In This Chapter

Unless you are lucky enough to have started your business with an ample supply of customers who are already eager to purchase from you, you will have to face a fateful question: where do you find new business?

You will need to invest a significant amount of time getting your business recognized and spreading the word about your products and services. Truth be told, even a reliable base of core customers should not relieve you of the ongoing responsibility of marketing your business. Reliable accounts have been known to vanish without warning.

The very best sales and marketing person for your business is you. While you will no doubt have others helping you, you are likely to be the key player in this area, at least in the early years.

Later on in this book, we look at best practices for sales and marketing as long-term responsibilities (see Part 5). In this chapter we focus on best practices for kick-starting your sales and marketing processes.

In the early years, your goals for sales will likely be more fluid than later on, when you have your business moving along smoothly.

Customers or no customers, you have a product or service to sell, and you are confident it will do well in the marketplace given the research you put into the idea before launching your business. You need to set revenue goals for those first couple of years, keeping in mind that you are starting from scratch.

The first, simplest, and perhaps most important best practice is to set revenue goals that are aggressive but achievable. Don’t build your first year or two around assumptions that your company will instantly be a national (or global) phenomenon. Assume that building a vast customer base is going to take some time.

Depending on your business, it’s quite possible that for the first few months there will be no sales at all. You may be spending a significant amount of time meeting with potential customers and telling them about your products and services. That sales activity will pay off in the long run; you just don’t know when. For the purposes of establishing your cash flow requirements (see Chapter 12), you’re probably going to want to make a conservative estimate.

Initial goals you set may not be built around income at all, but instead around generating activity toward future sales. For example, you might establish the following goals:

These kinds of goals will introduce customers to your products and services and begin to build your database of potential customers. They will also help you get a clearer sense of the average amount of time it actually takes to close a sale and the size of the average deal. Once you know that, you can begin to set goals for actual revenue amounts on a monthly basis.

As a business with no customers lined up, you’ll need to generate customer leads from scratch. Certainly some of the goals listed in the previous section will begin to generate leads; however, you may also want to consider the following options:

As a best practice, establish daily and weekly routines for generating leads. The best way to do this will vary, but some proven approaches include making a set number of calls a day to brand-new contacts; reaching out to family or friends to tell them about your products and services and ask them to refer business to you; attending networking events on a weekly basis; and talking daily to the owner of at least one new business that complements yours and offering to share leads.

It takes time to build a base of customers for your business. As you begin to develop your customer base, you’ll begin to see patterns. For example, you will learn that for every x number of leads you generate, only a certain number close business with you and buy your product. Use this information to determine what kinds of ratios emerge.

Through researching your industry, you’ll learn some important facts about which metrics are necessary to track to be successful in generating revenue and becoming profitable.

You will also learn that some customers are simply not worth the time and effort necessary to keep them happy. Some customer relationships that generate short-term cash flow simply do not justify the effort, energy, and resources necessary to sustain them.

Let’s look at an example. You have one client who purchases from you each month. His purchases average around $5,000 to $10,000 a month. However, he is constantly contacting your sales team to complain about products and demand discounts, and he frequently threatens to take his business elsewhere. All in all, he is a drain on your resources.

As your business grows and prospers, you’ll get better at recognizing desirable and undesirable customers. In Chapter 19, we share some more thoughts on what makes a customer good or bad for your business.

Your goal, of course, is to recruit and retain people with a proactive, “go for it” attitude. You can’t afford to have people on board who are content to sit on the sidelines simply waiting for things to happen. Instead, you want individuals with an entrepreneurial edge—those individuals who have the gumption, self-direction, and drive to get the job done.

You started this business because you wanted to control your destiny and be the determining factor in how much money you make. That spirit is essential in the early years of your business.

Your initial sales and marketing team will need this same edge to be successful in helping you grow your business. We talked about the skills and experience these individuals need in Chapter 8. Not only do these individuals need to be innovative, they also need to be able to execute. Innovation alone isn’t a recipe for a successful business; the ability to implement ideas is also required.

The individuals you need to help jump-start marketing and sales in those first crucial years of your business should have the following qualities:

For those first few years you will need hunters—those individuals who know how to go after business and secure customers.

Expect to spend time with your salespeople generating leads, visiting potential clients, and generating sales. You may find that many hunters are successful at finding customers and closing the deal but not so skilled at keeping the relationship going. That’s fine—at this stage, you need people who can seek out those individuals and businesses that will buy from you and close the deal to bring in that revenue. However, don’t discard the need to keep customers engaged with your business. This may be the role that you play with your customers. You are, after all, the face of that business, and you want your customers to get to know you.

Your key performance indicators (KPIs) for revenue generation will change over time. The KPIs you need now in the early years may not be the same KPIs you have two, three, or five years down the road.

In the early years you want to focus on the right KPIs for your business and measure against those KPIs regularly. Make adjustments as necessary to keep moving in the right direction. Don’t expect to get it right the first time, but be prepared to make the changes necessary as you learn what works and what doesn’t. Early on, it’s important to be able to turn on a dime.

