“I am trying to hire a CEO for my manufacturing business. If I give him equity, what should I do for my existing GMs?” One of my early-morning jogging partners shot this at me recently. Mine was a group of men, all in their early- to mid-forties. Many members of the walking (some ambling) group run their own businesses. Many a morning, we end up discussing the challenges someone in the group faces that week.
It surprises me to see that many firms lack a truly functional board of directors or, at the very least, an active board of advisors, though they have become reasonably successful. Each of these firms fulfils the mandatory requirements for the appropriate number of directors and periodic board meetings and minutes—often honoured more in the breach than in the observance. Ironically, this state is probably truest in entrepreneurial firms that would benefit the most in having such a functional board of directors or advisors.
Many entrepreneurial firms start off as proprietorships. They do so for a number of reasons, which range from the simplicity of the business to a founder feeling uncomfortable having partners or other equity owners. As the business grows, the more successful ones—even while staying private and closely held—end up having additional partners, external investors or employee shareholders. The ones that go public are beholden to a new set of statutory and practical rules of operations. However, proprietorships, partnerships and most limited companies are run far too long with little external help or advice, let alone oversight, that a well-constituted board of advisors or directors can provide.
Company Law and the law of the land recognise, empower and hold responsible the members of a company’s board of directors, to stringent legal and statutory criteria; for all intent and purposes, it doesn’t recognise any locus standi for a member of the board of advisors. For this very reason, people who don’t want to deal with the legal liabilities of being board members may be open to being a member of a company’s board of advisors.
The reason why am I so bullish on a board of directors or advisors is that I see a board playing the same role for a company that a good mentor would play for an individual. In other words, it acts as a sounding board, an experienced hand to guide through the shoals of business and someone to keep honesty intact.
In the case of my friend who wondered whether to give his CEO-candidate equity in the company; and if so, how to structure the vesting or earn-out of the equity, and how to handle equity to his current general managers, he sought help from us, his peers, as well as an HR consultant from the local management institute. Consultants can bring value with their external viewpoint, domain expertise and articulate the options available. But they do this with little context about the business.
On the other hand, a board member would have the larger context of a business, the history of the key staff and the challenges the business faces. So, when they bring their expertise of having seen and handled equity structuring in other companies and make recommendations, they do so within the specific context of your business.
Such a context may include constraints that one has, commitments one has already made, and contributions other long time employees have made. They may also understand the blind spots, prejudices and weaknesses, and be in a position to champion a course of action in a far more an effective manner than a consultant.
As business operational heads, most of us don’t think twice about seeking external expertise, like hiring an IT or a PR consultant or an intellectual property lawyer. We would be better off constituting an operational board of advisors, who can not only bring in such subject-matter experts, but can also provide a sustained, steadying hand over time to our businesses and ourselves as leaders.
Her father is in the lobby, waiting to meet you,” I was told. I wasn’t sure I had heard right, so when I stepped out into the little passage that served as the “lobby” of our start-up, there was indeed a gentleman, probably in his late fifties, waiting there. Granted it’s not every new employee’s father who travels 2,000 km to meet her prospective employers, but as a start-up you should expect the unexpected. More importantly, be prepar ed to do the unexpected to find, hire and retain the right people.
In these last ninety days I have learnt a whole lot more than any forty-five year old should legitimately have to learn about software – but the good news is that it has all been good. A couple of posts ago, I talked, ok likely gushed, about how I have been using Zoho.writer and Zoho.sheet in a quest to be free of my desktop Microsoft Office suite. I have been using Microsoft Word at least since the mid to late eighties (yep, that’s 198x) when I wrote my PhD thesis with it (I think I used WordStar for my MS thesis). Since then having spent most of my working life in marketing and trying to raise money meant working Microsoft Excel and PowerPoint like there is no tomorrow. In the late nineties I actually prototyped application UIs with PowerPoint, including mouseovers and sliding drop-down menus. In other words I could make both PowerPoint and Word sing – why be modest!
This was all the more reason I was surprised at how well both Writer and Sheet in Zoho worked. Somewhere in the dawn of time or maybe the early 2000s, when I got the bright idea to transition to free software, I downloaded OpenOffice and within one use session got so disenchanted and had to wait until this year to even try Zoho. But neither Zoho, nor Google docs, who’s spreadsheet application is pretty good, could hold a candle to Microsoft Powerpoint. Guess just to build my character further, the new laptops my lovely wife (LW) and I got had Microsoft Works, which for reasons I can’t fathom has its own native format. Thank god for Rich Text (RTF) that I could move documents around – assuming we remembered (each time) to switch the Save As filetype to Rich Text Format (of course our friends at Microsoft have not deemed it necessary for users to set, say Rich Text Format .rtf or Word 97 .doc as the native format). Which brings me to the point of this post.
