Common Sales Mistakes Startups Make During Their First Year : Under30CEO Common Sales Mistakes Startups Make During Their First Year : Under30CEO
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Common Sales Mistakes Startups Make During Their First Year

| March 13, 2013 | 1 Comment

Startup MistakesEntrepreneurship, it’s one of those things that everyone dreams about but no one really tells you how it’s supposed to be done. Though there are varying aspects to running a business, a fundamental component of any business is selling. Not every entrepreneur comes from a sales background and sometimes you learn lessons the hard way but in business, lessons cost you money. As a newly established business, you are bound to make mistakes but I hope to reduce some.

Here are the most common mistakes start-ups make during their first year. Some may seem obvious – but you’d be surprised how many of these mistakes are made by seasoned entrepreneurs.

1. Prospecting and Clients

As a start-up, most of your time should be devoted to prospecting. I would spend excessive amount of time on prospects that showed interest, it was to the point where it seemed more desperate than overselling. This is where the essence of selling comes in. As a startup, you work day and night to get clients and when someone shows interest it seems that’s all you can focus on. I would call, email, and use other tricks to get in touch with the prospect just to get that close. It gets annoying, fast! Don’t be pushy, or overzealous about bringing in the deal. You have got to know when to walk away.

Most of the time, clients are “shopping” you, you should know the difference between when someone is genuinely interested or when they’re just looking for a quote. On the other hand, if they did close, I spent too much time and overeager to please them. I call it the “clingy business girl or boyfriend” phase. You do everything to make sure they’re happy and go above and beyond what you’re supposed to do. As in relationships, clinginess is not attractive and nor is it in business. If a client wants something extra done, be sure to have everything written on paper before you continue and don’t be afraid of the word no. Take an hour or two to learn what the sales cycle is and how it works; it’ll help out in the long run.

2. Sell Yourself First Then Your Company

We made this mistake all the time, we would walk into a meeting and just start raving about our company and how wonderful it is. But to a client, your company is just like any other company. Chances are they have had people come in and say the same about their company just as you have. Unless you have a one-of-a-kind product or service, people will buy from people they like! When I walk into someone’s office, I do a quick look-around to see if anything catches my eye, and then ask the client about it. I had a meeting with a client who had a small statue on top of the printer. I asked about it, which turned into a long conversation. We barely talked about my company and wound up getting the contract.

3. Don’t Sell on Quality (for service oriented companies)

If you’re a service startup, you feel as if you have the best offering in the world. That may be true, but clients could care less about it. Look at it this way. Every company out there talks about the quality of their service, by making quality your number one selling point; you have just categorized yourself as “every other company.” Differentiate yourself by not spending too much time talking about the quality of the product or service. Quality these days has become a commodity, in other words; it’s a given. Find something else! We realized in our industry, clients wanted speed, so we started selling our service on speed. Of course this does not mean you should neglect quality, but where other companies took two months to deliver, we delivered it one and the quality was just the same.

4. Cost-Benefits and Profits

Yes, it’s a nice a feeling to get clients in the door, especially during your first year. We would be electrified getting the client in, when we got them, and after spending couple more months to fulfill the contract we would realize we made 3% profit. Don’t sell cheap, it’s not worth your time or the effort. As a startup, entrepreneurs feel they have to under sell everyone else. Not true, not only do you not make any profit but you make yourself look less than you’re worth.

Set a profit margin for your company. You should know on a per contract or order basis, what your operations, overhead, and other miscellaneous costs are. With that figure, set a bare minimum profit margin percentage that is acceptable for your company. If anything that falls below that line, don’t be afraid to walk away. There’s a saying that some start-up gurus use, “it is better to make a dollar than to make nothing at all.” Yes, but going after that one dollar might cost you twenty. Learning how to quote properly is different for every industry nevertheless, this is one of those mistakes that will cost you money in the bank.

5. Client Dinners

Clients are, of course, the most important aspect of any startup or any company for that matter. However, they have already chosen you and unless they are the top 3 clients of your company don’t spent too much time and money taking clients out if they are already bringing in revenue. Even if you have an expense account and are the CEO, you know that money is coming out of your pocket indirectly. You should spend that time and effort on developing new business.

Here’s where the mistake comes in. I felt if I took prospects out to dinner or somewhere else, they would incline to give me a contract. Not true! Aside from giving them a nice dinner they felt no more of an obligation to give your business. Just as they have to look at what’s best for their business, you have to look at what’s best for yours. If you do take them out to dinner, don’t make it too expensive, unless they are a high power executive.

6. Time Management

As a startup, chances are you have a handful of people and everyone has multiple roles. But keeping up with those roles can get in the way of sales. Unless you have a sales department dedicated to bringing in new clients, you need to set aside a day weekly to handle sales matters like making calls or following up. By having a day dedicated to sales, you ensure that you will have a steady supply of prospects, thus leading to clients. Based on how well your company is doing you may want to have several days dedicated to sales.

