Creating Predictable Growth and Stabilizing Cash Flow

Issue: Managing the peaks and troughs in the business.

Significance:

Highs and lows of business have an impact on cash flow, personnel management, and projected growth target(s).

Background:

The company’s primary challenge is to secure predictable sources of growth. Their niche is complex, high-ticket products and services, which are difficult to find and small, requiring a large number of accounts to be self-sustaining.

Accounts are billed by project or hour. Currently no payment on performance

The goal is to bill 2300 hours per week. Currently they are at 50% with a potential revenue drop year over year.

Adding a sales role to an existing executive has increased the pace of closing sales but new leads are not coming fast enough. In the new sales role, the executive closes 50% of the leads that go to proposal. The company sales cycle is three months.

The company passes off four of every five inquiries to lower priced appointment setting firms, because infrastructure is too expensive for low ticket, quick hit programs.

Actions Taken:

The company has multiple sales leads that have gone to proposal but have not yet been closed. Two years of SEO investment is paying off and 50% of proposals come from website leads. Referral partnerships continue to be excellent, and they have benefited from ad agency referrals. The company has two organizations as clients and sold their franchisees through word of mouth.

The company has attended trade shows generating leads but not enough to justify the expense, developed a plan of calling ad agencies, focusing on B2B clients, but cold calling and outsourcing to a sales agency turned out unsuccessful.

The company has built out space for three workstations for lower priced programs, with the goal of keeping operations in-house. They are looking to have conversations about franchises with a former client and considering hiring a “mystery shopper” to walk the floor of trade shows.

Ideal Outcome:

Generate and increase leads, take a financial risk with the right growth investments, including three investment initiatives: expansion for lower-priced campaigns, increase franchising clientele as a vertical, and have a presence in national trade shows.

Roadblocks:

Lofty goals with a reluctance to consider 100% pay for performance. Having grown with conservative cash commitments reluctance to invest beyond their comfort zone. Conservative operational policies inconsistent with their aggressive growth target

Desired Results:

Consideration of the pros and cons for the three investments and ideas for implementation.

Recommendations:

Expansion will offer an opportunity to test a pay for performance model in a familiar industry. Consider booth space at trade shows along with walking the floor with a focus on small businesses. Questions to be addressed – Are the costs the same for each account regardless of size? Are all accounts profitable? Are some accounts a distraction? Based upon response renegotiate referral fees.

Pursue franchisees if they fit the profiles of existing customers, and can form a group of like-minded companies. Establish a client qualification process to bring on additional business in a controlled manner.

Use market data for client-qualitative trends. Sell generic data to others in the industry. Use scrubbed data in marketing efforts.

Base average salaries for new hires to manage the peaks and troughs. Look into the cottage industry – part time home employees are a less expensive resource.

Outcomes:

The company tested adding a program in Philly with a performance-based model, choosing to reduce their on-site resources using technology to take advantage of the recommended home-based cottage industry.

Franchises are happening organically. The company has developed an approach to pricing that works for franchisees and the company.

The company is focused on the Sales function, with a lead generation team that is successful at generating leads (several have converted to sales), hired two junior sales people for lower level sales relieving the senior salesperson enabling her to focus on larger sales.

Having sponsored a conference they have met new referral partners learning about online directories in which they are now listed. These have been terrific sources of leads, as have the new referral partners.

Having closed two recent large contracts, the company’s annualized revenue will meet/exceed their target for the year.

Lessons Learned:

In a business with peaks and troughs that is based on larger clients being profitable, an owner should designate the top sales people to the larger clients accordingly and hire junior level sales associates to handle smaller ones. In addition, when a company is able to see what works and what doesn’t, it’s simply a matter of focusing time and resources on what works.

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