I went back to OpenOffice.org and downloaded the latest OpenOffice 2.4.1 and what an epiphany! The acid test for me was in opening, editing and saving some reasonably complicated PowerPoint presentations my colleagues had created (in MS PowerPoint 2003) with no loss of fidelity! Since then I have written a couple of articles in OpenOffice.org Writer, laid out a (short) magazine, worked with a number of my old Excel sheets including creating a few new ones and really gone to town with their presentation software OpenOffice.org Impress (can’t say I am too hot about the name).
So here are my top 5 reasons
[5] Its Free; OpenSource and extensibilityPublish Post
[4] Cross platform, Zoho and Googledocs support
[3] OpenOffice.org Writer (word processor)
[2] OpenOffice.org Calc (the spreadsheet)
[1] OpenOffice.org Impress (presentation)
Of course I have not yet used the database, math or drawing tools – all of which seem promising and make OpenOffice far more than Microsoft Office and make only give us more reasons to switch sooner!
The day I turned forty, it was as though someone threw a switch – I suddenly became incredibly smart! The reason I know this is ‘coz that’s when I realized, what an absolute idiot I had been for a great part of my adult life. Since then, hard as it might be to imagine, I think I am growing smarter still, as I continue to unearth stuff that had been staring me in the face, but I had obviously chosen not to acknowledge let alone learn from it. But then again, as the old adage goes, “If youth knew or age could…” the world would be a different place. One of the reasons that I made it this far without constantly tripping myself, is because I was singularly lucky in having a series of incredible mentors, who coached me, encouraged me and where needed placed a firm boot on a rather well endowed portion of my rear!There’s a whole another series of posts required if I begin with my earliest mentors (my materal grandfather and paternal grandma) – so I will skip them in this one and stick with my professional mentors starting with the most recent ones. Before I wax eloquent, let’s step back and try to answer some basic questions.
access and availability, no axe to grind and
real-world experience are the key criteria
for someone to be a good mentor
Who is a mentor? The dictionary, as always has something to say about this – “A wise and trusted guide and advisor” – in other words, someone you trust and knows more than you (if you are like me, nearly anyone else) can be a mentor. In my view, availability and access, no axe to grind and real-world experience are the key criteria for someone to be a good mentor. In hindsight, I have been surrounded by such folks.
What does a mentor do? A mentor often advices or cousels you. But there’s more to it than that. A lawyer advices or counsels you. For instance, she can tell you the pitfalls of doing a certain deal a certain way. However, while you may learn about your options and their consequences, you are not necessarily in a better position to make the right decision. A mentor focuses more on the HOW, than the what, you do something or get something done. He ideally teaches you and guides you while you learn something by doing. In many ways its apprenticeship by the hour or the minute! Any good manager of yours can tell you what options you have or the consequences of, confronting a critical but intransigent team member. Your mentor will show you how best to go about it, to achieve the desired result at the least emotional and business cost to all concerned!
A mentor focuses more on the HOW, than the what, you do something or get something done
Why do we need them? Simply put someone needs to keep us honest – hold up a mirror to us and not let us get away with taking the easy path. Advisors, experts and professionals can all augment and make up for any gaps in our competencies or domain knowledge – however most times we hire them for their services (inputs) but retain the prerogative of whether to act on them or not. A mentor need not be different – but a good one will be, in that they will ensure [a] that you act and [b] that you act in enlightened self interest – the greater good so to speak. There will be times, regardless of our job role or even in our personal lives when decisions will have to be made, and the people you’d usually consult themselves will be stakeholders in the decision. In such an instance you’d want to go to someone else whom you trust but is not a stakeholder. Of course finding such a mentor, unlike looking for the flashlights after the lights go out, is best done before you need them.
someone needs to keep us honest –
hold up a mirror to us and
not let us get away with taking the easy path
Mentors can be people who are already in your personal and professional lives. That way the trust and relationship already exists and if there is mutual respect, familiarity need not prevent the necessary candor for successful learning and growth. Chandrasekaran, the chairman at my first start up, despite having been a somewhat formal advisor in my previous stint at Sasken and subsequently becoming a good personal friend, served as one of my mentors. Whether handling things in my personal life (now you know who’s responsible for the mess! NOT!) or intransigent customers (I am sure you have never faced this!) and most importantly in learning and I hope, mastering cash flow management, Shekar was an invaluable mentor. Similarly my partner in crime, co-founder and CTO Baskar (who’d be embarrased if he read this not merely ‘coz he’s decade(s) younger than me) talked me through so many self doubts (what? I never have any) and showed me the true meaning of unflappable (I have it written down somewhere) that he has been one of my subtlest mentors yet.
