When You (CEO) Should Pull the Sales Alarm

When listening to CEO's and business owners talk about some of the sales challenges they face I have found myself using the phrase "my sales alarm is ringing" to indicate that something they said wasn't sitting well with me. I guess this is my equivalent to Spiderman's "Spidey sense" - a strong feeling that something is very wrong here.

As a veteran salesperson ($10B personal sales record), sales leader and consultant I thought it might be worthwhile to share what triggers my "sales alarm". Here they are:

• Any surprise, good or bad, is a signal that your sales team did not understand something important your customer’s decision process. Examples:
  • The CEO declares to your board or internally that an upcoming large sale is, "in the bag" yet the decision goes to a rival
  • You forecast a sales decision to be made by the end of the year and the customer still has not made a decision two quarters later.
  • You declare a particular sales pursuit a corporate priority and you lose it.
  • Any time you are 'surprised' that you lost.

• If you have EVER said, "there is no competition" either because you think you are the only company under consideration or are arrogant enough to believe the customer has no other choices.
• You think your customer owes you the business.
• When top managers constantly ask “who is the (one) decision maker?”
• When sales leaders assure the boss that they will win because they “know a guy” or feel they have an exceptionally close relationship with someone in the company.
• When your sales team comes back from an important sales trip and says, "our presentation was well received".
• When you've secured a business dinner, golf outing, demonstration with a prospect and can't articulate the specific measurable goals you have for that valuable customer encounter.
• When your leadership gives higher priority/emphasis to the number of "opportunities" they have in their "funnel" rather than win-rate, or if your strategy is to “place a lot of bets” so that you can win “your fair share” of  new business.
• When you don’t know your sales win-rate.
• When your sales team spends more time talking about activities or the 'close' relationships they have with the prospective customer than what they know about how a decision will be made.… as if the shear evidence of this activity (golf outings, dinners, hunting trips, etc...) is a positive indicator of who will win or lose an upcoming sales opportunity.
• When your salesperson can't succinctly answer this simple question, "What is the number one priority the customer will use to make its selection?" one week prior to submitting a proposal.
• When asked who are you selling to and your reply is something vague or as ill defined as, "lawyers" or "small businesses" or "anyone who needs printing" or "potential home buyers/sellers" or "anyone who needs insurance" or “large corporations”.
• When your assigned salesperson can't name the top three individuals by name who carry the most influence on the outcome of an upcoming sales decision.
• When you (CEO) can explain in excruciating detail how you make a product or deliver a service but when asked to define your sales process you either get chirping crickets or hear, “Well that is Bob’s expertise, he is our number one sales guy.”
• Anytime you feel good about coming in a ‘close’ second or are consistently coming in second to rivals in your sales pursuits.
• Anytime an existing customer moves his contracted business to a rival.
• If you've ever said the customer "was stupid" or "didn't understand our offering" or "we must tell our story better" when explaining why you lost.
• If ANY of your sales presentations has an organization chart in it.
• When you think consistent sales success is based on something vague like “having the right team in place”, “being energetic/confident/enthusiastic”, ”treating your customer with respect”, or “delivering great customer service”.
• When you consistently miss quarterly sales goals.
• When no one is held accountable in any way for a significant loss.
• You don’t have a “lessons learned” process, or you have one but you don’t incorporate the lessons you identify into specific process changes, or you only use your process after a loss (as a witch hunt).

If any of these applies to your business, run, don't walk, to the nearest alarm and pull it. You have a sales emergency that needs to be addressed right away.  If you don’t know why these should trigger an alarm, connect here and we will explain why we think so and recommend what to do about it.

About the author. Mike Gomez is founder and CEO of Allegro Consulting, a business growth specialty consulting firm in Atlanta, GA. Their mission for the past 14 years is to help their clients define strategies for growth and overcome obstacles that may stand in their way.  Mike is a prolific speaker, writer, former aerospace engineer, and sales executive for McDonnell Douglas, Boeing and Lockheed. He is credited with sales wins totaling $10B.  His talk, "Winning the $2.5B Israel Fighter Jet Shootout" chronicling Boeing's wins over rival and incumbent Lockheed is a one-of-a-kind story that will motivate, teach and inspire any sales team.

@GrowthGuy's 8 Rules for Startups - from 14 yrs. of Business "Accident Investigations"

In my past life I supported aircraft accident investigations. The primary purpose of these investigations was of course to find the root cause for why the accident occurred. Equally important was the transmittal of the findings and conclusions to the entire aviation community (pilots/crew, maintenance, designers, air traffic control, etc...) in an effort to prevent the accident from happening again. (Learn from a real jet crash: “What a jet crash can teach a business owner” ).

