Science & Sales

Earth Day featured multiple marches across the country, protesting the anticipated cuts in federal dollars to science.

An interview with one scientist hit the proverbial nail on the head. He said marches, protests, and similar won’t do anything, i.e. it’s preaching to the choir. He went on to say presenting facts (about why (fact-based) science is valid and necessary) doesn’t change feelings, because it’s just facts.

This is Sales 101, people buy with emotion and back it up with logic. Telling someone against science it’s a great investment because it helps mankind means nothing. Asking them if they’re happy their mother is alive after being saved from cancer by a targeted chemo not available 10 years ago creates an emotional pull.

It’s what we should do more often. Reduce the facts and fire up the emotions, then use the facts to support the emotional decision.

Leverage Our Instant Communication World

We live in the age of instant communication. We also live in the age of someone with a microphone just about everywhere. Mitt Romney found it out in 2012 and recently in the Seattle ares two fire district commissioners got in hot water when they made comments about controlling the budget by hiring Mexican firefighters because they can pay them less.

What we can learn from this is any communication can travel fast. I recently posted an article on LinkedIn and within an hour I had a call and an email about it (and more later).

It shows that even though there is so much information out there, if it’s of value it gets noticed. Why so many newsletters, like this one? Because people get them, read them, like them, etc. Why a lot of comments on LinkedIn posts (and especially Facebook posts, even the inane ones)? Same answer.

You sustain this by providing value. Posting someone else’s catchy saying or inspirational message online takes nothing more than perusing the Internet and doing some copy and paste. Taking the time to offer value makes people realize you know what the heck you’re doing.

Whether you provide advice as I do, sell an industrial product, or provide a service, stand out in a noisy world by giving people worthwhile information. It’s worth the little bit of extra time versus copying someone else’s work.

“Diplomacy is the art of telling plain truths without giving offense.” Winston Churchill

 

Let Your Employees Handle the Trophy

The front page of the Seattle Times sports section on March 20, 2017 had a picture of Seattle Sounders co-owner Drew Carey carrying the MLS Championship Cup as fans and he marched to the game. On the radio that day I heard a discussion that included:

  • How one of the announces was at the game and pre-game march and said the trophy was passed around amongst the fans.
  • One of the other announcers comparing this to when the Seahawks Super Bowl trophy was and is on display there’s a “guard,” he was the only one allowed to handle it, and he only touched it while wearing white gloves.

Think about this as you create policies for your employees. Is your company one where the owner is involved in everything (being the guard)? Is the owner a bottleneck because everything goes across his or her desk? (This also applies to any department head and his or her reports.)

Or is your firm one where the employees get to handle the trophy? Meaning, the employees get responsibility, the ability to make decisions, and the ability to learn from those decisions.

I’m going to state how it’s better policy to have the employees involved versus a bottleneck, which we also call a dependency. Whether you believe me on this or not realize if it’s ever time to sell your company the buyer will be interested in this. They want a competent management team and employees who can get things done without babysitting.

If you’re skeptical about this, here’s a short example. A client owns a firm in the trades, is looking to buy a smaller firm, and we found what appeared to be a good target. However, one of the supposedly experienced tradesperson can’t be sent to a job on his own. The owner must take him to the job, go over the job with him, and then he’s okay. This was a deal killer as my client doesn’t have the time or inclination to babysit like this. Let your employees “handle the trophy.”

“If I don’t go into work a little scared, I don’t have any interest in it.” Mary Tyler Moore

Estimates and Misclassifying Will Hurt You

It’s March and that means college basketball tournaments aka, March Madness. It’s your typical tournament in that all the number one and two seeds won their first games and by the end of the second round a number one, two number twos, and a number three had been upset. Also, the “experts” proclaimed some teams had been seeded lower than they should have been and therefore got games too tough too early.

Recently I wrote a very well received post about how projections are mostly meaningless. The same applies here but we should give credit to those seeding these teams as 75% of the “Sweet Sixteen” are where they’re supposed to be. Of course, even the experts brackets were busted by these and other upsets.

Those teams upsetting the much higher seeds got hot at the right time and these factors the same in our day-to-day businesses. Think about how often a “for sure” client doesn’t become a client. Or how the longshot customer buys from you without (what you perceive to be) too much effort.

We all misclassify the likelihood of someone doing business with us (both ways) and every so often we get “hot” at the right time, say the right thing, etc. That’s life, and it’s part of what makes life and business interesting. Of course, if, like sports teams, we practice what we do (and practice correctly), we reduce the chances of upsets and increase the chances of getting hot.

“The man who says his wife can’t take a joke forgets that she took him.” Oscar Wilde

Scare Tactics Selling; Just Like Fake News and Alternative Facts          

I guess it’s the era as it seems we’ve regressed to the days of misleading everything. Let’s ignore the political stuff even though it seems worse than ever (maybe it’s the speed at which things travel these days).

I’ve been hearing ads for a tax mitigation firm saying, “The IRS is unleashing an army of enforcers….” In other words, only we can save you from having your house, car, and first born taken by the IRS.

Yet at the same time the Seattle Times had an article titled, “Fewer Americans face income-tax audits as IRS loses more agents to budget cuts.” Now which is it, an army of enforcers or fewer employees out there? My guess it’s the latter.