Mentoring can happen in a nanosecond, as in when Mr. Raghavan our angel investor, told me “Go for it – only when you take risks you are going to make things happen and learn” as all of us were agonizing over entering the retail business. And it may happen over months or years, as I realized has happened with my dad and me. And any number of ways in between – the only definitive is that you will be a better person for it.
So stop reading this, recognize the people who you’ve already been mentored by, call ’em up and thank ’em. If you can’t think of any, what are you waiting for – go out and get yourself at least one.
Much like riding a bicycle or swimming, with entrepreneurship too, no amount of study or theory can take the place of plunging right in. Yes, some scraped knees, water swallowed and spat out and wounded egos are likely to result, but nothing helps you learn like real-world experience.
Over the past several months, I have tried to walk through a typical, if there is any such thing, life cycle of an entrepreneur. From when the thought to start something first lodges itself in your mind through all the way to exiting your business, the entrepreneurial journey is a roller-coaster ride on steroids. As happened with me, and every parent prior to me, you are clueless when people tell you, “Your life will change once you have children.” They could just as well be talking about being an entrepreneur. All the reading, talking and thinking does not prepare you for it — it’s messy, sleep-depriving, unpredictable and will make you want to cry! Yet, it is is exhilarating, scary and fun all at the same time.
Better men and women than I have written oodles about entrepreneurship and start-ups — the how-to, why and wherefore and the blogosphere is a cacophony of advice givers. So is there anything left to say? My two cents is that it is certainly worth repeating the basics, the foundation on which all endeavours entrepreneurial and otherwise rest and build on. And this is what I shall strive to do in this article.
What: It’s the Journey
My accountant used to tell the tale of how, when a youngish man passed away, his brother standing by the funeral pyre had a flash, a rare moment of insight about how ephemeral life is and how trivial most concerns that dog all of us are. Yet, an hour later when he returned home, he chided his wife on how cold the coffee she served was! It is hard enough to be receptive to the flash of insight and nearly impossible to stay in it every moment.
Yet, as an entrepreneur (or as a parent or spouse), it’s worth reminding ourselves that we should accept, internalise and live the truth, that ‘It’s the journey that counts’.
Many of us fall into the trap of posing most issues as an ‘either-or’ situation. If you are not striving, you are complacent (not content); if you aren’t successful, you have failed; if you aren’t paranoid, you will be dead!
Reality, however, tends to be a lot more nuanced, filled with shades of grey rather than just black and white. If we succumb to it, there are endless ways to pull ourselves down even without competitors or sometimes customers doing it. To what most people would say such as “Keep an eye on your goal at all times” (which you should), “Stay focused” (which you should), “Persevere (beyond reason),” my recommendation is to remind yourself each day that “It’s the journey that matters.”
For even if you get where you (think you) want to be, if you don’t enjoy your trip there or worse yet, you don’t get there, it would all have been a waste.
So, write it down, post it on your desk; better yet, make it your screensaver!
Who: It’s the People
No journey is much fun if you have to do it all alone. Of course, having obnoxious, inconsiderate or downright horrible travel companions is probably the only thing that is worse than travelling alone. Entrepreneurs by nature like getting things done and if you are like me, many times, you’ll have the feeling that no one else can do as good a job as you can (not true). So taking on a partner or hiring and training employees will all, at times, seem far more trouble than it is worth, but no enterprise worth its salt has been built by one person, however heroic — even Superman needed Jimmy Olsen ever so often.
The trouble, of course, with people is that they are people, with all their foibles and baggage, social and emotional. Peter Drucker in his book The Effective Executive speaks of making strength productive by not hiring to minimise weaknesses but to maximise strength. He narrates how: ‘President Lincoln when told that General Grant, his new commander-in-chief, was fond of the bottle said: “If I knew his brand, I’d send a barrel or so to some other generals.” Lincoln assuredly knew all about the bottle and its dangers. Lincoln (however) chose his general for his tested ability to win battles and not for his sobriety, that is for the absence of weakness.’