Sadly, in my 14 years of consulting for small businesses and startups alike in Metro Atlanta I have visited too many business "crash" sites. In an attempt to prevent a crash, or better yet, improve your chances for success, I share these findings from those who faltered of failed. This list is intended to be complimentary to Mark Cuban’s outstanding 12 Rules for Startups published in Entrepreneur Magazine back in 2012.

1. Plan it on paper first. What problem are we solving? What differentiates our solution? What is our pricing strategy? Who pays? How do we attract customers? How do we sell to these customers? How long before cash positive? These are just a few of the questions one should be asking BEFORE you create a logo, a website, or even establish a name for your company? The process of writing succinct answers that stand up to tough honest scrutiny is harder than you think but it is an exercise that is well worth it. Though this business planning process will not guarantee success it will most certainly improve your chances tremendously. (Want to know “What to Include in Your Business Plan”)
2. Start ‘soda straw’ small. “I want to sell our solution to lawyers.” “I want to provide our services to any tech startup.” “This new CRM solution is for ANY small business.” These are real examples from start-up founders who each had a minimal sales force. The problem with this approach is the size of the customer target dwarfs the typical staff and resources available to communicate with this audience in any meaningful concentrated manner. The more effective approach is to carve out a narrow segment of the target demographic (by geography, specialty, etc...) and concentrate your resources accordingly then prove your business model can succeed with that segmented customer. Then, and only then, grow by pursuing new customer demographics in “one vector off “ increments.
3. Be transparent. Tell the team what the plan is (there is a plan - right?), who are the competitors, why are we different, how are we going to grow, what the company can/will look like a year from now, and how will we make that vision a reality. Saying that the plan is in your head just doesn’t help anyone. Worse than that, keeping the plan a ‘secret’ provides for the use of that number one of all excuses when goals aren’t met, “I didn’t know.”.
4. Lead. People want to be led. That is a fact. A great work environment is one where there is personal satisfaction for directly contributing to the growth of the company. I heard from one CEO of a Fortune 100 company that his leadership style was to “set expectations then inspect”. Perfect and succinct. So lead by assigning clear roles and responsibilities, set measurable expectations then inspect to ensure your plan is being followed and the team is getting the support, training and resources they need to do their jobs.
5. Have a sales process. Place as much emphasis on the sales process as you do about making the product or delivering the service. Sales is a respected profession and critical to the success of any company. So handing the responsibility to the most dynamic person, best golfer, best joke teller, or best looking person on your team is probably not the best approach. Sales is a process - the process of gathering knowledge about your customer’s problem so that you might devise a solution to best solve it. It is therefore critical that your sales process reflects how your customer buys similar products or services. Much like other specialty roles such as operation, finance, and accounting, sales too takes skills, training, and expertise. (Learn here about “The Business Owner’s Role in Supporting a Sales Team”)
6. Measure the right things. But don’t over measure. Taking the temperature of the company is important to gauge it’s health and how well your team is performing to the plan (there is that word again!). Here are a few of my favorite things to measure: qualified leads (marketing), win-rate/renewals (sales), defects/rework/on-time delivery/production cost (operations), operating cash flow (finance).
7. Be miserly. Especially about “non-value-added” expenses. If you would hesitate at all to itemize the expense on a customer’s bill then think twice about spending the money. Example: new office chair, plants, company flat company, especially in a startup, so treat it as a precious resource .... because it is. (Here is a good article about cash flow management: 4 Biggest Causes of Cash Flow Management )
8. Seek out advice and be coachable. Being a good lawyer doesn’t automatically mean you have the experience to be the CEO of your newly formed law practice. Same thing holds for a gaming coder, software developer, or a doctor, engineer, or a chemist. And lastly just because it was your idea or invention doesn’t mean you are equipped with the skills to lead and grow a company. Sad to see an owner finally grasp, “You mean the problem is me?” just before the business is shuttered. Worse is everyone around him/her already knew this. Running a growing thriving company is hard and requires talent and expertise. If you have not gained that expertise through varied job experiences then seek out those experts and LISTEN and ACT on their advice.

 

Need help with you Metro Atlanta, Georgia start-up?  Let's have a cup of coffee. Contact me here. 

About the author. Mike Gomez is President and CEO of Allegro Consulting, a growth specialty firm in Atlanta, GA. Allegro has been helping Georgia’s private business owners to plan and execute strong growth strategies since 2002. Mike is a strategy and sales process evangelist and coach with a tool chest built on direct experience in international sales ($10B), strategy and program management. He is an advisor at Atlanta Tech Village, judge for Next Top Entrepreneur, a prolific speaker, writer, former aerospace engineer, and pilot of both aircraft and helicopters. 