If you are starting at zero (meaning no customers), your KPIs will almost certainly be focused on generating leads of potential customers for your business. If, on the other hand, you are starting out on your own full time after having done some consulting work while employed at another company, your KPIs may be focused on generating additional revenue from current customers and also on developing leads of new customers for your business. Perhaps you are just starting to expand your business out of your local area. In that case, your KPIs might be focused on geographical expansion through Chambers of Commerce, at industry events, or through a network of business allies.

For any new business, identifying specific KPIs for revenue generation is a critical best practice. These KPIs may be focused on early marketing and sales goals, such as …

You need to identify the critical success factors (CSFs) for your business and determine KPIs to support those CSFs. Let’s look at an example.

Assume you have a small business focused on selling and repairing antique clocks and watches. This was a side business for about two years, and you launched it full time about six months ago. You have 10 regular customers who collect grandfather clocks and antique watches and are frequent visitors to your business for both repairs and purchases. You need to expand that customer base in order to succeed full time in this endeavor. You set a CSF to generate new customers for your business, and specifically to generate 30 new customers over the next year, at a value of $5,000 per customer. To achieve this goal, you decide on the following actions:

These are your KPIs toward meeting your CSF of generating 30 new customers in a one-year time frame, at a value of $5,000 per customer.

Now you need to monitor your progress against those KPIs. You may find that what you have proposed is not sufficient for generating 30 new customers within one year. If so, make adjustments to your KPIs.

Continuing our example: if you find that by displaying your products at antique shows twice a year you are able to generate at least two profitable customers per show, you might want to consider increasing your attendance at antique shows. Or if you find that the lists you purchase generate no new customers, you need to determine what the problem is: Are you marketing incorrectly to these folks? Is the list you purchased not valid for your business? Or does this form of identifying potential customers just not work for you? Maybe you are better off investing in showing your products at antique shows and building your customer lists there.

In these first few crucial years of getting your business off the ground, monitor your KPIs frequently—even as frequently as weekly. Look for indicators that adjustments need to be made to the KPI, or wholesale changes in the KPIs you are measuring, to keep moving in the right direction for your business.

You’ve done all the research up front, yet determining who the market really is for your products and services may not be an easy task. A certain amount of trial and error, and then revising your assumptions, is inevitable during the first few years of a business.

Certainly if you are a retail shop selling baby products and baby clothes, you have an easy time determining your market base. However, what if you offer event planning services? Who’s your market? Is it small businesses or larger businesses? Does it focus specifically on small inns or B&Bs who want to get event business but can’t manage it? Is it for organizations that need to plan customer appreciation events? What if market conditions change the operating assumptions of all of these prospective buyers? As you can see, determining your market isn’t always easy.

If you have a store that sells organic produce, your target market may be local families who want a healthy alternative to what’s available in larger supermarkets in your area. Your target market for a consulting services business may be small businesses just starting out that need guidance to ensure they are successful.

You’ll also need to consider segmenting your market for better results. For example, if your target market includes both individuals and businesses, segment your target market into those two groups. Your marketing efforts will be different for each group to focus on each segment’s unique needs.

After you determine your target market, you must address a critical question: what’s the strength of the demand in that market?

Let’s look back at one of our examples. You own a small grocery that sells organic produce. Lately, you’ve seen a lot of news stories about the importance of eating healthier, consuming more fruits and vegetables, and, specifically, eating products free of chemicals. This should increase demand for organic produce, which should translate into increased business for your organic produce.

You need to understand why individuals or businesses want to buy from your business. Is it that your product is unique? Do you have a strong customer service focus? Once you understand why people buy from you, it is much easier to gauge the demand for your product and focus your efforts on meeting that demand.

As a best practice, perform this exercise for each of your products and services: write down the benefits and features of your products and services.

Features of products—chrome finish, 11-inch screen, rubber safety guards—are generally fairly simple to identify, but identifying a product’s benefits usually isn’t so easy. Why should someone purchase your product or service over someone else’s?

It’s easy to mistake features for benefits, and it takes some practice to distinguish between the two. One classic marketing exercise is to draw a line down the middle of a sheet of paper, and to write as many product features as you can on the left side. That’s the easy part. The harder part comes when you try to establish the benefit by completing the sentence, “My customer would pay for this because …” Once you come up with a compelling enough answer, enter it on the right-hand side as a benefit. Here are some examples:

To help identify benefits, send a survey to your customers asking them why they purchase from you. Be sure to provide them a list of options to choose from.

Some small business owners are unable to identify the competitive advantage of their business. Consider this example: You offer consulting services around establishing policies and procedures for small businesses, including providing customers with the following products:

Benefits of the service you offer would include:

When thinking about benefits, the most essential best practice of all is to think constantly, and even obsessively, about what your customer wants most. Doing so will help you to spot and take action on all kinds of new opportunities.

Once you can successfully delineate features and benefits of your products and services, you have taken a step toward determining the demand in the marketplace. You know what kind of customers to reach out to. Search for those customers that need the benefits your products and services offer.