I’ve been seeing reports of global economic meltdown and that we should all prepare.
A lot of us remember the disaster of 2009. At that time, I was part of a company, which was losing substantial amounts of money and had no sales pipeline in sight. We had one client, and that customer was tenuous at best, generating very little revenue. The other issue of course, was everyone else was in capital conservation mode, and for a small start-up, there were no easy customers or sales. So how do you and how did we survive?
First task is to evaluate the cost of your sales organization. When your company is growing in a high growth period (think 2007) people tend to loosen budgets and spend on items that may not be necessary and are probably not using half the tools they bought. An evaluation of what is needed would be first so that you can reduce your cost of sales. In this exercise, it is critical to evaluate your sales personal too. Who costs you the most vs the revenue they generate? what is the best way possible that you are generating revenue now? This part is always the hardest, because it means that you are admitting to your staff rough times are here, and some people may be let go.
Second task is remodelling, and forecasting how long the downturn is going to be. This is a bit of a crystal ball, but it effectively lets you recast your sales expectations and allows you to find your most profitable and quickest sales. It is a very interesting task, because it requires real thought and creativity – it’s easy to re cast numbers lower, but it’s also important to understand how to attain those numbers.
Last task is to sell, and figure out what is your best method. Hopefully you have an idea of how you will attract customers already, but as it was in our case, we didn’t. We had to look at ourselves and understand how we could remodel for success. It meant changing commissions, discussing how and who we would let go and what would be the best way for us to sell. In the case of that company, we had a term called “Butts in Seats”. Given that it was a services firm, how could we scrape and claw using all of our relationships, family and old contacts to see if there are any ways to get our people billing. We also looked at partner channels or channel sales for survival. Effectively you look for the most cost effective way to promote the business and get recognition.
So, the way this looked like for my company is we let go of 2 business developers and our VP of sales resigned. One of the owners, me, took over sales and we held onto one person who did business development (cold calling etc). We then took to blogging and other web based recognition to promote the business. Spending time trying to forge new relationships with partners. These changes reduced our cost of sales by 80% effectively saving the company and allowing us to weather the storm.
We stayed this way until June of 2010, where we then started bringing more people on, since we were hitting a high growth period. Those times were very difficult, and as owners we didn’t pay ourselves, but the subsequent years were fantastic and fun because we had lived the horror story and could reflect in the good times. Of course there were others who didn’t make it, most of them because they didn’t budget and adjust accordingly.
While I do think a downturn is possible, having these three ideas in mind give me the confidence that my new company will be able to ride out any downturn and thrive.
- On March 7, 2016