The Handoff - A Business Owner's Role in Supporting A Sales Team

I've just heard this story too many times not to share it as a learning moment.

I received a call from a salesperson asking for advice as he struggled to meet his quarterly sales quota. I assumed he was calling looking for new sales techniques or particular guidance on moving a client to close. But this was not the case at all. Here is how the dialogue went:

Salesperson says, “I’m selling a product in a market where I have a competitor selling the exact same thing.”

I replied, “Same thing? You mean same features, same everything?”

“Yes”

“Are you more price competitive?”

“No, not really. We offer trade in of older equipment to bring the price down but so does our competitor”

“What about service?”

“Yeah, we do support the customer better than they do.”

”That’s good. But will your customer pay more for this better service?”

“No.”

“Interesting, so tell me what kind of direction have you received from the owner of the business you work for?”

“What do you mean?”

“Well, given the market realities you’ve outlined, how does your owner expect you to win new business? Is he doing things to separate you from this competitor? For example, specializing in a certain niche (becoming experts and thus the preferred vendor) or using marketing and strong advertising techniques to build brand preference (aka, Colgate vs Crest toothpaste)?”

“No, the only guidance I was given was, “Treat it like it’s your business.”

Even the best salesperson will under-perform or fail under these conditions.
  
It is not the salesperson's job to identify target customers and invent ways to differentiate.

The role of the owner, President and/or CEO of a business is to equip your sales team with the tools to be successful. At a minimum this includes the following:

• A list of “target customers” 
• those inline with the customer mix outlined in your short and long-range growth plan
• who match the profile of those who will value your product, expertise and/or differentiators
• The compelling story to support why clients should buy your product over competitors
• Who are the competitors the sales team can expect to face and what differentiates us from each
• A supportive marketing (lead generating, branding, demo tools, social media, samples, brochures, etc...) strategy
• The right sales tools and support (travel budget, conference attendance, CRM, bid and proposal, quoting, etc...) - tools that actually help the sales team do their job versus those that help the owner monitor the sales force.

Given that only 28% of a salesperson’s time is spent in front of the customer and about 50% of that time is actually selling (the rest is prospecting (35%), relationship building (10%), and training (5%)), it is imperative, you the owner, equip him/her with the tools to ensure it is the right prospect and that he maximizes the productivity of that time.

In my 12 years of consulting "under-performing sales" has been by far the number one pain point with the blame typically placed squarely on the salesperson or VP of Sales. It is not long into the engagement when humility kicks in as the owner discovers it is their lack of a long-range plan, a clear understanding of what makes them different, a detailed knowledge of their competitors, and an ineffective or non-existent marketing strategy that are the real culprits.

Want to give your sales team the best chance for success? Let's talk about your metro Atlanta business over a cup of coffee.  Contact me here.

About the author. Mike Gomez is President of Allegro Consulting, a growth specialty firm helping businesses plan and execute aggressive growth strategies. He grew his very first client’s business from $8M to $35M in just two years. Mike is a growth strategy and sales process evangelist, prolific speaker, writer, three-time marathoner, a former military officer and pilot of both aircraft and helicopters. www.allegroconsultant.com

The Elevator Pitch Challenge. Can You Say Yours In Two Floors (10 sec)?

Ah! The infamous "elevator pitch". How many of you have this refined in such a manner that you can actually give it in an elevator or any other setting for that manner?

Why is this even important?

Well here is a case where a strong elevator pitch can be valuable. At the start of nearly every Board of Advisory event at the Metro Atlanta Chamber of Commerce the host would send a microphone around the entire room giving everyone an opportunity to stand up and state your name, your company name and "what it is you do". There are several ways the moderator would keep this from consuming the entire time allocated for the event itself. One way was to restrict the person to saying this in three breaths (three sentences). Another was to limit it to 10 seconds. In other words, an opportunity to give your elevator pitch but to an audience of 50 to 100 local business leaders. This kind of scenario is not uncommon. Are you prepared for it?

I use the following elevator scenario with my clients to hone their ability to clearly articulate what it is they do.

"You just walked into the 3rd floor elevator at a shopping mall and just before the door closes an important business acquaintance you haven't seen in a long while squeezes in the door at the last second. He/she recognizes you and says, "Mike! Good to see you again. What are you up to nowadays?" He presses the first floor button. The elevator starts to move. How will you reply?"

