Passionate about Sales?

Do you know what to look for in a sales person? Most sales applicants can present a lot of reasons why they will be great for you . Suggest you might be hiring on straight commission and see what they say… If they are from your industry, they will tell you about all the business that they can bring with them. Usually you can discount that by 50-100%.

Do your sales people have a passion for sales?

If your sales people do not… Rule #1 : Suggest that they seek employment elsewhere. Rule #2: Replace them them with people that love sales. If a sales person does not love selling, they will rarely bring you sales success. You do not want “order takers.” Unsuccessful sales people will give you reasons why customers will not buy from your company. Rarely will they say that they really do not know their product or are not really putting in the necessary time or effort. If they are not doing the job, shame on them and shame on you. You cannot afford to keep them on the “if come.”

Take a long hard look

Do you know what to look for in a sales person? Most sales applicants can present a lot of reasons why they will be great for you . Suggest you might be hiring on straight commission and see what they say… If they are from your industry, they will tell you about all the business that they can bring with them. Usually you can discount that by 50-100%.

Some companies prefer little or no experience, so they can train the new sales people properly and do not have to overcome bad sales habits.. . Because an applicant has been with 5 other companies does not mean good experience, it usually means failure.

The best sales people

Having trained & worked with 1,000s of sales people, I have noted 4 traits that the most successful have in common:

  1. They love selling. (are passionate about)
  2. They have worked very hard to know everything about what they are selling (this is crucial).
  3. They are enthusiastic and optimistic.
  4. They put in a lot more time and effort than the “average” sales person (who sells far less).

Note: None of the above mentioned were “born sales people.”

For help with your sales organization, contact SCORE.org or your local chapter of SCORE.

Bill Haman, SCORE Cincinnati

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Why a Business Plan?

The successful entrepreneur is generally more inclined, once a business idea is selected, to sharpen the concept by a detailed planning process. The result of this step is a comprehensive business plan, with its major components being the marketing “mix,” the strategic plan, operational and logistical structures, and the financial proposal. The purpose of the business plan is to recognize and define a business opportunity, describe how that opportunity will be seized by the management team, and to demonstrate that the business is feasible and worth the effort.

The business plan is the “blueprint” for the implementation process. It focuses on the four major sub-plans: marketing; strategy; operational/logistic; and financial. While the business plan often goes through some revision, it generally represents a rather advanced stage in the planning process. The primary product or service to be offered, based on the results of the market research, should be determined. Whether the business will be a start-up, purchase of an existing business or a franchise should certainly be firm at this point. Often, a specific business location is indicated, or at least a rather specific area.

Time estimates in a business plan should allow for meeting all the necessary regulatory requirements and acquisition of permits to get to a “customer-ready” condition. The amount of funding required and a general approach to raising these funds should be determined. Marketing mix issues focus on how the product or service is differentiated from the competition.

A business can differentiate itself on any of what are often referred to as the “four P’s” of marketing: product characteristics, price structure, place or method of distribution, and/or promotional strategy.

Strategic issues relate broadly to the company’s mission and goals. Every venture must continually assess its strengths and weaknesses, the opportunities to be seized, and any threats to the success and plans of the business. Operational issues relate to company structure, and the scope of the business. The operational plan addresses tangible items such as location, equipment, and methods of distribution. Decisions on these issues largely determine startup costs.

The financial proposal includes an estimate of the amount of money needed to start the venture, to absorb losses during the start-up period, and to provide sufficient working capital to avoid cash shortages. It projects sales and profitability over some period into the future, generally 3 to 5 years. Where outside funding is sought, it also describes distribution of ownership of the venture and methods of debt repayment and/or buyback of partial ownership.

Where implementation of the plan requires participation of lenders and/or investors, the plan must clearly and convincingly communicate the financial proposal to the prospective stakeholders: how much you need from them, what kind of return they can expect, and how they can be paid back. Many entrepreneurs insist that their business concept is so clear in their heads that the written plan can be produced after start-up; this attitude “short-circuits” one of the major benefits of producing the plan. The discipline of writing a plan forces us to think through the steps we must take to get the business started, and, to “flesh out ideas, to look for weak spots and vulnerabilities,” according to business consultant Eric Siegel.

A well-conceived business plan can serve as a management tool to settle major policy issues, identify “keys to success,” establish goals and check-points, and consider long-term prospects. The plan must realistically assess the skills required for success of the venture, initially and over the long run, and match the skills and interests of the team to these requirements. Test the plan, and an accompanying oral presentation, on friends whose business judgment you value. Let them assume the role of a prospective investor or lender.

