Borrow Less, Sell More
by Rob Spiegel
The secret to your success is simple: sell more.
Want some really good advice on running your small business? Simple. Quit borrowing money and quit seeking investors. Instead, spend your creative energy two ways: cut your costs and sell something to somebody. Let’s look at each one.
Cut your costs
Small businesses are cash strapped. That’s a fact of life, and not a bad fact. Being cash strapped keeps you lean, keeps you creative, keeps you competitive. Home businesses are typically even more cash poor than companies with outside quarters. Again, this is good. When you’re not tight on cash, it’s the easiest thing on earth to become wasteful.
It’s human nature to become wasteful. We love becoming wasteful. All day long we’re faced with pressures to improve our business tools, our surroundings. Our vendors are squeezed and they need more. Our employees can barely get by on our meager salaries. The chair you’re sitting in definitely needs to be replaced. You are surrounded by unfilled needs. But if you spend money that does not improve the quality of your product or service measurably, you’re probably wasting money. And unfortunately, companies often fill these needs with borrowed money or investors’ cash.
There’s a special truth about needs. You satisfy one and another appears. You can manage needs – if you’re careful and lucky – but you can never satisfy needs. Replace your chair and your desk suddenly looks shabby. Give the marketing director a raise and suddenly everyone else needs more money. They also need better surroundings. I once listened to the argument that our salespeople would sell more if they worked in better office space. I’m sure they would.
This is true in non-profits just as well as businesses. I’ve served on boards that struggled to save each dime and struggled even harder to bring in new members. The membership grew. The coffers grew. Gradually we could afford an office manager. And a better office. Then an assistant office manager and a new copier. The focus went internal. Members dropped away and suddenly we couldn’t afford the office or the paid staff to fill its wonderful rooms. We were soon enough back to hording paper clips and seeking new members.
Sell something to somebody
Borrowing money and seeking investors puts off the inevitable: you have to sell in order to succeed. I’ve worked at companies where the owners were very, very good at borrowing money and lining up investors. They spent quite a lot of time and energy perfecting their strategy for nailing down loans and talking up investors. They were too busy to spend much time selling. Once the big loan came in; once the big partner ponyed up, there would be plenty of time to sell.
Selling is hard work. It’s an unpleasant activity that’s filled with rejection. And it’s very hard to find a business that does not require regular sales work to survive. There’s no magic involved. Most of it is the dirty work of digging up prospects and calling them. You try to make an appointment or you try to sell over the phone. They don’t want to buy. They want to get rid of you. But you persist. You tell them the nasty chair they’re sitting in really needs to be replaced with one of your new chairs. Tell them they’ll sell more while sitting in your wonderful chair.
Your ability to sell is more important than your ability to manage a staff – and heaven knows that’s nearly impossible. Selling is more important than developing an excellent product or service – which is really the easy and fun part of a business. Selling is the heart, the soul, the brains, the internal organs and the skin of a business. Everything else is dressing.
Sell and cut costs
Nothing magic about it. Most budding entrepreneurs find it mightily difficult. And likewise, most businesses fail. When I’m asked what I think about a company’s potential, I try to figure out three things:
- Can the product or service be sold?
- Is the entrepreneur willing to do the selling?
- Will the business owner be able to resist the wave after wave of pressure to increase overhead?
In most cases, number one is an easy yes. The real difficulty comes with two and three.