A typical elevator will cover two floors in 10 - 16 seconds. To allow for a response I suggest your pitch should last no more than 10 seconds.

So now that we know how long it should be, what are the ingredients to a good elevator pitch? When stating what you do it should be, (1) clear enough for your grandmother to understand, (2) be stated in a manner that clearly sets you apart from others in your sector, and (3) is intriguing enough to warrant the following sincere (versus the brush off) reply, "Wow, that's interesting. I'd like to hear more. Let's get together for coffee." Of course, if the person is not in the market for your services another good response could be, “Interesting, I might know someone who could use your services.”

The bottom line is be clear, be different, and be brief.

Here is how the elevator ride would be for me.

We see each other in the elevator and the business owner says, "Mike! Good to see you again. What are you up to nowadays?" He presses the first floor button. The elevator starts to move.

I reply, “Good to see you Tom. I’m with Allegro Consulting, a 12 year old firm working exclusively with private companies on matters related to growing a sound business like strategy and process definition."

In this 10 seconds I emphasized a key differentiator for my company, longevity, that we’ve been around longer than almost everyone of my competitors. I made it clear who I specialize in working with, “private(ly) (held) companies”. And, I gave two concrete examples of what I do for my clients. You noticed I didn’t say something vague like, “I help companies go to the next level.” even though this is the most common phrase I hear from potential new clients. The reason is this phrase can mean different things to different people. There is no doubt what strategy means and implied in that is, I help companies who are ready to grow based on a strategy.

Was this helpful?

Want to sharpen the elevator pitch for your metro Atlanta business?   Let's talk about it over a cup of coffee.  Contact me here.

About the author. Mike Gomez is President of Allegro Consulting, a growth specialty firm helping businesses plan and execute aggressive growth strategies. He grew his very first client’s business from $8M to $35M in just two years. Mike is a growth strategy, and sales process evangelist, prolific speaker, writer, three-time marathoner, a former military officer and pilot of both aircraft and helicopters. www.allegroconsultant.com

Is your sales strategy right or wrong? How do I know?

A prospective client was sharing some stories from an ongoing large sales opportunity they are pursuing. He concluded with this statement, “I think we have the right strategy now.”

I replied, “How do you know?” That caused a long thoughtful pause.

He admitted he had no way of knowing the answer to this question. And based on his use of the word "now" he had thought other strategies they had pursued was the "right strategy”. So how much confidence can you place in his latest declaration?

Let’s take a moment to explore what makes something right or wrong.

We have all taken test before and told whether we got an answer right or wrong. In this environment someone made a decision and documented what he/she views as the right answer to a given question. Your answer is deemed right or wrong by making a relative comparison against this known criteria. But what about passing a right or wrong judgment on something like the paint color your teenage son chooses for his bedroom. Most would say this is not possible as there are no hard rules from which to make a relative comparison. Not so fast my friends. I’d argue that if Dad has the final say on the paint color for the room then he and his personal tastes will determine right or wrong.

So where does a sales strategy fit in this spectrum. Is it vague and thus fall into the category of personal tastes or is it more concrete like a school exam?

My experience says it is a combination of the two. And the way you determine if the strategy you chose is right or wrong is by making a relative comparison to what you know about the formal and informal rules of how the buying decision will be made and the personal views and opinions of the people participating and/or influencing the process.

People make buying decisions not companies. And because they are people, their personal biases and interests will always be a factor.

Knowing which biases and how much of a factor is your sales challenge. Having a formal process in place to make this relative comparison is your company’s challenge.

Are you chasing an important complex sales opportunity in metro Atlanta?  Want to improve your chance of winning by subjecting your sales strategy to some outside seasoned scrutiny?  Let's talk over a cup of coffee.  Contact me here.

About the author. Mike Gomez is President of Allegro Consulting, a growth specialty firm helping businesses plan and execute aggressive growth strategies. He grew his very first client’s business from $8M to $35M in just two years. Mike is a sales process evangelist, prolific speaker, writer, three-time marathoner, a former military officer and pilot of both aircraft and helicopters. www.allegroconsultant.com

The Worst Sales Direction EVER! “Treat it like it’s your own business.”

I've just heard this story too many times not to share it as a learning moment.
I received a call from a salesperson asking for advice as he struggled to meet his quarterly sales quota. I assumed he was calling looking for new sales techniques or particular guidance on moving a client to close. But this was not the case at all. Here is how the dialogue went:
Salesperson says, “I’m selling a product in a market where I have a competitor selling the exact same thing.”
I replied, “Same thing? You mean same features, same everything?”
“Yes”
“Are you more price competitive?”
“No, not really. We offer trade in of older equipment to bring the price down but so does our competitor”
“What about service?”

