Answering the Challenge of Generating Revenues
Monday, April 25, 2011
Posted by: Matthew Montoya
By Kurt Black, President & CEO
It is well known that entrepreneurs face many challenges to building a successful business. In my opinion, nothing is more challenging for a new company (and particularly if the founder is also a new entrepreneur), than generating revenue. Sure, there are some entrepreneurs that come from a Sales & Marketing background and bring their vast network of contacts to the startup business. But I feel that the majority of entrepreneurs are the "doers.” That is, they're the ones that actually perform the work, whether it be preparing taxes, building websites, dry cleaning shirts or what have you. Their past experience is often in performing the activity that is the core of their new business. They don't have extensive experience with Sales and Marketing, nor do they have an existing network of potential customers to call on. Instead, they need to get out in the marketplace and sell their new business' product or service. This can be a huge challenge for an entrepreneur.
There are many reasons why Sales & Marketing is so challenging, but three key ones are: (1) it is not an easy process; (2) it requires skills outside of the typical entrepreneur's comfort zone; and (3) it often takes a tremendous amount of the entrepreneur's time, which takes away from the time to do the actual work. Let's dig into each of these key reasons a bit further:
- Sales is not easy.It often requires researching your prospective customers and then finding a method of reaching them with your message that is both efficient and effective (which is a critical balance to find). Often times it requires "pounding the street and/or the phones,” which is not an easy task. It takes a lot of time and a lot of patience, as the entrepreneur will statistically get many more rejections than sales. But those who succeed will be the ones who are persistent even in the face of this difficult, time-consuming task.
- Sales often requires skills outside of the typical entrepreneur's comfort zone.Cold calling prospects is not an easy task for many new business owners. Sales people typically look at prospects in terms of close ratios. If a business has a close ratio of 5 percent, that means that for every 100 people you called on, 95 of them said no. That is a lot of rejection, and that's difficult for a lot of entrepreneurs to deal with.
- Sales is time consuming.Again, a lot of entrepreneurs are the "doers,” or the ones who actually perform the revenue-generating service or make the revenue-generating product. Researching prospects and making cold calls takes significant time away from these activities. It is a tricky balance for the new business entrepreneur to balance selling and doing.
When I founded my most recent venture, I wanted to find a way to make our Sales & Marketing activities as efficient and effective as possible. We had stumbled upon the opportunity through my prior business, where we built an online directory for a very large association in the higher education sector. When other associations heard about what we had built, we found that there was tremendous interest in the product. Revenue was generated when businesses buy a "listing” in the directory as a way to reach the association's members. It is a great product because it provides a tremendous amount of value to both the association members and the business partners. But as a small business, we needed to find an efficient way to sell the listings and thus generate the revenue.
We thought about ways to do this efficiently, and came up with a creative solution – we would split the revenue with the associations. That is, we made the directory a revenue-generating product for the associations. We would implement, support and enhance the product, and the associations would market it to their members and business partners. It was a win-win, because the associations would get an additional revenue stream and our company would get assistance in selling the listings. Additionally, the associations' members would get another value-added tool, while the associations' business partners would get a tremendous platform to reach and communicate with the members (their prospective customers).
So by being creative, we were able to address one of the biggest challenges an entrepreneur will face – Sales & Marketing of the business.
Kurt Black and his team at nOvative Networks, has helped NACCE create the NACCE Marketplace, which enables community college educators and administrators to search for businesses that offer particular goods and services to the higher education marketplace and to the nascent and existing entrepreneur/small business owner that NACCE members reach. Searches are possible by geographic area, topical focus and type of service. Visit http://naccemarketplace.com for more information.