Paul Hawken, entrepreneur, raconteur and teacher, speaking about the people you want on your team, says “… it makes no sense whatsoever to hire any but the best people you can possibly find. Your employees shouldn’t admire you. That is kid stuff. You should admire your employees.” So make sure you don’t travel alone and that you pick your travel companions carefully for their strengths.
How: Don’t forget to have fun
At least three thesauruses that I consulted report the words fun, joy and playful as synonyms. And who am I to disagree with them? Neither should you!
Business, commerce, entrepreneurship — all sound like serious stuff and all too often we treat them that way, but high cholesterol, hypertension and stomach ulcers are a lot more serious. So having fun, being joyful and keeping work playful is important. The real world in the form of payroll, accounts payable, demanding customers and disgruntled employees make it hard. It is the rare business that manages to accomplish this without ceaseless vigil and trying hard. While we may take our business seriously, we had better not take ourselves too seriously. I will be the first to admit that this, like most good advice, is easier said than done.
Nevertheless, the baristas at Starbucks, the concierge at the Windsor Manor hotel in Bangalore and my local barber all live the maxim that work can be fun! There will be enough folks telling you how to do or not do stuff or why you will fail. The easiest way to have fun is to prove the naysayers, who will be coming out of the woodwork daily, wrong. The best revenge at all times, I believe, is having a good time.
So focus on making sure that the journey for the folks travelling with you and for yourself is fruitful, fun and fulfilling today, and other things will take care of themselves.
Whenever I read of a prenuptial agreement, I react viscerally. Not that I am particularly romantic, nevertheless there is a sense of foreboding. Putting in place an agreement should the relationship fall apart, even before the marriage, seems unsettling to say the least. In the Indian context, where marriages are still largely arranged and families actively contribute to heal rifts (and in some instances serve as the source), there is no major downside to a pre-nuptial lack of preparation. However, in the case of entrepreneurial businesses, even those that plan well before starting up, often give little thought to how it might end.
As an entrepreneur, you conceived a business idea and shaped it to meet a large market need. With love and, at times, feelings bordering on hate or insanity you have nursed, nurtured and grown it to a stage where you now have a reasonably stable business. Along the way, you have brought on board employees, partners and other owners who have ridden the enterprise’s roller-coaster ride with you. You are just getting accustomed to the growing pains (which only seem to change and never cease) and look ahead to what’s next. Of course, even if you are not there yet personally, your employees, investors and likely, your spouse are pushing you to figure out what’s next.
I use the term ‘exiting your business’ for this phase of your business. It may involve an actual exit, such as selling your company or even shutting it down or a major change in shareholding (which I deem a virtual exit) such as going public or a significant dilution of equity, ideally with some financial upside for the present shareholders. If you are not hyperventilating by the end of the previous sentence, you are ready to consider what the best manner to exit your business is.
Are there alternatives to exiting your business? Indeed, there are. You could choose — as many of the companies described in Bo Burlingham’s book Small Giants have — to stay privately held and of finite size. This has its share of challenges including the growth path for your senior team members, monetisation of people’s equity and succession planning. As Bo Burlingham puts it “(You will face) the same choice that all successful entrepreneurs are faced with sooner or later, although most don’t realise that there even is a choice until it’s too late.” So how do you ensure that your exit is smooth?
Know thyself
As with starting a business, exiting a business begins with understanding yourself. The good news is that you are no longer the person who started your business. Therefore, what you want today is likely to have changed. Even if you feel it hasn’t, it’s well worth being certain.
Begin by asking yourself: “What is it I want?” Do you want to grow the business to many times the size it is? Do you merely want to cut back on the hours you are working? Do you want to hand the company over to someone else and not be the person with whom the buck stops? Are you capable of letting go? Would you drive your spouse and family batty if you were no longer an entrepreneur here? These questions are all valid regardless of whether you intend to go public, sell the company, shut it down or raise another round of capital.
A recent example of not being clear is when Bill Gates stepped aside to let Steve Ballmer, his college buddy and confidant of decades, take over the number 1 spot at Microsoft. An article in The Wall Street Journal reports that there were shouting matches and even a dramatic walkout by Gates after an argument. According to the paper, these run-ins “paralysed business strategy decisions that the company still wrestles with today.” Eventually, as another commentator observed, “Mr Gates had an epiphany about his own role and stepped back.”