“Yeah, we do support the customer better than they do.”
”That’s good. But will your customer pay more for this better service?”
“No.”
“Interesting, so tell me what kind of direction have you received from the owner of the business you work for?”
“What do you mean?”
“Well, given the market realities you’ve outlined, how does your owner expect you to win new business? Is he doing things to separate you from this competitor? For example, specializing in a certain niche (becoming experts and thus the preferred vendor) or using marketing and strong advertising techniques to build brand preference (aka, Colgate vs Crest toothpaste)?”
“No, the only guidance I was given was, “Treat it like it’s your business.”
Even the best salesperson will under-perform or fail under these conditions. It is not the salesperson's job to identify target customers and invent ways to differentiate. The role of the owner, President and/or CEO of a business is to equip your sales team with the tools to be successful. At a minimum this includes the following:

• A list of “target customers” 
• those inline with the customer mix outlined in your short and long-range growth plan
• who match the profile of those who will value your product, expertise and/or differentiators
• The compelling story to support why clients should buy your product over competitors
• Who are the competitors the sales team can expect to face and what differentiates us from each
• A supportive marketing (lead generating, branding, demo tools, social media, samples, brochures, etc...) strategy
• The right sales tools and support (travel budget, conference attendance, CRM, bid and proposal, quoting, etc...) - tools that actually help the sales team do their job versus those that help the owner monitor the sales force.

Given that only 28% of a salesperson’s time is spent in front of the customer and about 50% of that time is actually selling (the rest is prospecting (35%), relationship building (10%), and training (5%)), it is imperative, you the owner, equip him/her with the tools to ensure it is the right prospect and that he maximizes the productivity of that time.

In my 12 years of consulting "under-performing sales" has been by far the number one pain point with the blame typically placed squarely on the salesperson or VP of Sales. It is not long into the engagement when humility kicks in as the owner discovers it is their lack of a long-range plan, a clear understanding of what makes them different, a detailed knowledge of their competitors, and an ineffective or non-existent marketing strategy that are the real culprits.

Want to grow your metro Atlanta business?  Let's talk over a cup of coffee about what we can do to give your sales team the right tools for success? Contact me here.

About the author. Mike Gomez is President of Allegro Consulting, a growth specialty firm helping businesses plan and execute aggressive growth strategies. He grew his very first client’s business from $8M to $35M in just two years. Mike is a sales process evangelist, prolific speaker, writer, three-time marathoner, a former military officer and pilot of both aircraft and helicopters. www.allegroconsultant.com

8 Growth Tools Every Business Owner Should Know, Have and Use

You need a good nail-gun, a saw and more to be a carpenter. To be a car mechanic you need a wrench, a computer code reader and a good socket-set to name a few of the essential tools. If you are a regular mountain climber then you likely have good rope, and plenty of high quality caribiners in your tool chest.  So, what are some of the important tools required if you are the CEO of your start-up or established business. 

#1 Business Plan (for start-ups): An exercise and accompanying document you complete PRIOR to launching a new business. Properly done it will force you to be clear on what your business is all about, the product or service you deliver, how you plan to deliver it, and supporting evidence for why customers will buy from you over competing alternatives. It will also tell you how much money you need to keep the business operating effectively before you are producing sufficient cash flow to cover operating expenses. Experience says you will find this document will be obsolete in the first six months of operations as real life will be surprisingly different than your assumptions. Regardless, this step is critical to success.

 #2 Strategic Plan (for established businesses): An exercise and accompanying document that combines your future vision of the business and real life market realities to define in a measurable way what your company will look like 2 to 3 years from now. It is the spot on the map you select before getting into your car for a road trip. Customer mix, revenue, market penetration, operations and people are all addressed in this document. A well done strategic plan will leverage you current strengths, acknowledge and address weaknesses, exploit market opportunities, and counter external threats. Everyone in your company should know your strategic plan - this is how you create an “aligned” workforce.

 #3 Tactical Plan: An annual document that defines specific actions (beyond day to day operations) to be taken by specific individuals in a specific time-frame (usually quarterly) that will incrementally move your company one step closer to the Strategic Plan goals. If you were to envision your business as a movie, this would be the “script”. You are the director and your employees, the actors. You are tasked with completing this movie on time and with no overruns.

 #4 Targeted Customer: Exactly who did you design your product/service for? It is not “everyone”. Your target customer is the bullseye of your sales dart board. The better you are able to describe the critical attributes (job, race, gender, age, income, business, hobby, etc...) the better and more efficient your marketing and sales force will be in finding and winning them.