7. Have a Plan

Having a sales day is dandy, but what do you do on a sales day? This is where having a plan of action ready come in handy. Set up your day in a way where you can maximize your efforts. For example:

Time

Task

8 to 9AM Gather all the leads, morning emails, coffee
9 to 11AM Makes 25 calls to top prospects
11 to 12PM Send out letter
12 to 12:30 Lunch
12:30 to 3PM Make 25 calls to new prospects
3 to 4:30PM Follow up calls
4:30 to 6PM Check and respond to emails

Here’s where the plan gets tricky. Actually following it! It is understandable that things come up, but staying on the plan is going to be the hardest thing you’ll endure, but it will pay off. In your plan, think outside the box. Everyone out there is doing the same thing, sending emails, making phone calls, and so on.

How can you differentiate your sales calls from everyone else? Think outside the box! We would take out an hour to handwrite letters and envelopes. Sometimes it worked sometimes it didn’t, but when I followed up on those letters, 80% of the time prospects said they had read them. Another thing we tried (with large prospects) was to send them a gift. I remembered a prospect telling me he was a huge fan of baseball. I bought two tickets totaling $30 and mailed to him. He was so ecstatic, that he called us in for a meeting and wound up giving us a contract. These tips are nothing new, you have to figure out what will work best for you industry. 

8. Internal Business Process

Don’t fall into the trap of “when it happens then we will figure it out,” especially when it comes to sales. Getting the client to choose your company is the easy part, satisfying their needs is not. One mistake I have seen start-ups make is not having an internal business process once the client signs up. I watch a start-up lose clients left and right because of this. They worked to bring in clients, after they did; they ran around trying to figure out what to do, by the time they got their act together, the clients was gone. There has to be a process of how to handle a client once they sign up with you. What are the next steps? Who handles what aspect? What happens if you get ten clients at the same time? What happens from start to finish? All of these things should be drawn out and every single member of your team should know what their roles are. Do a mock run to see if there are any bugs in your system because your operations should run like a well-oiled machine.

9. Business Partners

You don’t have to sell directly to customers every time. Sometimes it helps setting up partnerships with companies that are in the same industry that compliment your business not compete with it. For example, if you’re in the IT industry and develop software, set up partnerships with local IT hardware distributers. Treat them well, and pay them for their referrals because they could be sending those leads somewhere else. Business partnerships should be handled like a marriage, be kind, gentle, speak softly, take them out to dinner regularly, and so on. If the relationship is maintained properly, business partners can send clients your way on a consistent basis.

10. Match client’s personality

Startups, most of the time, have a passion for what they are selling and sometimes that passion can work against you. I would go into meetings and my passion would translate into talking fast, but my prospect was a laid back and would respond to me in a monotone voice. I realized this mistake when he kept asking me to repeat what I was saying. You have to learn what to match your client’s personality. If he or she is speaking slowly then you should as well. If they are energetic and you’re not then take a energy drink.

11. Don’t “Fake it Til You Make it”

Everyone has their own version of “faking it,” most of us have done it at one point in time. I have met several entrepreneurs that feel the need to overstate who they are and what their company can handle. Don’t do that! There is no shame in being a start-up, nor is there shame in struggling. By overstating, you mock the intelligence of the person talking to you, and trust me, they know if you are who you say you are. By being realistic you appeal to the sense of emotion of others, emotions that want to help you.

12. Don’t Aim Higher Than You Can Reach

We would put in multi-million dollar bids when we knew there was no way we could manage it. Our theory was, when we get the contract, we will figure it out then. Not only did we waste a lot of time and effort in working on bids that we knew we had no chance of attaining, but when we actually succeeded to get one and it was a disaster. We couldn’t manage everything and the client was very unhappy. In the business community, you know, your reputation means everything. You should know what your cap should be, if you cannot handle a contract don’t let greed get in to way. Yes, it would be nice to have a large contract but if it cannot be delivered, then walk away. Clients will actually appreciate your candor more rather than you acting like you can do it.

13. Keep Yourself Educated

This can go two ways: First, is be educated in your own industry. Not only educated, but an expert. I made that mistake, as a CEO in a technology firm, I assumed I would only need to know just the basic overviews, my job was to run the company; I have an IT department for all the technical stuff. Boy was I wrong! You should know the trends, what’s new, and where the industry is headed. As the CEO, you’re the first sales-person. It is part of your job to sell your company and you cannot sell unless you know what you’re talking about.

Second: Have some level of general knowledge about different areas. This can be tricky, because you cannot know a little bit about everything but this can make the difference. You will meet different types of people whether they are prospects, clients, business partners, or just networking. Different people have different interest, but if you can find a way to make a connection with someone, it can be the difference between making a sale or not. I once struck up a conversation about the space-time theory, which I knew little about. However, I knew enough to have an intellectual discussion and I must have made an impression because a week later, that person gave a large contract.

Conclusion

Not everyone comes from a sales background but if you do not learn how to sell, you won’t make any sales, and without sales, you won’t be in business long.

Nabeel M. Saleheen is the Co-Founder and CEO of Alegix, a provider of SharePoint and Mobile Applications development that primarily focuses in the nonprofit and small to mid-sized industries. Nabeel stated his first company at the age of 16. Since then, he went on to start two technology firms, a real estate investment firm and a nonprofit for under privileged college students.

Image Credit: Shutterstock.com

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Category: Startup Advice

  • http://www.facebook.com/xoxobrandy Brandy Anderson

    These are awesome tips! I have witnessed many of them personally so it’s definitely a solid list of typical behaviors and not-to-dos.