people engaged but keeps them engaged. It’s all about stickiness in the space, which I quite frankly don’t think anybody in our research has done at all effectively.
Joel Cam, founder of Joel Cam’s Design, also experienced constant pressure to remain relevant and stay ahead of competition, which he handled by “… constantly going to seminars, talking with vendors. Print vendors and just vendors in general are the best resource.”
The services offered by start-ups might result in the displacement of existing prospect–vendor relationships and this often constitutes a big challenge. According to Tarang Gosalia, cofounder of Optamark, a US printing firm, “… getting the existing customers to switch their mentality with their existing printer and start working with us is still a problem.”
Accounts receivable. All the sales in the world won’t keep your business afloat unless you collect your payment. In fact, cash flow issues will not only stifle the growth of nascent ventures but also cause their demise. Entrepreneurs must have an organizational procedure to track sales and account receivables, or they risk finding themselves in the same position as Francisco Garcia, founder of INCOM Communications in Mexico: “I realized I had to collect every time I ran out of cash.”
Organizational ability. Getting things done within the context of a large organization is quite different from achieving results as an entrepreneur. One mistake is to underestimate the role organizational support plays in an individual’s success. According to Peter Dennis, founder of PMD Consulting:
… coming from a corporate management and sales environment, where I had a team working for me, to suddenly be completely on my own and having to generate something from nothing … is emotionally daunting and draining and scary. And so all those emotions of doubt, of fear, concern, self-doubt—the “Are you good enough to do this?” kind of stuff—that’s very difficult. And there are elements of that that I think actually drive you to do well, but also create a very important sense of urgency, of, hey, if the phone’s not ringing and you don’t pick it up, or if you don’t go see someone, business isn’t going to come to you.
Ethics. Unethical practices within prospect organizations and among collaborators are always a potential concern, as they can create conflicts of interest and make arm’s length transactions impossible. For example, many entrepreneurs in Kenya and Nigeria encountered obstacles when dealing with certain marketing managers.
Some, like Contact Marketing founder, Chris Ogbechie, learned that these marking managers were setting up “shadow” companies that they outsourced some tasks to. Essentially, the “buyer” and “seller” were the same person.
… they’re not looking for effectiveness because they are the ones who decide whether it is effective or not, or the result as long as he could make extra money. So, when we ran into such companies, it was difficult for us. We didn’t realize that that was the problem and we kept thinking, “Hey, these guys have this problem and how come they are not allowing us to come in?” Until we probed further, we realized that there was no way we could break in because it will require us doing certain things.
The “certain things” he refers to are doling out bribes or kickbacks to these managers.
Peggy Obi Okongwu, founder of Hansmora, a coal exporting firm, also discussed questionable practices threatening her business:
The major fear I had, I might still have, is getting the right quantity … because at times, they’ll tell you what they loaded was 23 tons. If you don’t have somebody in the inspection agencies like SGS, COTECNA that will really be there on ground … you will also pay the person who will check for you. At times, you’ll see your goods getting into Lagos State and the Customs staff starts behaving funny. They might want you to tip them off before they can, at least, sign what they are supposed to sign.
For Rekha Bhagubhai of Britind Industries Limited and some of her fellow entrepreneurs in Kenya, one of the biggest challenges was receiving fake checks.
You get conmen giving you postdated checks that bounce or even current checks that bounced. Another thing is getting honest salespeople. They are on your payroll, but they spend time selling and at times they carry competing products at the same time. Also, there are requests for under-the-table payments.