Infocusselling’s Blog

June 17, 2009

When to Dump a Networking Group

Filed under: INFOCUSSELLING BLOG — Educated and Aware @ 11:37 pm
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In one of my last articles, I asked, “Is it possible to network too much?” A related question is, “Should I stop networking in this group?” Depending on what is happening, the answer may be a resounding, “Yes!”

Sales today is about being vigilant in using limited time. Most salespeople spend less than 30% of their time in active selling and less than 50% of their total time in any aspect of selling. The rest of the week is filled with travel, marketing, company meetings, training, client problem resolution, and paperwork. All of these are part of sales so we can’t get rid of them. What we can get rid of is unproductive networking time.

Networking is a sales function inside another business—the networking group is its own business with income, expenses, and they hope profit. The group exists to make money by providing the service of connections. Think the chamber of commerce isn’t a business because it’s a not for profit? Ask their president how long they could survive if they took in less money than they spent and you’ll hear the answer: not very long! Most other networking groups are for-profit businesses whose ongoing success is based upon collecting dues money from members and meeting fees from visitors.

Is that bad? Not at all. In fact, it’s very good because it makes them deliver a product that you are willing to buy. If the group is working for you, you are (or should be) happy to pay your dues. If the group isn’t working for you, then you should take your business elsewhere and the group should understand that it failed to satisfy you.

How do you know if a group is working for you? First, make a list of every networking group you work and then add up over the last six months the total number of hours you spent on that group. Include meeting time, driving time, follow up phone and email time, appointment time, one on one time—everything that took time away from you doing anything else, and get a total for each group. Next, look at your sales during the same timeframe and tie each sale to the networking group where the lead for that sale first originated. Don’t stop at one generation, but go as far back as you can trace it. Maybe Ken called you because Mary gave him your number, but if Mary got your number several months ago from Larry, and you met Larry at Networkers Inc., then Networkers, Inc. was your source. Do this for every client and then add up the number of sales dollars under each networking group. When you are done, divide sales for each group by hours for that group, and you have sales per hour invested. Finally, compare your groups.

Are some groups more valuable than others? Most likely, yes. Is one group dominant? Could be. Either way, you should reward your best group—spend more time at it, take a leadership role, expand your reach in it. Go where you are making money. At the same time, the group at the bottom of your list needs to be taken off your schedule because there are too many great opportunities out there to let a bad group take up your valuable limited time. It’s a cold, hard, objective business decision on which group to dump—the one that is giving you the lowest sales per hour. If you wish to belong to a group that does not bring you value, that’s a charitable contribution decision that falls outside of sales.

Will the group you dropped complain and try to get you to reconsider? Probably as they are a business and their continuation is contingent on receiving income from members. But, at the end of the day, your first priority is to your business. When a group is not performing, dump it and find a new one or invest more time in the groups that are really ringing the bell.

There’s a lot more we could talk about on this and if you want additional details drop me a line or give me a call. Right now, it’s time to do some cold hard number crunching.

Jeff Bowe, Principal of ACTUM Group, is a sales trainer and outsourced sales manager who focuses on helping sales people make as much as they think they are worth, while increasing corporate profit as well. For more information, Jeff can be contacted at 317-577-3750 or jeffbowe@actumgroup.com.

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Enhancing Business Cash Flow

Filed under: Uncategorized — Educated and Aware @ 11:25 pm
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by Craig Buehler, Monon Financial Services

It is essential for every business to have access to cash. As banks reduce or eliminate lines of credit and eliminate cash out on property refinance, how can companies gain access to working capital?

Unsecured loans are very difficult to find and today’s lenders require that tangible assets be used as collateral. Companies that lease their space and have vehicle or equipment assets find that lenders place such a low value on these assets that it is difficult to use them to obtain the capital they need.

Accounts Receivable or A/R financing has been around for decades and while not sexy, can be an effective way to unlock capital. When a company issues an invoice to its customer there is no doubt of the value – it is the amount owed! A/R financing is based on advance rates and discount rates. The advance rate is the percentage of the invoice the lender will forward to the company when the company issues an invoice to their customer. An underwriter determines the advance rate – typically 70% – 90% of the invoice. The discount rate is the amount the client is being charged for the money being lent. Generally the discount rate is 2.5% – 4% for each 30 day period.

Example: Company A has an invoice to Company B for $1,000.00 with an advance rate of 80% and a discount rate of 3% for the first 30 days and 1% for each subsequent 10 day period. The lender “buys” the invoice for $800.00 which is paid immediately to Company A. Company B remits payment to the lender after 38 days. The discount rate is 3% + 1% for a total discount of 4%. The lender has already paid $800.00 for a balance of $200.00 less the discount fees which amount to $40.00 in this case. So the lender promptly pays Company A $160.00 and the transaction is complete. Company A gained immediate access to most of the invoice funds ahead of when the client would have paid for services thus improving cash flow.

The beauty of A/R financing is just about any company can use this form of financing – even young businesses which have very few other options for accessing cash. The more you need cash, the more you may want to look at Accounts Receivable financing.

Craig Buehler is president of Monon Financial Services, a full service leasing and funding brokerage which specializes in helping clients find and conserve working capital. He can be reached at craig@mononfs.com or 317-815-8617.

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Going Too Far: Appreciation, Incentive, or Inducement?

I recently heard a speaker (David Steele) comment about changes in selling today. He commented that in the past, expensive dinners, golf trips, and high priced tickets were the norm. I know from experience that unless a new car showed up in a driveway or a rep’s beach condo was used by a customer for vacation, no one really gave much thought to corporate gift giving. But today, expensive dinners, golf trips, and front row ticket are much less common. Have the rules changed? And if so, is it due to the economics of business that no longer allow fat margins to cover gifts, or have the ethics of business changed so that the potential impropriety of gifts given in anticipation of or as a thank you for business is no longer acceptable?

When a gift is given, what is the intent? Does the timing matter—a gift given before or after an order? A gift given before a purchase is likely intended to sway a decision than one given after, unless there was a promise of such a gift made during the sales process. Does it matter who initiated the conversation? The seller could say, “I’ve got tickets to the finals every year, and I always take my newest account. I hope you can get this order placed so it can be you.” If so, that could be construed as an inducement. But a buyer could also say, “I want to go to the playoffs this year, and last year my supplier got me tickets. Do you think you can do the same?” This could imply a requirement to the seller as part of the purchase decision, an intent by the customer to extort special favors as a result of his or her discretionary purchasing power.

What about on-going customers? Do we give gifts to on-going customers to maintain their business, or to sincerely thank them for being loyal and supportive to us? Who is more valuable? The first time buyer or the repeat buyer? Sure you have to get the first order to get to the second order, but think how much easier it is when you have on-going customers instead of a long list of one hit wonders. If we only give gifts to repeat buyers, does that look more like a sincere thank you and less like a blatant inducement?

In the end, it comes down to intent. What is the intent of the buyer and what is the intent of the seller. If the intent is to influence a decision, it sounds questionable. If it is done post order and the buyer didn’t know it was coming, it sounds more sincere. I can’t answer the question for anyone but myself, but I’m noticing a change in trend that might mark a new direction in buyer/seller expectations.

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