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Know Your Sales Margins


If you don’t know whether your business makes more selling Product A or Product B, listen up.

Reference: Business on Main

Do you make more money selling cookies or cupcakes? Who’s more important to your business: the big customer who ties up half your workforce, or the dozen smaller customers who occupy the other half?

Knowing which of your products or services generates the biggest profit margins is critical to building a sustainable business. It helps you determine where you should focus your resources for future growth, and where you should be trying hardest to cut costs or raise prices. Yet surprising numbers of small-business owners overlook this fundamental exercise.

“Too many business owners think in terms of sales and revenues, and not the bottom line,” says Joellen Sommer, a certified public accountant whose New York City-based consulting firm, Your Own CFO, provides clients with on-call, part-time or interim chief financial officers. “They really don’t know what the cost is to produce a certain product, or at least not the all-in cost. If they provide a service, very few track the true cost of their employees who deliver it.”

Sommer recalls working with a firm in the advertising industry that was shocked to discover that its largest client was actually costing the company money. When it came time to rebid the business, her customer let the client go rather than try to hold its prices, then redirected its energy to finding new clients.

Engineer and entrepreneur Robert Sherwood had a similar epiphany several years ago. After a long and successful career in Silicon Valley in which he grew one of his startups to $100 million in revenues in just three years, Sherwood returned to his home state of Kansas and launched SmartText Corp., a small company that sells legal forms and business documents via the internet.

For years, Sherwood assumed that his highest-priced products generated his biggest profit margins. After all, once he’d developed a large and complex document, it cost nothing more to deliver over the internet than one of his simpler forms. What he failed to consider were post-sale costs. It turned out that customers spending $150 on a document were a lot more demanding than customers shelling out $10. When they had trouble figuring out how to download a purchase or save it to a hard drive, they were much more likely to call his company for help.

Sherwood tried beefing up the “frequently asked questions” page on his website and offering alternative delivery methods, such as file transfer protocol, to ease the burden, but to no avail. Finally, he began to position his lower-cost but higher-margin products more prominently on his website. That led to lower revenues as his average selling price fell, but higher profits as customer service calls went down. On sales of about $1 million annually, profits rose by nearly $150,000.

Crunching the numbers
The simplest way to measure the profitability of a product or service is by its gross margin: the sales price less the direct material and labor costs to produce it, divided by the sales price. If, for example, your $25 widgets cost $20 to produce, your profit margin is 20 percent.

For many companies, however, that is only a starting point. The gross margin calculation does not include overhead expenses like rent or equipment costs, or even selling expenses. The more of those costs you factor in–especially where they vary significantly from product to product or service to service–the more accurate a picture you’ll get of your true profit margin.

Using the data
Once you’ve calculated profit margins for your various products or services, you’ll need to decide what to do with the information. In simple terms, you might do one of three things with low-margin elements of your business: cut production costs, raise prices, or, if neither is possible, discontinue offering the product or service. The real world is more complex. Fast-food chains might enjoy their biggest profit margins on french fries and soft drinks, for example, but they’re not about to stop selling cheeseburgers. Most businesses need to offer a well-rounded menu of products and services to attract and retain customers. But there is still much you can do.

Consider the experience of FHI Heat Inc., a Solon, Ohio-based producer of flatirons, blow-dryers and other hair-care products. After joining the company in 2008, CFO Michael Paull began a rigorous analysis of its profit margins by product, product line, distribution channel and customer. Using the results of that analysis, the company has seized opportunities to pair low- and high-margin products together in offers that create higher-blended profit margins while also boosting sales (think of fast-food value meals). It has also negotiated price breaks from vendors where possible, and in some cases raised its selling prices–even at the cost of losing a few low-margin customers. Over the past two years, Paull says, the effort has helped the company double its profit margins.

Are you ready to take a closer look at which goods and services generate your best profits? Here are four tips:

  1. Verify the integrity of your data. Unless you have a good handle on your true cost inputs, you can’t hope to calculate profit margins accurately.
  2. Share your findings with other decision makers in your organization who can impact what it costs to produce your goods or services and what you charge.
  3. Consider the indirect consequences of any changes you make. Just because one product has lower profit margins than another doesn’t necessarily mean it should be dumped. Different products and price points appeal to different customers. And in sufficient volume, low-margin products can generate more profits than high-margin products that are moving slowly.
  4. Make margin analysis an ongoing discipline. Your product offerings, costs and pricing power are constantly shifting. Depending upon the nature of your business, consider monitoring margins on a quarterly or monthly basis.