Before you make plans to exit your business, it is important to recognise that most exits are beginnings rather than endings. For instance, if it involves selling your company and you are no longer going to be involved, you’d have to figure out what you would want to do; more importantly, you would have to be clear about what would happen to your employees with you out of the picture. If the buyer wants you to stay, what will your role be and how happy are you going to be in it? How long should you stay? If you are taking the company public or taking in equity, how will having a formal board of directors impact your business or you? And if you are going to shut down your company, what is the fair thing to do by your employees? Most importantly, when do you walk away from any transaction? In other words, what are you not prepared to give up? Ideally, you run through this exercise annually rather than the night after you receive a call about a possible merger or acquisition.
Exit is a project
In the early days of your business, you probably prided yourself on the speed with which you made decisions. And as an entrepreneur, you still have a disdain for all things that seem to slow you down. If so, be warned that exiting your company is a Project with a capital P! It requires serious chunks of your time and 100 per cent of your mindshare at such times. You should run it as you’d run any major project — it may turn out to be the most critical one in your professional career.
In crunch times, most of us revert, almost atavistically, to our native comfort zone. Leaders who come from a sales background view this as a sales deal, technical folk as a test of their technological capability — in other words as a specific challenge from outside that needs to be dealt with aggressively. Usually, the biggest and most non-trivial challenges of an exit lie inside the company.
The communications and people aspects of an exit — from company intent, “Why are we raising money?” or “Are we in trouble?” to the personal, “Will I keep my job? Should I be buying those vested options?” to a possibly critical “Do I want to bother my boss with this minor issue in the midst of all this?” are critical. Your team may not only have a lot of questions but may also be quite distracted, which is not good for the business or the exit. Therefore, having a clear plan, that includes entry and exit criteria (such as when will this project be killed, if at all), objective targets (“What do I consider a fair share price?”), milestones (“By when do we intend to conclude this, either way?”), roles and responsibilities (“Who does what and how?”) and continual tracking (weekly meetings, daily or alternate day calls) is vital.
Regardless of how hard you think the exit project will be, it will be harder still! So get professional help. It is useful to have the buffer of a professional intermediary, who’ll be objective and ensure that the process does not get derailed and keeps you honest. And be prepared to pay them — they’ll earn every dime if you pick them well.
Business as usual
All of us have been in situations when, even as a key customer meeting is running late, we get a page saying that a top technical guy has resigned and our alarm reminds us of a promise made to the little one not to miss her school play again. As we race madly from the meeting, the fuel indicator glows red and the accountant calls to say that the wire transfer has not come in and tomorrow’s payroll is at risk. Now imagine doing all of this while your spouse is not in town, you have a head cold and a twisted ankle. Trying to manage an exit even as you run your business is all of the above and then getting pulled over for speeding by a surly cop.
It is easy to lose sight of the fact that you have a business to run, especially if you find the exit project exciting and exhilarating. But it is important to keep in mind that by the time the day of the IPO or the selling agreement arrives , you had better still have a viable, vibrant business. And this will not happen by itself. When you are sitting across the table from your institutional investors or prospective buyers, it is this healthy business, running as a well-oiled machine, which is going to allow you to be a cool yet formidable negotiator. It is useful to keep in mind that the exit project is just that — one of several in your business and not necessarily one that will be successful.
So keep your eye on the ball and remember your core objective — sustaining and running your business as though you intend to do it for the rest of your professional life!
Last month, I wrote of my Top 5 utilities that I can’t live with. Guess the computer gods were watching and about five days ago my laptop gave up its ghost (of course tossing it on my bed and watching it slip down to the floor may have had something to do with it!). The loss was all the more untimely, as the first half of an overdue article was on the HDD! Frantic calls for sysadmin help, safe mode log on as admin and scraping the ascii text on to Zoho writer resulted in my getting the article out an hour after my Friday 6PM deadline! You can read it (“Selling Every Moment“) at Hindu Business Line here .
The good news is that even a couple of weeks before this tragic moment, I had made a beginning to go completely on-line, as in render my laptop a mere client and operate solely on the net — yep, store my data on the net and use apps on the net. So here’s my report from life on the cloud!
GMail & Google Apps pretty much the bulk of my time is spent with GMail and more frequently with Google Apps, as we try to get our new business (still in stealth) on-line. When I first began using GMail (from being a Yahoo! mail user and Eudora client) it seemed outright strange not being able to do folders. My current use pattern leads me to pray each day that Google actually means its “Do no evil” pledge. Pretty much sticking to mail and chat in Google Apps and only kicking tires with their Docs and Sites utilities.
