Problem: Sales Are Low. Solution: Strategy.
Last week, Cara and I had a great Business Development meeting with a bookkeeper who specializes in creative, small businesses. And she asked us a question that I’ve thought about nonstop since. “Among your clients, are you finding that sales are lower this year because of the election?”
I furrowed my brow and exclaimed (probably too emphatically): “No!” Perhaps I interpreted the question too analytically at first blush, then going on to clarify:
“Some creative businesses are down, yes. And I’m not hearing the election cited as a reason yet (I’m sure that’s coming). But even if/when it does, that is far from the whole story…”
Why Is It that Sales Are Low(er) for Some Businesses this Year?
If I look at Ellevated Outcomes’ client portfolio, 19%-22% have experienced a sales decrease in the past 12 months. (I’m waiting on July-end numbers from a few people who are juuuuuust on the brink). If I dive deeply into those who are experiencing a sales decrease, there are 3 reasons why.
And before I start, I want to clarify: to me, this is such good news. There’s often so much people “leave on the table” when sales are low. It doesn’t mean it’s easy (far from it!!). But it’s empowering to realize just how much is in our control.
1. External Factors
This is precisely what our lunch partner last week was referring to. Of course, the upcoming US election is one external PESTEL example. Elections come around every 4 years, so we can anticipate and plan accordingly. Similarly, recessions fall into the same boat (believe it or not). The economy is going to dip at least every 12 years. It’s a tried and true economic cycle.
In addition, if you’re a Nashville-based business or in another growing, secondary market, there’s massive opportunity right now (hooray). And there’s growing competition too (could be hooray, depending if your glass is half-full ;)).
The reality is: increased competition means that what was once so special isn’t necessarily unique anymore. And similarly, as the gig economy continues to grow, people’s work and social patterns change, and barriers to entry are lower and lower, there is more and more competition.
We see this in our little corner of the world too. It’s becoming increasingly common that when prospective clients are talking to us, they’re talking to coaches or consultants too. (This didn’t use to be the case). And personally, my view is: this is great! It allows us to really share our differentiators and stand out. But make no mistake: we have to earn every opportunity we’re presented. Sales aren’t easy. We put tons of effort into each and every one to ensure we can show why and how we’re different.
2. You’re Not Tracking Sales by Line of Business
Over the past couple weeks, our team has had a handful of client examples that appeared as: sales are lower than prior years. But then when we put on our CFO hats and reeeeeally tore apart our clients’ numbers, cleaned them up, and segmented them, we learned: sales hadn’t decreased at all! The top line is down because these clients discontinued unprofitable or energy-sucking product lines, sales channels, or non-ideal clients. (And then reallocated the energy and money to ideal business).
But when you’re looking at one big, jumbled number, you’re not able to see this distinction. And it’s energizing + illuminating! It means that you’re selling more of your core, most profitable business; and therefore, your bottom-line profit will increase, even if at-a-glance sales are lower.
3. You’re Running a Different Business Now
This is a continuation of #2. If you’re one of our clients, 1, 2, or 3 years down the line, we have used strategy to tighten up and reshape your business. This is a different business than the one you walked into our door with!
If you’re used to reacting to opportunities coming your way, once you get your next-level business ; ) you must make a change to attract the business (sales) you desire. The Marketing and Business Development tactics (or lack thereof) that got you here, won’t be the same ones that get you there.
Here’s an example: for one of our interior designers, over the past year alone, we have changed their client profile significantly. (And this business has been around a long time). They are still the same designer. Still have the same aesthetic. Seek the same personality of client they always have. We’ve just really, really dialed in their ideal client and services. This change has increased their average real revenue per client +66%.
That is a big, big leap. It means they can work with way fewer people but do much more creatively satisfying work. And it also means that we must deploy Marketing and Business Development in a different way. We can’t just sit back and react to what SEO sends their way. We need to proactively attract this new level of business. It’s exciting to think about!
So, how is Strategy the Solution?
1. Ensure You Have a Truly Distinct Differentiator
No matter where you are geographically or even what industry you’re in, the barriers are down and all bets are off. Competition is on the rise.
The reality is: with decentralization and increased access to nearly everything, there’s not much in the world that can’t be replicated by someone else. It’s very, very hard to create and sustain something that is truly unique enough that others can’t replicate.
So when it comes to small business, our philosophy is: the best differentiator you’re going to have is the experience you create. It goes without saying: you have to have great products or services; people must be willing to exchange money for what you’re selling. That is tablestakes.
Instead, the question is now: when people are telling their friends about you, are they able to get really excited about what makes the thing you sell unique? Even if you’re a product-based business, we want you thinking like a service business. What is the customer interaction experience that will make others talk about you?
2. Make Sure the Experience is Repeatable
This is, in fact, the bottleneck we help all our clients solve. Depending on the size of your business and how long you’ve been in business, this will look and feel different, but all successful(!) small businesses face this root problem.
Once you have identified and magnified your (experiential) differentiator, you must be able to deliver it through other people or means. You become sustainable when your business’s experience (not the experience only you provide) brings your customers back time and time again.
3. Build your Marketing and Business Development Flywheel
Business is a game! And if you refresh your strategy each year, you will rise to new levels over and over again. This is part of the fun, for those of us with a growth mindset. And it means that part of your “next level” will be making updates that build on your existing, strong foundation.
Having a solid Marketing and Business Development Strategy means that there is a repeatable, consistent way that you attract new business. So that when you do get to that new level (and you will!), you can apply this existing foundation and simply tweaking your place, positioning, and maybe adding a channel or two.
BTS at Ellevated Outcomes, our Business Development Culture and practice has not changed since day one (really). The structure our team uses today is the one I wrote about in our business plan on January 1, 2018.
BUT(!) you better believe it’s been tweaked, as our clients’ sophisitication has evolved, we’ve added Strategists to our team, and we’ve eliminated products. We have to show up in different places than I did 6 1/2 years ago. Use different language when we’re talking to our network and perspective clients. Overcome objections more keenly.
This isn’t discouraging (to me). It’s growth. And if we hadn’t leveled-up along the way, our sales would’ve decreased. But we – and the majority of our clients – have controlled our destiny so that’s not the case.
Over the past month, we’ve seen a surge of small businesses realizing that they too, would like a strategy (my head and heart!). Owners feel like they’re scattered, working on so many things. And we now find them asking such a smart question: “But am I working on the right things?”
Strategy takes in all the information about a business – internal and external – understands the competitive differentiator, and then diagnoses a discrete problem. And then of course, poses the distilled, clear, doable solution.
If any of this resonated with you, or you have a friend, family member, or small business colleague who you think could benefit from a partnership to help them get in front of their business, we’d love to see if we can help. You (or they!) can schedule a consultation here for our Q4 kickoff dates.