A former reporter for The Wall Street Journal and Dow Jones and contributor to Barron’s, article author Randy Myers is a contributing editor for CFO and Corporate Board Member magazines.

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Selecting a Venture

The basic rule is simple: “Find a market need and fill it!” The process of finding the need, and the method chosen to fill it are where the difficulties arise.

Based on an opportunity scan, does the market need a product or service that is not currently being provided? Is there a needed product or service currently being provided in a less than satisfactory way? Is some particular market being underserved due to capacity shortages or location gaps? Can we serve any of these needs with some competitive advantage?

Remember that a business idea is not a business opportunity until it is evaluated objectively and judged to be feasible. You may wish to choose two to five of the ideas that seem most promising for more detailed study. Trying to consider too many would spread your time, energy and focus too thin. At the same time, if you focus too early on only one business idea, you are more likely to become “attached” to it, and could lose your objectivity.

Testing the feasibility of your top business ideas involves time and effort to collect key information. A first pass might consist of consulting recent journal articles that evaluate the market of interest; most libraries have computer-based indexes of periodical articles, such as InfoTrac. Other useful library resources include industry trade books, directories, and other sources of industry statistics.

Craft an entry strategy. What type of business could best seize the chosen opportunity? Would taking in partners with complementary skills enhance my chances for success? What would be the optimum location? Whom would we serve, and how? Would my chances be improved by buying a franchise or an existing business, as opposed to starting a venture “from scratch?”

A small business is the usual product of entrepreneurship. Can a person start a large business? Only 4% of businesses employ over 20 people at start-up. What kinds of businesses are the larger start-ups likely to be? My sense is that most would be food service businesses, and many of those would be franchises.

Over half of business start-ups consist of 1 or 2 employees. What kinds of businesses can you enter with only 1 or 2 employees? Most would probably be considered professional practices (medical, law, accounting) rather than commercial businesses.

Small businesses are characterized by independent management, closely-held ownership, a primarily local area of operations, and a scale that is small in comparison with competitors. Many are small by design, or are “lifestyle” businesses, where the primary objective is employment for the principals.

Many are intended to be more “entrepreneurial ventures,” with the intention of generating substantial growth in scale of operations and profitability. Successful entrepreneurs craft such an idea into a business concept that, hopefully, fills a void in the marketplace. You should enjoy your concept and be excited enough to relay your feelings to your market.

Your concept does not need to be a major breakthrough. It could simply be an improvement to an existing product or service. The improvement could be as simple as better service and/or quality than is currently available, a faster or otherwise better method of delivery, or a technological improvement.

Solicit input from friends and other consumers of the product as currently offered. Ask questions like: Is there a need? Would YOU buy it? What price would you expect to pay for it? Is there a better way to provide it?

Check out how the competition is providing the product to the market. Determine what makes your concept different from the competition. Why would the market be better off doing business with you? What can you give the market to improve their experience with the product? Does your product or service exceed the expectations of the market?

Define the needs of your market by listening to prospective customers and understanding how your product might fill that need. Is there something more you could do, to make it more attractive to your market? Is your product a solution to a problem in your market? How will you handle customer service complaints? What are your guarantees to your customers?

Statistics show that 80% of company sales come from repeat orders and referrals from satisfied customers. Exceed your customers’ expectations and they will be back, and they will refer you to others.

Refining and improving your concept is an ongoing process. Maintain a high profile in your community to develop relationships that help promote the product and serve as a referral and constructive feedback network. This involvement will only produce these benefits, however, if you are sincere in your willingness to work hard for the community you live in. If you don’t the available time to offer your community, perhaps you could give your product as a gift to local charities or sponsor a local event where your community would benefit.

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To Network or Not To Network, That is the Question!

Gotta Try This!

A couple of days ago, a fellow mentor copied me on an email he sent to one of our clients on the value of networking. I felt that his comments encapsulated the essence of networking. He had attended a networking Continue reading «To Network or Not To Network, That is the Question!»

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Free Publicity and Awards Build Small Business Success

Marketing your small business

by Karen Durand & Katie Nelson, SCORE Cincinnati Chapter

It’s well known that small businesses have limited marketing budgets, but still have a great need to get their message out to build their business.  Dennis, Murphy, SCORE Mentor, suggests that one should NEVER be afraid of the Media. “All businesses should have a brief bio and a short one page article about the universal problem that their company solves or fulfills,” i.e. your “elevator speech.”  He has found this to be amazingly successful in garnering media attention and awards.