Skype – and now with video. Skype is the only utility that gives gmail a run for the first place in my working life. Between chats, international calls, peer2peer file transfers and now video chat it gets a great deal of use. For several years we ran most of our internal business on AIM and Skype has pretty much replaced this for both intracompany as well as across company (and country boundaries). Now with utilities with the ability to record (not a feature I have used yet) it promises only to get more important.
Zoho (http://www.zoho.com/) pretty much replaces the MS Office suite and my experience is that ZohoWriter particularly kicks butt. Am using Zoho Project and as a power user of Microsoft Excel I am amazed at Zoho Sheet (though miss the work offline feature). Not having used Office Office, I found both Zoho and Google presentation tools not as productive as good old PowerPoint on the local HDD. Got my neighbor using Zoho CRM (free for up to 3 users). Personally found the CRM feature, even for a motivated user like me, a bit heavy! Likely switch to
BaseCamp – was using this as my primary project management, planning, newsgroup tool for the last six months with other conspirators as we prepare for our next startup. Simplicity thy name is BaseCamp! I must admit though I have, since writing this first, switched to Zoho projects, as I needed to be able to track a whole slew of tasks, milestones that are overwhelming BaseCamp’s simple(r) lists.
Blogger, Twitter and WordPress
For a while there, I had to physically abandon my computer, so that I could get over my growing addiction with trolling blogs. Now even without a self-help group, am doing better though Blogger probably gets more use than it should; planning to move this and other blogs over to wordpress eventually and so spending time there in installation and learning about it. Twitter, though my own contributions are bite sized, a fair amount of time is spent reading/tracking others posts & leads. The jury is still out on it utility beyond serendipity.
GMail Drive – in addition to using of course Google mail and their news alerts, I just learnt how to use GMail as a virtual Hard Disk Drive on which I can store my files. Of course this requires installing a Win Shell extension. But 2GB of storage on a virtual drive is not bad! There is a Firefox plug-in gSpace that does the same thing as well. As many of you pointed out this is not a lot of space – but I got my mom (yep, mom) to use it, so simplicity trumps all else (again!). In my case I also have a 500Gb Seagate drive on my desk, so I don’t pretend 2Gb is all I’ll ever need. But its pretty good to start with.
I realized that there are a whole lot more tools I use including RememberTheMilk and LibraryThing, but the first three above hog 80% of my time and effort. If like me you are poor at backing up, it might not be a bad idea to check these out.
No one looks forward to a visit to the dentist, especially if it is a root canal that’s in the offing. Yet, most people would choose a root canal over haggling with a car dealer. The words ‘used-car salesman’ have come to epitomise our loathing for the selling profession. The sweet-sounding young thing who keeps calling offering me credit cards and personal loans, is most reluctant to answer when I ask her if it is a sales call. So it would appear even salespersons are at times ambivalent about their jobs.
In this scenario, how important is the sales function for an entrepreneurial firm? Before we answer this question we need to recognise that most entrepreneurial firms begin selling before they have a product and many even before they are a company.
As a founder, you have to sell your ideas to other founders, prospective employees, potential investors and future customers. Often, we fail to acknowledge this as selling as our passion and vision drives us to make believers of others. Selling, however, is what it is and it is critical for the success of your entrepreneurial firm.
Furthermore, it is far too important to be left to the sales folk alone. You need to be selling your company to all the stakeholders, selling your product and its differentiation to your own sales people and selling to customers and partners your unique value as a supplier and partner.
Founders as sales people have their share of risks — they are too close to the company, its products and their perceived benefits that they may not hear too well what customers are telling them.
As a start-up evolves to be a real business, the need to bring in professionals for the sales function grows. Salespersons spend most of their time outside the company and ensuring that they are aligned to your vision, values and goals is a continual process. If your sales people are to win hearts and minds even as they rake in the dollars selling your products, it is important that you stay involved after you bring on board the right salespeople.
Much like customer support, they will be the face of your company and the less they are perceived as ‘used-car salesmen’ the better you will be served.
Selling process For a company’s sales team to be consistently successful it requires a clearly spelt out process for selling.Many companies discover that writing code or building a product is all too easy to get started without adhering to a well spelt out process. However, disaster in the form of poor products or, in the worst case, a shuttered company, is the likely outcome in the absence of such a process. Similarly, too many start-ups think about sales, if at all, late in the game. Even when they plan for it, they grossly underestimate what’s required and make erroneous assumptions such as “the product will sell itself” or marketing or the technical personnel will be able to sell it. However, to continuously, predictably, and most importantly, profitably sell your product you need the right professionals with the right tools and a strong selling process.
