Jul
15
The 4th Rule for New Entrepreneurs (this one warrants a post by itself)
Filed Under Miscellaneous, Entrepreneurism, Management, Leadership, Sales
Continuing the list, Number 4: If it is good enough for Rudyard Kipling, it’s good enough for me -
The Five W’s (and one H) of SALES. Many a great idea has died a slow and painful death due to no cash to buy food and drink for the human beings who are building this new enterprise, many an army has lost the war before ever entering battle from a lack of supplies. Business is no different. Cash is oxygen. Cash flow is created through the production of sales. I must admit, this is a subject I can wax poetic about for a while. Sales can be one of the least appreciated, albeit oftentimes highest paid, career paths in existence. Bottom-line though is this, new businesses need to generate cash. Cash can be easily generated from sales. Sales don’t happen by accident though, and they rarely happen virally. They happen through a planned target for customer acquisition and servicing. Thus…Rudyard Kipling’s poem:
I keep six honest serving-men
(They taught me all I knew);
Their names are What and Why and When
And How and Where and Who.
The Five W’s (and one H):
- What are you selling?
- Who will buy it?
- Why would they buy it?
- How will you sell it?
- Where will they buy it?
- When will you sell it?
You must make a plan for your sales and revenue generation….or you better make a plan on moving back in with Mom and Dad. There is a big reason that many businesses post their first dollar on the wall…because that first dollar is symbolic of something. Not that you will be a millionaire, or that you have all your problems solved (woe ye merry man who doesn’t realize the problems have just begun); rather it symbolizes that you have actually gotten someone to buy your poorly-thought-through, undeveloped, PNQAFAYEIWBASAYGSMC (possibly-not-quite-as-fantastic-as-you-expect-it-will-be-as-soon-as-you-get-some-more-capital) product or service. In other words, “Hot Damn, I sold sumthin!!!” Note: That dollar also symbolizes hope and dreams and optimism…all crucial.
In summary, you’ve got to make a plan for sales. What will you sell? Will you personally sell it or hire someone? What are the sales growth expectations and how will you fund that plan? What will the product / service generate in short term and long term receivables, are their annuities, what percentage of clients will convert from a prospect to a client, how will you find prospects, what is the sales life cycle (i.e. time to close), how much will you invest in your proposal to a client to buy your product / service, how will you recruit salespeople, what expectations will you manage up front in the buying process, is this product / service profitable enough to justify the sales expense, etc, etc, etc.
Lots and lots of questions you must ask yourself about the sales process, not to mention the service side (profits, costs to provide service, refunds, service personnel, etc.).
A couple last minute points here:
You will likely need to start selling, to generate revenue, before your product / service is “ready” or “perfect”. That is OK. Remember Guy Kawasaki’s Rules for Revolutionaries, Don’t Worry Be Crappy. Remember the next Rule. Don’t Stay Crappy….Release, Release, Release (new versions). I just visited with some Entrepreneurs yesterday who told me what differentiated them from the other products on the marketplace was the fact that they took 2.5 yrs to develop it prior to launch. I leaned over to my co-worker and said…’rich parents’. In the absence of serious early stage funding and rich parents…most Entrepreneurs have to start selling prior to being fully ready.
Price your product / service higher than _______ (whatever you were about to price it at). People see more value in higher pried items than in cheap stuff. Witness why you don’t buy most of your friends gifts from the $.99 store, despite the cool wrapping paper and awesome Halloween decorations they have available all year long.
Even if you are The Greatest Salesman in the World, you will someday get tired, sick, or tired AND sick of selling. The larger your business grows, the more important it is you have a defined plan for scaled growth that is no longer dependant on your own incredible skills. In other words, avoid the typical problem suffered by most Surgeons…lots of money but no free time to enjoy the cash flow.
So…get cranking. The Five W’s (and one H) are calling. Plan your work…work your plan!!
Comments
3 Responses to “The 4th Rule for New Entrepreneurs (this one warrants a post by itself)”
Leave a Reply
Yeah. We would all love the RPVC (Rich Parent Venture Capital).
nice post
I couldn’t understand some parts of this article th Rule for New Entrepreneurs (this one warrants a post by itself) : Common $Cent$, but I guess I just need to check some more resources regarding this, because it sounds interesting.