Finding Clients in New Places
To be in marketing is a thankless task. You are often invited into a situation which, upon first viewing, appears utterly hopeless; you’re looking at a business with terminal illnesses.
Here’s the scenario; the bank loan is greater than the turnover; most of the staff have either resigned or been let go; the few remaining employees comprise family members and friends, too close to sack; the suppliers have got the business on hold pending full payment; only then will they deliver but only then cash-on-delivery; and without asking the obvious question, you strongly suspect there’s a county court judgement lurking around somewhere (probably in that cupboard over there in the corner, the one with the model aeroplane ‘swooping ‘ on the top).
And here’s the thing. None of this seems to deter the owner. Your potential client sits on the opposite side of the table from you and, although on first impression comes across as a rational human being, as the story of his business unfolds you begin to question your own judgement being there at all. How has this person, this business actually survived for so long? You’re saying nothing while he bangs on but you’re waiting for the declaration ‘I’ve run this business single-handedly since I left Downtown Engineering twenty years ago’. You suspect you saw a nervous twitch then, a signal that tells you that you are very soon getting your chance to ask a question. The facade is about to collapse and the conveyor belt of smug about to grind to a halt.
So you wait, confident in knowing your first question is about to make its grand entrance on this guy’s stage.
‘So tell me, where do you see yourself in five years time?’
Silence……. The look on the guy’s face says it all. This face appears to have a great future behind it but there’s nothing on your side of the equals sign to give you any comfort. He’s definitely trying to look you in the eye but the angel on his shoulder is telling him to button-up, and stop being a twat. ‘Listen for once!’
‘Three years then?’……
Nothing would give me greater pleasure than to tell you I made up this scenario. But I didn’t. The company did have the bank loan, which outshone any pre-tax profit by a country mile. It had two remaining employees that had reached the point of no return long ago. There were actually two CCJs in force, one from his own accountant (no, I didn’t believe that one either!). The business had run out of any supplier that was happy to provide goods on credit. It had a client base that rarely paid in sixty days, let alone thirty, and who only engaged them in the first place because they hadn’t finished paying for the last job they completed ninety days ago.
In short, the business was basically trading insolvently, throwing away money on employees that had long surpassed their usefulness, had crippling cash flow issues, was using Peter to pay Paul so any ‘cash in’ immediately became ‘cash out’, was happy to discount way below any practical margin to secure work and was looking in the wrong place trying to secure a commercial future, by trying to get work responding to open tenders online. As a final indicator, the business was renting office space and a workshop from a family friend - because it couldn’t afford the local business rates.
Any of this sound familiar? Sadly, all too familiar, but in a way none of this was really the proprietor’s fault. Alright, so he’s doing everything he can to keep going but at some point soon it will all stop. When the chequered flag comes down he won’t be anywhere near the front. In fact, he’s competing in completely the wrong race; he either doesn’t know it yet or refuses to admit it.
The Curse of the Small guy
It’s the curse of the SME; an inability to differentiate away from the competition to avoid fighting for new business on price. It’s not a commercial or a personality thing, it’s a vision thing. The guy in the driving seat has lost the vision to make changes, the ones needed to create the differentiation. The reason why it’s a curse is because the SME market is the most populated sector in business. There are more SMEs out there than any other classification of company and yet this main stream sector is treated with contempt by the banks, is often rejected by main contractors when required to support any claim that they can complete the work to any satisfaction, and relentlessly targeted by taxation.
The one thing a struggling SME will rarely have a reserve for is marketing. And yet marketing is the one thing most SMEs are crying out for. The problem is they see marketing as something it is not; advertising, public relations, mail shots, door knocking, telesales, trade shows etc. all of which may or may not be the solution, but all of which divert much needed cash from the bottom line. To move away from the herd there needs to be a change in thinking not a change of heart. There needs to be a definition of the job of marketing in order to get off the conveyor belt with everyone else and get on winning profitable business. This is what marketing does. The Job of Marketing The job of marketing is to design and build a machine that, when you turn the handle at one end, money comes out the other.
There are only three rules of engagement: • It doesn’t matter who turns the handle, but it has to be turned • Keep turning the handle until either you don’t need to anymore or somebody buys the machine from you • If the money stops coming out, stop turning the handle
Who Turns the Handle?
I once worked with an entrepreneur that basically lived in the air. His working week was to leave New Zealand, fly to Japan, buy second hand 4x4 vehicles, ship them to and auction them in Australia, South Africa, the UK, and any other country that drove on the left, then fly home. He visited at least two of these countries every week and regularly attended the local auctions to move on his stock. Once he had acquired his stock he would sell literally ‘on the wing’ while flying to next auction. He didn’t have an office, no team of employees nor any staff, nor did he have an infrastructure.
What he did have was a mantra: ‘Once you’ve got something to sell, all you need is a customer base, and it doesn’t have to be yours.’ Presumably he meant the customer base need not be your not the ‘something to sell’ bit. Either way he was incredibly successful and made a fortune during a boom period when Japanese 4x4 exports were leaving Japan by the boatload (not his boat ‘somebody else’s’). All shipping was handled by the seller, all import administration, taxes and sales overheads were handled by the country based auction house.
The point here is to illustrate a business model that not only worked then for car export/import dealers but is deployed in probably every industry on the planet – outsourcing.
In the 1980s and 90s outsourcing became a mainstream industry. High-end service providers would bid for enterprise level contracts based on their adherence to a mutually agreed service level agreement (SLA) with the client. The service providers would then outsource parts of the contract to smaller focussed suppliers/service companies who competed (usually on price) for the business. The high-end service providers would then keep their share of the profit in exchange for their value added service deployed managing the contract.
Prior to this, in the 1970s and beyond back to the 50s there was very little outsourcing; we all had jobs, and we did the work for the boss e.g. the factory owner or the building company.
Today the outsourcing concept has made its way so far down the socio-economic scale that someone working from their kitchen table can outsource what they make and sell it online via a third-party. Amazon is the largest third party vendor on the globe. The greater majority of the tangible products sold online by Amazon is either made and/or supplied by thousands of smaller vendors outsourcing both the sales and marketing role to Amazon as a chargeable service. This culture basically turns the original outsourcing model on its head; the little guy now outsources to the big guy to do his sales and marketing for him.
Now guess what. If the guy working from his kitchen can do it, so can the small guy.