The most common tool or process in sales, be it multi-million dollar selling to major accounts or one-on-one retail sales, is the Sales Pipeline. Simply put, it is a series of steps, such as figuring out who your likely customers are (prospect identification), which of them have money to buy, are likely and desirable (qualifying the buyers), and understanding what need they are trying to fulfil (understanding needs).
The accompanying table shows one such sales process; your own may have fewer or more steps depending on the nature of your business. Even in a restaurant or store, good salespersons go through this process, figuring out which customers are browsing as opposed to buying, what it is they are looking for, is the wife or the friend the decision maker, can they up-sell you with accessories (or appetisers or drinks in a restaurant), negotiating price and closing the deal.
However, in high complexity sales such as technology products or high-value selling, the time taken between the first step in the sales process and the order closure may be several weeks to months. And, when you have many such prospects and sales deals in the air, without strict adherence to the process, your survival will be in question.
The term pipeline is used to refer to the sale process, as the sales organisation will aspire to continuously move customers from the first step (identification) through the last step (payment receipt and asking for referrals). At any time, a good sales organisation will have a number of different prospects at each stage of the sales pipeline. Ensuring that the pipeline never runs dry and that a bottleneck is not created at any stage (proposals or negotiations for instance) is critical for predictability and sales success.
Daily discipline Selling, in my view, is the most unforgiving of all jobs in that it requires a level of daily discipline and commitment that few other jobs require. In engineering or marketing you can afford to have an off day; put something off for tomorrow or next week. However, in sales, the consequences of putting something off for tomorrow or next week are often disproportionate and tend to last longer. For instance, when you don’t call on that new prospect you had intended to or make that follow-up phone call about your proposal, that’s when that key decision maker goes off on his six-week sabbatical or your client has an organisational restructuring or budget cuts! Though a good sales person bounces back from this setback, it may take another three-six month selling cycle before she has another shot at the account.
This is made worse by the fact that sales people face rejection every day — from prospects and customers who tell them why their competitors’ products are better and of course less expensive and, worse yet, customers who love the product and your company but they are not buying right now! One week in the shoes of any of your sales people is about the most sobering experiences any of your non-sales employees can have.
Successful salespeople attribute their performance to attitude, discipline and perseverance. The discipline they refer to is in how they manage their sales pipeline.
Typically, regardless of the number of steps in it, the sales pipeline is broken down into three segments. Segment A – those accounts that are nearest to closure, Segment C – those that you have just started working on and are still in the early stages and Segment B — all those in the middle between A and C. Great sales people work their pipeline in the order A-C-B, spending maybe 20-30 per cent on A, 40-60 per cent on C and 20-30 per cent on B. Novices and less effective folk by focusing predominantly on A or A and B tend to let their pipelines run dry or at the very least become very unpredictable.
What time management people refer to as Quadrant II activities — namely the important but not urgent activities such as getting to know the decision making process or the decision makers — are typically Segment C activities. If like the industrial ant, you don’t work your C accounts on a daily basis, like the proverbial grasshopper you are likely to starve once the spring of A accounts passes.
Relationship building If you spend a week accompanying your top sales person, you will discover as one of our engineers recently remarked, “It’s not the product or even the sales pitch but the relationship and trust that the sales person has with the customer that brings home the deal consistently.” People like buying things from people they trust and like. Relationships, especially ones that engender trust, are not built overnight. This is the ultimate Quadrant II activity that separates the great sales people from the merely competent.
With today’s constantly evolving (and rapid obsolescence of) technology, products get rapidly commoditised and features contribute far less to differentiating your offering. So how do your sales people stand apart from the din of competing offerings? Recent selling research and literature talk about consultative selling. From the days when the pyramids were built, great salespersons have always been consultants and partners first. They strive to understand the real issues customers are trying to address and provide them the best possible solution within their constraints. That may, at times, even mean sending them to the competitor. No good deed goes unrewarded especially when a strong relationship has been built.
Those that have built good relationships are not only rewarded with more deals, but are less likely to be perceived as used-car salesmen or worse than a root canal!
From January 2008, several months before I got off the job treadmill, I had gotten a serious case of blog addiction and was going to sleep later each night as I found yet another post to read before signing of. Previously I suspect only the New York Times op-ed pages held that sort of neck craning, fatal car crash fascination. And learning how to use Google reader and doing “research” for my next startup were only excuses I suspect to feed my growing blog addiction. There is something mid-afternoon “Ricki Lake-ish” my-sister-stole-my-boyfriend quality about a lot of the soul baring blogs out there, and I don’t refer to just personal or mommy blogs but even a wide swath of tech and political blogs. While I have been able to turn the telly off, I have had less success with blogs for reasons I am not too sure of. I have probably avoided going there anyways!