 #5 Sales Strategy: A process where you analyze the depth and breadth of your market opportunities, the intensity of the competition you expect to face, and given resources you possess to devise a sales plan of attack. Similar to war planning you may choose a broad strategy that secures a large number of small victories or concentrate your resources to score a big impactful strategic win. It defines how and where you will deploy your limited resources as well as the weaknesses of you competition you plan to exploit to win new business.

 #6 Marketing Strategy: Marketing is all about generating qualified leads for your sales team to close on. Developing a marketing strategy is a left brain activity as it involves analysis and critical thinking. A well done marketing strategy involves analyzing your customers (who they are and how they buy) then exploring and selecting the most effective tools (web, social media, billboard, collateral, TV commercials, car wrap) within given financial constraints to garner their interest. You compete and hire marketing experts and service providers for their right brain creative skills to implement your strategy.

 #7 Sales Process: A replicable and thus written method for how you take a warm lead and turn him/her into a happy customer. As you might expect this is one of the most important steps in your business processes and should not be relegated to the personal techniques of any given salesperson. In addition to more consistent win rates, a defined sales process will allow you the owner to engage in a conversation with any of your sales team and know exactly who is in the funnel and where they are in the sales cycle.

 #8 Critical Processes: Those unique, replicable steps your company completes to generate leads, win business, deliver a consistent product or service and collect financial compensation. Documenting these steps provides two major benefits, (1) reduces risk by creating a back-up should you be unfortunate to lose a critical employee with all of the corporate memory due to a job change or accident and, (2) it establishes a baseline upon which to develop improvements. Say your company name is XYZ then what makes your product an XYZ product or service performed and delivered the XYZ way?  

Are you a metro Atlanta business who may need to 'borrow' some of these tools to help your business grow? Let's talk over a cup of coffee.  Contact me here.


About the author. Mike Gomez is President of Allegro Consulting, a growth specialty firm helping startups and establish businesses plan and execute aggressive growth strategies. He grew his very first client’s business from $8M to $35M in just two years. Mike is a growth strategy and complex sales expert, prolific speaker, writer, three-time marathoner, a former military officer and pilot of both aircraft and helicopters. www.allegroconsultant.com

The Formula for a Successful Start-up

Towards the end of an engaging coffee meeting with Harold Brown, a well known and self defined serial entrepreneur and investor in the rising tech community of metro Atlanta, he made this observation, “As I am getting to know you Mike I’ve come to the conclusion you are not a ‘creator’ you are instead a ‘doer’ and I bet if we paired you with a good creator we’d get one heck of a start-up.”   

I wasn’t insulted by that observation at all.  In fact he captured me perfectly.  I am a doer and always have been.  My consulting company is all about helping business owners become more disciplined doers.  There is no doubt the aircraft engineering degree (process orientation) and military upbringing (Dad was career USAF) contributed to these traits.  The whole conversation got me thinking about what the necessary ingredients are for a successful start-up – outside the risk taking, free spirit characteristics you hear about most often. Here’s what I concluded:

(C + D) + Fr = SSu

or

(Creator + Doer) + Financial resources = Successful Start-up

Leave it to a former engineer to turn an observation into an equation. Let’s take a moment to dissect this formula.

Financial resources:  The inclusion of this in the equation should not be a surprise to anyone. It takes money or equivalent to start a company.  We all know that - whether that means going without pay for years or writing checks for website, business cards, office space, travel, capital equipment, etc…. I read somewhere that one of the top three reasons for a start-up failure is being under-capitalized.  In other words they simply run out of money before sales revenues are sufficient to support the business.  Now I will argue that a vast majority run out of money because they spent unwisely namely because they lacked a Doer who would ensure a plan was in place to control precious cash.

Creator:  This is the passionate idea person who can see a problem or need as well as the business solutions to address it.  Though there are common traits between a creator and an inventor the difference is dramatic.  A creator in this case conceptualizes a business solution before a technology solution. Sadly an inventor‘s approach is exactly opposite, which explains why so many inventors are flat broke.  Jeff Stibell wrote this in a Harvard Business Review article titled, Are you an Inventor or an Entrepreneur?

“But don’t confuse being an entrepreneur with being an inventor. Great ideas are a dime a dozen. Action is what differentiates an entrepreneur from an inventor. If you want to focus on ideas, become an inventor — not an entrepreneur.”

Guys like Henry Buckley typify the definition of a creator. He conceived and started 10 businesses, the latest a jogger-based door-to-door pamphlet delivery service called JogPost.

