Entrepreneurs (and a few angels) are constantly surprised by how long it takes to get the market to accept a new product or service. They typically only raise enough money to get them to a point where sales generate sufficient cash. When sales fail to materialise (or hit the levels needed), the impact on the business can be enormous. Startups then have to raise money in an “emergency round”. Existing shareholders can expect to get heavily diluted and entrepreneurs lose that most precious resource – management time.
Things always take longer than expected. Although we are all aware of “market inertia”, we fail to acknowledge this in our business plans. One of my portfolio companies recently employed a sales person to try to persuade business clients to use its services. The feedback was great and the salesperson promised bumper sales. But they never materialised. So we employed a different salesperson, and revenues shot up. The big difference was that the new salesperson took the clients through the process and got them to sign up immediately. If they don’t do it there and then, inertia kicks in and you’ll never get that sale.
Too many salespeople think their role ends when they finish the presentation. If your product involves signing up online, make sure your salespeople take internet-ready laptops with them and sign customers up straight away. Create a sense of urgency in your sales pitch and remember that your customers will rarely share your sense of enthusiasm for your product.
Permjot Valia is an active business angel and co-founder of Flight & Partners, a London-based fund manager. He blogs at www.businessangelblog.com
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