Now the good news is that I went off the air, not just in my own writing but also in browsing, lurking, reading or other forms of being online. It helped that I left town with family and that connectivity was intermittent (which I thought would be poor, was not – and yes, I did take my laptop with me). But just doing real world things such as visiting temples, attending festivals, such as the Aoi Maturi and sitting in Zen gardens pondering the imponderables and lots of walking (to/from temples, hole-in-the-wall vegetarian joints and 7/11 stores) and keeping two nearly teen kids engaged kept me unbelievably busy. It also provided some much needed distance and withdrawal from the whole blogosphere which seemed to be sucking my hours and what few grey cells remain. If in early May you’d have told me that I’d be off line for two weeks, I’d have though that serious withdrawal symptoms would incapacitate me – am happy to report that I couldn’t have been wronger. And here I am back adding already to the navel gazing personal post category!
When I read Marshall Kirkpatrick’s post Five Tools Everyone Working Online Should Have (IMHO) this morning on ReadWriteWeb, it triggered the thought about the five tools (ok call ’em utilities) that I can’t do without, especially when off line. This is somewhat ironical as I have over the last thirty days tried to move my entire electronic content on-line – basically trying to use my (now borrowed) laptop as a thin client. But that’s for another day, another post.
Yesterday my wife finally got her Dell Inspiron 1525 (in a truly inspiring blue) that your’s truly volunteered to set up and I realized that even without thought I loaded the following utilities first, so that her (and therefore my) off line experience stayed blissful (ok, maybe that’s stretching it). So without much ado, here are the five utilities without which I cannot get through my offline work day:
WordWeb its hard to say which was the chicken and which was the egg. That fact that I had WordWeb made me the local authority (not just to my two kids, but to colleagues) on words from the (not always) Queen’s language or that I positioned myself as the LA and found I could not maintain it without the help of WordWeb. Nevertheless, this tiny little program is an incredible dictionary and thesaurus, when offline and even better when you are off line. Get it today!
Gadwin ScreenPrint – for whatever reason I seem to need screenshots at the most inopportune moments and that too without the cursor, or with it and a delay built-in, or I need only portion of the screen/dialog box, want to save it file, clipboard or printer – you get the picture. Gadwin ScreenPrint is that it-slices-dices-makes-breakfast screen printing tool that doesn’t need even a high school diploma to operate.
Google Desktop is likely the second most used combo on my keyboard. This is one of those tools that make me wonder how we ever made do without it. Sure I hear muttering out there about how someone’s system got crawling after they installed GoogleDesktop but having installed this on five computers at last count, including my parents, I know that I’d install this in a moment’s notice again in my next computer as well. Never had much use for the sidebar but primarily use the quick search. I have probably improved my file naming protocols but am likely overly dependent on this utility to find that document I created last year on Why mushrooms don’t get their due credit or the scanned copy of my father-in-law’s passport.
Picassa – I’d have thought I’d have picked IrfanView as the utility of choice – but it turns out that I don’t do a whole lot of image gimmickry besides, storing, sorting and acting as the family image repository manager. And truth is we presently have far too much vested in Picassa, with location tagging as well as comments. Also I love the time based viewing of (searched) images so for instance, I can view a slide show of all pictures of my daughter Roz taken in Singapore in chronological order (don’t even ask why!)
iTunes – I am just spoilt. Despite its reluctance to easily convert my wife’s 300+ cassettes into digital music, iTunes is the music player of choice in our household and so it’s got to be there. This is particularly weird since none of the three (I can’t even find that original Shuffle) iPods we have in our house are actually used. But I never said this made sense.
Special mention (the only not-for-free app in my top list)
David RM’s Journal – journaling and practically most of my writing is done in this. You gotta experience it. Comes with an addictive free to use for forty five days trial period.
Even putting this list down helped me gain some insight on how I work – do most of my work with words (hence The Journal, WordWeb, Google Desktop), use pictures reasonably (Gadwin Screenshot, Picassa and IrfanView) and actually listen to music (even though moving all our content on to the 500Gb HDD remains a dream) from the computer (iTunes).
Over the last several years, I have written about startups, entrepreneurship and business in general in the Hindu BizLine and Wall St. Journal. I have compiled these for easy access in the column below.
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