“42”% of startups fail due to lack of sales. Not because the product is bad or because they run out of funding. Because they do not sell enough”
I cannot count the times I have listened to a pitch that starts with and then drones on about how the potential market size for a new, customizable hyper-widget is X billion consumers. If only, the popular adage goes, we captured a tiny 1% of that market we’d be ok! Yes, confirming that there is a viable market for your product is important. It is a hygiene check at the beginning of your path as a budding entrepreneur. Once you are pitching to strangers for money, this should be a mere side note. Here are some key considerations that should build the foundation of your long term success. Not to mention feature in your pitch.
- Focus on speed of scaling instead of market size: so your market potential is 500m dollars? Nice. How quickly do you think your company will be making that much in sales? Focus on understanding your cost of sales, both in terms of financial cost and time. How long does it take you to acquire one customer? They key is to understand and share how quickly you can realistically grow.
- Understand your stages of growth: one of the most crucial aspects of sustainable growth is to understand your next milestone stage of growth. What will it take to double in size, then double again? Once you have doubled in size, what does maintaining your new level of engagement require of your organisation, your processes, your technology? Make sure your capabilities grow in tune with your sales or you will find growth plateauing at best and customer service and quality dropping through the workshop floor at worst.
- Have a sales funnel: one of the top two most common reasons why start-ups fail is a lack of sales. What percentage of your team’s time is spent on sales? 5%? How does that percentage compare to your very early days after you have been in business for a few years? Even in start-ups that manage to get sales early on there is often a temptation to take care of existing customers at the expense of hunting for new business. What if that one big key account decides to move on? Will your business survive? A sales funnel that is shared among all employees, depicting sales leads, their volume, likelihood of success and timing are a minimum requirement for long term sales growth.
Combining the above three points into a “sales DNA” for your company allows your workforce the necessary clarity around sales targets, expected timelines and capability requirements. The rest is execution.