Staying Alive
The struggles of a business trying to survive.
Editor’s note: Paul Downs is writing this week about his decision to hire a sales consultant. The series started with this post.
At the beginning of 2012, I had set a sales target of $200,000 a month, and in the first two months of the year, we hit that number. But March came in weak: we sold only $135,732. April was almost as bad, with just $146,677 in new orders. And May was even worse: $114,042. By the end of May we were $200,000 behind our target, and I was worrying about running out of work.
We can generally handle a down month now and then without difficulty, as these are often followed by months in which we far exceed the quota. But three weak months in a row means a serious mismatch between our production capacity and the amount of work we actually have on hand. That’s bad in two ways: first, the missing sales mean less cash coming in from deposit payments, and second, we will eventually have no work to do. I had hired five people in 2011 to ensure that I could get $200,000 worth of work out the door each month. That was now looking like a big mistake. Would I have to lay off all of those people?
Naturally, I spent a lot of time thinking about what was happening, and eventually I decided that my problem was the economy. In the spring of 2012, there was quite a lot of chatter in the media about poor job growth and the possibility of a double-dip recession. I latched on to that story and convinced myself that the problem was out of my hands. I was ignoring the possibility that we simply weren’t doing a good job with sales, mostly because my method had worked well in the past. I hadn’t changed anything about how we made sales, and it just seemed as though that couldn’t be the problem.
But now, when I look back at what was happening, it’s clear to me that there were danger signs I ignored. In particular, I downplayed a couple of big jobs that slipped through our fingers. One, for a large company in California, had seemed to be a lock. Our contact at that company had even told us that we had the job and promised a deposit the following week. But it never came. Instead, I got a call from an office furniture dealer who was providing furniture for the rest of the project, a major office expansion.
He had seen our proposal and said he was very impressed. He called to see if there was some way we might work together on future projects. Or so he said. I spoke to him about how we might collaborate and left with the impression that we would work together soon. But I never heard back from him, and the job we had been counting on didn’t come through either. Eventually, we heard from the client that it “had decided to go in another direction.” The dealer had simply bought the job out from under us. Having seen our product and our pricing, he had come up with a competing offer and price that the client accepted.
In another instance, we put a great deal of time into working with a military client, doing extensive design work, revision after revision, that the client took and used as the basis for its bid package. It went on to award the job to another company, one it had worked with previously. Both of those jobs were large enough that, had we received either of them, we would have exceeded our targets for April and May. And in that case, I might not even have noticed we had a problem. But we are vulnerable when we lose the big ones, because a bunch of smaller orders may not take us to our target. And in this case being played for chumps made a real difference.
As I wrote in my posts last fall about my AdWords debacle, I took my sales problem to my Vistage group in May 2012 and got some good advice — namely, that the problem was not the economy and that I needed to look within my own organization. At this point in my AdWords posts, I spoke about what I did with my campaign to restore a particular type of incoming call.
But I left out the other big change I made in response to a recommendation from one of the members of my Vistage group, Sam Saxton. Mr. Saxton owns a custom stair-making company, Salter Spiral Stair, that is in many ways similar to mine. It manufactures custom items and sells them over the Internet. He told me that he had hired a sales consultant who had helped him double his sales volume in the previous two years, and he suggested that I follow his path.
Wednesday: Meet the Sales Consultant.
Paul Downs founded Paul Downs Cabinetmakers in 1986. It is based outside Philadelphia.
Article source: http://boss.blogs.nytimes.com/2013/06/18/how-our-sales-process-broke-down/?partner=rss&emc=rss