Doer:  This is a person (a) with the discipline and skills to develop and execute a credible business plan, (b) who possess fundamental selling and marketing skills, and (c) who is versed enough in financial balance sheets to make critical and timely decisions, (d) who knows how to find, hire and motivate a talented workforce, and (e) who knows when and how to engage outside experts (legal, accounting, etc…). 

Now don’t get me wrong, I am not suggesting that this is an entirely different person from the creator.  Though quite rare, a creator may in fact possess some or all of these traits.  The important message is a business cannot make it without a well thought out plan, good marketing, strong sales and a disciplined approach to how capital is being utilized.  Take away any one of these and you’ve significantly impacted your chances of success.

Jim Flannery, Founder of the Four Athens technology incubator, reinforces this formula when he shared with me the reason the word “Four” is in his incubator name.  His experience says that you need the following four things to make a successful start-up:

• A business person
• A marketing/sales person 
• A technical person that can implement an MVP (software/hardware start-ups exclusively) 
• A service provider (legal/accounting) 

“I am very fearful of solo founders,” Jim says.  “My advice, rather than say "do you possess these traits", is "can you find two other people that possess one of these traits each AND believe in your (creator) vision"  

My strong message to those creators is to be brutally honest when assessing your skill-sets and if you lack any of those under the category of doer don’t make the mistake of thinking you can get by without it. I’ve seen enough to confidently say you can’t and won’t.

Want some growth advice for your metro Atlanta start-up from a proven "doer"?  Let's chat over a cup of coffee.  Contact me here.

Mike Gomez is the founder of Allegro Consulting, a business growth specialty firm.  He has served as a program manager and business development executive in both Fortune 100 companies as well as small businesses. Through the use of sound yet simplified business processes he has helped Georgia companies achieve remarkable sales growth. Mike is a growth strategy and complex sales expert, prolific writer, speaker, guest lecturer at GaTech and UGA, and a mentor at FourAthen technology incubator and Atlanta Tech Village.  http://allegroconsultant.com

Networking - Your Responsibilities

I had one of those "ah ha" moments recently about networking. In a nutshell here it is, it is my responsibility to equip those in my network who want to promote my business with a way to do it within their comfort zone.

Here's the rest of the story.

I was asked to present a business "challenge" to my bi-weekly networking group of 23 people. Here is the email I sent with the challenge:

My challenge centers on networking. Specifically I am looking for suggestions on how I can better improve my networking effectiveness. I know what you are thinking - not another networking question! But please read on to see why this is unique. 

It is fairly common to hear a business person state he/she needs a good real estate agent, or a payroll expert, credit card processor, lawyer, promotions guy, website, marketing,  insurance provide, or even someone to help sell or buy a business. After all there is no stigma associated when asking for any of these services. Thus, in each of the above cases we can offer up the network of experts we know and trust who can fulfill their needs. 

But how often will you hear a business owner state he/she is struggling with running their business; that he/she is overwhelmed, working ridiculously long hours, or that sales are sinking and they don’t know how to turn things around? The fact is ego, and a multitude of other forces will prevent a business owner from ever admitting they need help let alone solicit openly for a solution. They won't even tell their wives or husbands when there is a lingering problem.  The business graveyard is overflowing with businesses whose leaders were pulled down into the death whirlpool despite being thrown one ring buoy after the next. Though I know each of you (in my networking group) can spot a company in need of my business consulting services, I also know it is unrealistic for me to expect you will ever say anything to that owner or even suggest a counseling coffee meeting with me. It is sort of like telling a psych patient he is psychotic. Nobody wins. So given this reality, how should I network? What should I ask of those I meet in networking meetings who are sincere about finding ways to connect me with potential clients? I haven't figured this out which is why I now only ask for speaking referrals. That seems to be something most are more comfortable taking about.

This response from one of my strongest advocates (Daniel Mastrodonato of Payroll1) is a reinforcement that I had failed in fulfilling my responsibilities as a good networker - to make it easy for those in my group to connect me with others.

"That is a tough one because I have been pondering over that since I met you! I want to refer business to you, as you have done to me, but I fall over my words when I want to say to some of my business owners……… You need HELP and I have just the guy that can HELP!"

We all know that a personal referral is one of the most powerful marketing tools for any business.  Getting that referral requires more than just being great at what you do.  To truly leverage your network you must equip them with a script that is natural to them, that won't be awkward, or make them come across as inappropriately nosy.

Have you equipped your network with a script for how to promote your business? Are they comfortable with using it? Have they tried it in a business networking environment?  What kind of response does it generate?

