Big Paper Blog

Not my usual topic, but I think often about micro/macro participation in the economy, and thought it’d make an interesting blog post. In no particular order, here are a few topics for discussion:

Building a Sales Pipeline

You cannot bank your financial stability as an individual or company by selling to a limited base of customers. What I see often is an entrepreneur waiting on 1 or 2 key deals or customers to close, and *then* things will stabilize.

Nope, it doesn’t work that way. You have to build a pipeline of individuals who are at various stages of learning about and being converted to purchasing your product. It’s called building a sales process, and it’s not a new concept.

Which is why it is so surprising that it is such an undeveloped skill for entrepreneurs. Many, perhaps 70% of entrepreneurs I talk with, have no idea how to sell their product. And I’m not talking about entrepreneurs who just came up with an idea, and don’t have the technology built yet.

Rather, entrepreneurs with fully developed products, with a large overhead and burn rate, who know the market is interested in their product, and yet– there’s a disconnect.

I think we believe that sales is a magical skill that only a few rare schmoozers possess, and we have to pay them $200K/year salaries in order to come on board and help us out.

Not so! Any entrepreneur can learn how to effectively sell their product by putting themselves in the shoes of the target customer and going through all stages of marketing/sales, and ask, “Truly– would I need/buy this product personally?”

The other part is to ask, “Are the sales/marketing steps I’m using a comfortable process to my customer?” There shouldn’t be anything out of the ordinary about the way you’re approaching a client. If there is, then even if your product is awesome, they’re unlikely to be.

If the answers to these questions are no, find out why. Then fix those reasons so the overall sales steps work, then apply that process to the people you’re marketing to. If you do this right, it would take less than a month and you could drastically turn around your ability to generate revenue.

Financial Literacy

It is frightening how many entrepreneurs lack basic skills in finance. I don’t mean that from a place of judgment, but from honesty– it is frightening! And here’s why:

Entrepreneurs without a basic understanding of financial principles seriously jeopardize not only their financial situation, but that of their dependents, employees, business partners, investors, and the economy overall.

I understand how/why this financial illiteracy happens. The entrepreneur has an awesome idea, a dream they want to pursue. Bootstrapping works for a while, or perhaps they find some easy money to get started. Or perhaps they focus exclusively on other areas of the business– skills they’re comfortable with, or building out the product.

All good things– but totally pointless if your business cannot sustain itself from month to month because you lack basic financial skills, such as recognizing how to properly value your product within the market, or assessing the total cost of sales + operations + cashflow.

How do you know you are financially illiterate? Four ways:

a. You don’t regularly scrutinize your bank statement
b. You avoid Excel documents
c. You have Excel documents but don’t know what they mean
d. You cannot recreate from scratch the basic financial documents: P&L, Cashflow statement, Balance sheet.

I know that Excel can be a genuine barrier and a pain in the ass, to boot. But each of those 3 documents are very, very simple and hold critical information–

P&L:

Sales per month
How much you have to pay out when you sell those items
How much you have to pay out for your total office/staff costs
What’s left over, if anything

Cashflow

Money coming in/out each month, and when
Points out those cash gaps so you can plan for it before they happen

Balance Sheet

What you own, what you owe, and what is left over– the business’s “value”

If you notice, these things (ratio of revenue to expenses, cash gap, and basic “valuation”), are among the most highly deficient areas entrepreneurs struggle with.

If you’re in a startup, do yourself and your team a favor– take a Saturday afternoon and immerse yourself in reading financial information online– read articles, look at templates, sample financial charts, blogs, etc.

There is no excuse for financial illiteracy except for 1 reason: not educating yourself, and that is a really, really scary reason to put yourself and others on the sure path of financial distress.

Job-hunting

This is a sales process. You are selling your ability and willingness to help a company solve their problems on a day-to-day basis. You cannot find a great job unless you identify:

a. What problems you can solve
b. Who has these problems and needs them to be solved badly enough that they will pay you?

I’ve written previously about job-hunting– read more here. I have followed that formula every time I needed to apply for a job or wanted to find particular things in a new job, and it always works.

If you need a job, please follow the recommendations in that blog post and take a sales process approach, and your chances of finding one in the time frame and in the type you want, will triple. Seriously.

Funding

This is also a sales process. There is no easy, fast, streamlined, shortcut way to find funding. No matter if you’re a terrific VC deal, or a microbusiness looking for economic development funds, the process of funding is the same, and built around core concepts:

a. No one wants to give you money and lose it
b. Most businesses fail and lose other people’s money

The biggest reason entrepreneurs fail to find funding is that they should not have been looking in the first place. If you don’t think this applies to you, you are probably wrong.

There is no great deal that cannot find funding. If you can’t find funding it’s because:

a. You shouldn’t be looking for funding
b. You aren’t taking a sales approach
c. You are looking for the wrong type of funding

Contrary to what many entrepreneurs think, it’s not because investors are wrong and you’re right. Or because you need to polish your business plan a few more times. Or because no one invests in the summer.

It’s because your business is not clearly demonstrating that you are in the top 2-10% of seriously money-making companies with a low risk quotient– and for whatever reason, you don’t realize this.

There are a few other things I’d like to write about–

• Defining a product
• Bootstrapping
• Microbusiness
• Poverty mentality vs. resourcefulness

–but I’ll save those for part 2.