Scare tactics selling. I’m sure it works or they wouldn’t do it. Sounds very 1960’s selling to me (think the reputations of used car salespeople).

Contrast scare tactics selling with what I heard at a workshop last week. A wise sales trainer told us the most important thing he learned from a corporate buyer was “buyers want to be sold.” Not manipulated, not pressured, not mislead, but sold with solid information.

Why? Because this allows them to justify their actions to their boss, the board, a committee, themselves, and, most importantly (if a personal decision) their spouse. Everybody reading this sells something – okay, bankers actually rent money not sell it. J As I tell the students at my class at the SBA, if you ask good questions, understand the issue, and present a solution that provides value the qualified buyer will buy from you.

“Like a narcotic, rudeness offers a sensation of glorious release from jailers no one else can see.” Rachel Cusk

Projections are Useless

At the end of the third quarter of the February, 2017 Super Bowl the announcers were saying viewers should go online and vote for the game’s MVP. With the Falcons ahead by a few touchdowns I’m guessing all the early votes were for Falcon players. I said to my wife, “What if Tom Brady completes a gazillion passes in a row and the Patriots win?” Guess what happened?

Projecting a game’s MVP two-thirds of the way into the game is meaningless. Most business projections are meaningless, especially if over one year. Customers come and go, employees turnover, etc. One of my clients had a couple customers tell him near the end of Q3 they had over-ordered early in the year and there would be no more orders until January. The customers’ projections were off and therefore my client’s projections were off.

Yet I see businesses for sale put out nice five year projections. And guess what, they all show steady sales growth and escalating profit growth. When is the last time you saw a business grow at the same rate every year for five years?

Just like picking an MVP in the third quarter of a football game business projections are usually nothing more than an (optimistic) guessing game, and are usually off base, especially when for longer than 12 months.

“Behind every failure there is an opportunity someone wishes they missed.” Lily Tomlin

Dependencies Will Kill Your Valuation

As I write this, and as you read this, I’m in Antigua, West Indies on a Rotary service project, “Improving Education Through Technology.” This means installing computers, Wi-Fi networks, and training teachers on how to teach better (reach the kids) using technology.

This is our 12th project and it’s much like a small business. Our annual cash budget is over $100,000 and the total value including in-kind, donations, and discounts is about $250,000. It’s also like a small business in that it’s top heavy.  My friend Jeff Mason with the Bellevue School District’s Cisco Networking program, technology side, and me, business side, are true project dependencies.

If I couldn’t secure funding, write the Rotary matching grant application, deal with the bureaucracy, and the politics there would be no project. If Jeff wasn’t around to procure equipment, get it ready, pack it, load it, and train our team of students, who do the on-the-ground work, the project wouldn’t happen.

Compare this to a business, and not even micro-businesses doing hundreds of thousands a year in sales. Compare it to a business doing $1-10 million in sales where you can fill in the blank, “The owner is the only one who ________.” It could be she:

  • Can program the machine
  • Can finalize the bids
  • Has the customer relationships

Or a myriad of other tasks. The chances are these owners can’t go to New Zealand for a month and have the same business when they return.

Business owners need to get others to do what only they now do. It won’t happen on our project, and probably shouldn’t, but it needs to happen in a business if the owner wants the value to increase.

“No snowflake in an avalanche ever feels responsible.” Stanislaw Jerzy Lee

Deal of All Kinds Get Disrupted

In the business news at the end of January were stories about how the Walgreens deal to buy Rite Aid had the price drop because Walgreens, as per a government edict, can’t take over as many Rite Aid stores as planned (someone will have to find a buyer for those other stores).

Things happen all the time to derail deals, and not just buy-sell deals.

Jobs – a good friend was in the job market, had “the perfect” job lined up, an offer was out, and, boom, the parent company did a reorg and froze all hiring.

Customers – a friend’s company went through hell when some changes at their top customer put the emphasis on price and nothing else. They lost a big contract or two, for very little money, even though the customer’s people who use the product hate the competitor, say they have poor quality, and don’t deliver on time. I guess the number crunchers won this round.

Buy-sell – A few years ago I went through a stretch where three deals disintegrated after signing a letter of intent (LOI). It had been a long time since even one went south after there was a signed LOI (when the Great Recession hit six weeks before closing is all I can remember). Two of these deals had legitimate reasons for not happening, i.e. something happened that changed the company.

The other one (and one from about 1.5 years ago) went bad for the reason most good businesses don’t get a deal done with a good buyer, and the reason is trust, or the lack thereof. The deal from three years ago had a seller who wouldn’t sign a contract representing and warrantying what he had told the buyer about the business was true and correct. At this point any trust evaporated.

The more recent one was more complicated but it centered around the perception the seller wasn’t interested in the buyer’s success. When the seller wouldn’t take interest, or offer much help prior to closing it became evident once he had his money he’d be hard to track down.

Things happen, and if there’s trust those things are overcome. As in a case from about 10 years ago when the selling business had a sales decline (the seller took his eye off the ball) and he did what he had to do to keep the buyer on board. In this case, it was hiring him to learn the business while it was being “fixed” and prior to closing.

“Democracy is the theory that the common people know what they want, and deserve to get it – good and hard.” H.L. Mencken