Dennis offers his “Top 10 Tips for Marketing Your Business:”

10) Find someone that believes in your dream and can help you achieve it. (Example. a free SCORE Mentor)

09) Build an attractive and strong website. Use search engine optimization.

08) Don’t be afraid of the media; contact them and tell your story.

07) Have a brief bio of yourself including a brief one page article that details the universal need that your business fulfills (be sure to exemplify WHY your business is different than others in your field.)

06) Find local media contacts. Check the bylines for writers and their contact information. Community newspapers are always looking for good content and the distribution is tailored to people in your community!

05) Get on various mailing lists. About.com is a great one. Information is knowledge, and mailing lists are free.

04) Follow up! It’s easy to send an email or place a follow up phone call. This could separate your “potential story” from the rest of the pack to the top of the stack.

03) Toot your own horn! Don’t be afraid to promote yourself. You’ve made it this far; flaunt it in a professional but personalized way.

02) Apply for local/national awards. Awards are not only a way to get your name out there, but the plaques will look great on your store wall.

01) Network, Network, Network! Get involved in your community, meet with business owners, chambers of commerce, etc.

If you’re interested in receiving free confidential small business assistance or serving as a score volunteer contact us through scoreworks.org or call 513-684-2812.

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Seven Most Overrated Businesses: First

Restaurants.

Dining out and cooking are among Americans’ favorite pastimes. But “restaurants are among the toughest businesses to run,” says Donna Ettenson, vice president of the Association of Small Business Development Centers in Burke, Va.

Far too many people assume their culinary abilities will lead to success in the restaurant business. Instead, about 60% of restaurants close in the first three years, according to a 2003 study at Ohio State University. That’s quite a bit higher than the roughly half of all start-ups that close in the first five years.

The reason: Restaurants typically have low profit margins and need strong managers who can run an ultra-tight ship through seasonal fluctuations and other struggles. Most people don’t have that kind of intense managerial ability to pull it off. By the way, the pitfalls are quite similar for restaurants’ cousin – the catering business. In other words, Chef Emptor.

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Seven Most Overrated Businesses: Second

Direct Sales. It’s a tempting pitch: Work from home and earn commissions by selling cosmetics, kitchen knives or cleaning products. But companies that recruit independent sales reps tend to attract new team members by pointing to the success of their highest earners.

A harder look shows that those high earners are making big money in large part by recruiting new reps into the organization and getting bonuses or a cut of their recruits’ commissions, says Ken Yancey, chief executive of SCORE, a Herndon, Va., organization of current and retired business executives who volunteer time counseling entrepreneurs. The new reps then have a much harder job because they need to recruit more people on top of selling product even though the number of reps out there is increasing.

The result, Yancey says: “Most of them wind up with a bunch of jewelry or kitchen equipment sitting in their basement that they can’t sell.”

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Seven Most Overrated Businesses: Third

Online Retail.

By far, one of the easiest businesses to start is selling items through online marketplaces such as eBay or Amazon. But as online commerce ages and these sites fill up with more established retailers, it’s much harder for new, small sellers to compete for attention and generate a viable income.

“A lot of people are thinking it’s the Web of five or 10 years ago and you stand out simply because you’re on the Web,” says Rieva Lesonsky, chief executive of GrowBiz Media, a content and consulting company for small businesses based in Irvine, Calif.

Instead, successful online retailers today must have a handle on sourcing their products at a low enough price, then layering on clever online marketing and fine-tuned logistics. These businesses won’t generate much income if they can’t be easily found in searches, maintain a good reputation among buyers or add enough value so that sellers can build profit margins high enough to take on bigger players and physical stores.

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Seven Most Overrated Businesses: Fourth

High-End Retail.

Many people dream of opening a day spa, luxury jewelry store or designer clothing boutique – businesses they feel good patronizing. But specialty retail businesses close at higher rates than non-specialty stores, according to the Small Business Administration’s Office of Advocacy, and are even riskier now that consumer discretionary spending has dried up and people are no longer spending money on little luxuries.

“It’s going to be a long time before we return to the days of conspicuous consumption,” says Ms. Lesonsky of GrowBiz Media. High-end retailers often suffer from poor locations and lack of understanding of how to source and market their products in an effective way. In today’s economy and in coming years, she says, retail entrepreneurs should be looking to sell non-discretionary consumer goods or offer items at a value rather than high-end products.

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