Need for More ProActive and Accountability-Based Business Incubators/Accelerators

Over my eleven years offering sales strategy and long-term growth guidance to business owners I have had several opportunities to work with start-ups located within the communal walls of a business incubator/ accelerator/co-working space.  An increasingly common experience I recently had with a company in such an environment made me wonder.  Are we really helping these start-up companies by simply giving them encouragement (cheer-leading), access to mentors (which are rarely called upon), discounted office/bull-pin space, refrigerators full of Red Bull, pin-pong tables, good WiFi and conference rooms?  Is this enough to make a real difference, to lessen the high failure rate (40% first year) typically experienced by start-ups (hi-tech or otherwise) or create good jobs through growing enterprises? Or are we just being enablers, offering a site (albeit discounted) other than say home or a more expensive office space (like Regus) from which they will still unwisely burn precious cash on an questionable idea without a well vetted plan or realistic sales strategy.

I will argue most of these start-up sites (whatever you want to call them) would see dramatically different results (jobs, success, revenue) by (a) being more selective with whom they welcome (have the basics of a business plan and ability to say how they will make money (don't laugh, it is sad how many can't answer this question))  and (b) are more pro-actively engaged with those housed in their facilities (periodic mandatory reviews with ramifications).

I became a better engineer, salesperson, pilot, program manager, and leader because I had bosses who were motivated to hold me accountable, teach, challenge, measure and coach me (whether I liked it or not) because they too were expected to achieve aggressive performance goals.  I can vividly remember both how much I had to prepare for and how nerve racking it was to undergo a top to bottom program management review of a project I had P&L responsibility over or a "black-hat" review of a international sales campaign I was leading or even a check-flight while in the USAF.  These intense sessions in front of company leadership could be career making or career ending events. Did I have a choice on whether I participated? No, of course not, this was a condition of my job - these were my bosses. But I will tell you with absolute certainty I grew with each one.

Those who have started companies and failed one, two or three times before succeeding are walking encyclopedias (look it up) of valuable information that can be used to PREVENT others from experiencing the same pain and waste of valuable resources. Unfortunately there is a pervasive belief by those sponsoring or operating these co-working/accelerator/incubator spaces that failure is the best teacher, and further, that forced performance/strategy reviews will poison the collegial "creative," "stimulating," "nurturing," environment they are trying to foster. I say "nuts" to this notion (stealing a line from General Anthony McAuliffe during WWII when responding to the German's insistence that he surrender because he was clearly surround by an overwhelming force).

Let me share the most recent experience that prompted this outburst.  A partner of a two-person software start-up housed in an incubator called and asked for a two-hour sales strategy consult. That partner had already experienced one failure and didn’t want to be involved in another. (I was later told the principal was resistant to the idea up until the very moment I arrived.  After all, he felt they were just fine, that this was an unnecessary use of $400.) In those two-hours we discussed the product and what was unique about it, the characteristic of their current customer (just one) and why they purchased the product. Then I let them explain and I provided feedback on their sales strategy - who they were targeting and how.  Here is an email I received from the principle the next day:

"That was a great session and extremely helpful. Your no BS approach is what a lot of startups should be getting. Problem is most people advising start-ups don't know what they are talking about. In 4 years I have not had one person advise me that my approach sucked and was a waste of time...when it did. That's the right advice to really help someone. I think our new strategy will be (emphasis on will be --- because we have some homework to do) extremely simplified and measurable based on our conversation. Time to build the war room."

Left alone I am certain, based on the course they were on, they would have run out of money and folded. Not because they didn't have a good product, in fact it's a great product. In just two short yet intense hours we discovered the shortcomings of their approach and set them on a new course.  How many other start-ups in these settings could be saved from this experienced and regular scrutiny? Are we doing them a disservice by sitting back and waiting for them to seek help (usually too late) or should we do like my bosses did to me and insist on regular reviews? Wouldn't it make for a better story if those who entered sites like ATL Tech Village or FourAthens are say 50% more likely to succeed because of these mandatory tough love reviews? I bet it would improve the attractiveness and PR of these sites as well.

About the author. Mike Gomez is President of Allegro Consulting, a growth specialty firm helping start-ups and established businesses alike wrestling with issues of growth. He formerly sold military fighter jets to international allies for the largest aerospace firms Boeing and Lockheed. Under Allegro he grew his very first client’s business from $8M to $35M in just two years. Mike is also a prolific speaker, writer, three-time marathoner, a former military officer and pilot of both aircraft and helicopters. www.allegroconsultant.com