Tuesday, December 07, 2010

We will send the auctioneers tomorrow

My friend Roger clearly remembers those particular words from the telephone call. After many days anxiously spent waiting for it the bank had called him that sweltering December afternoon. The call effectively put a nail in the coffin for Rogers’ fledgling insurance agency.

Twelve months earlier, Roger had started his business with unbridled and unstoppable optimism. He quit his well-paying but stressful job as a marketer in a large company, much to the distress of his pregnant wife.  But Roger quit because he had a dream. He dreamed of giving his unborn son everything he ever wanted. He dreamed of an end to the despondent dependancy on his pay cheque. He dreamed of hours of relaxed recreational family time.

Driven by a lucid, Technicolor vision of his dream Roger took a one million shillings loan from the bank to start his agency, only to have the bank take it from him one short year later.

The auctioneer came the next day, a greasy-faced, pot-bellied, squinty eyed man wearing a garish yellow suit. With him were about twenty smelly, gruff, and clearly drunk young men to help him. Without ceremony the intoxicated young men roughly tore down the office partitions with vicious efficiency. They hauled off the furniture and computers into a waiting lorry. The greedy looking auctioneer kept smiling as he ticked off the carted items from his list. The men soiled Roger’s expensively installed wooden parquet floor with their muddy shoes. They left debris, papers and files scattered everywhere as they took what was Ceasers. Roger remembers the silent, sympathetic stares of his neighbouring tenants. They folded their arms against their chests as if shielding themselves from Roger’s failure.

Devastated and destablised by the failure of his business and anxious about the impending future Roger spent days mourning what seemed to be the end.  He cursed that it happened only a week to his son’s first birthday party.

Laughing and gurgling at his party his son seemed oblivious to the despair of his father. And when Roger saw the exuberant and excited smile of his son as a lone birthday candle danced in his eyes; Roger felt a surge of hope once more.

The closure of his business was not the end, but only a speed-bump in the journey of his life. So that he would never forget he thought about the top three things he should have done differently.

The most striking result of his self-evaluation was that Roger and his staff never really knew what they were selling.  Many times when potential customers would call in, Roger and his staff did not have the answers to questions asked by the prospects.  Roger lost valuable sales hours furiously searching for the information requested. By that time, a more knowledgeable competitor might have snatched the deal from under his nose.  Once, a potential customer told Roger that he had decided to buy from a rival whose website provided the information the prospect was looking for. Roger realised that he would need to know his products as well as he knew the back of his hand.

 Have you ever lost a customer because you didn't have information on your products when the customer needed it?

Another grave error Roger realised he made with potential clients was not calling them back. Follow up, follow up, follow up. He wrote it down three times for good measure. As a marketer Roger was great at making people aware of his product but he struggled to maintain a sales conversation that spanned several visits and calls. Despite droves of people seeking the services of the agency, these would trickle down to a handful of undemanding customers, as Roger and his agency failed to follow up on the inquries.

To buy, some prospects only needed a bit more information, a reminder, or a call at the end of the month when they had money, but Roger did not follow up.  He would either forget to call them, not call from fear of rejection, or call back when it was too late.

The failure to follow up meant money spent on marketing would many times go to waste.The interest of highly potential customers who were not followed up  would wither out and die like a neglected houseplant.
Follow up. Follow up. Follow up. Roger wrote it down once more.

Do you ever fail to make a sale because you didn't follow up a prospect?

The third most important lesson Roger could learn was the need to match his expenses with revenue.  He had to calculate exactly how much money he would earn from what he spent. Working in a large organisation, Roger had learnt how to make and keep to a budget. The problem is Roger never counted how much each shilling he spent would earn him back.

An example was the hundreds of thousands of shillings Roger spent on snazzy office furniture. This was done despite only 5% of his customers ever visiting his office.

Roger made the mistake of spending most of the money he borrowed on things which did not earn him any money back. He realised that the money would have been better spent on marketing and product development.

Do you spend too much money on things that don't earn you any money back?

So that December, Roger lost his business to auctioneers for a loan balance of a quarter of what he had borrowed. But Roger’s fire was not extinguished; far from it - like the dancing candle in his boy’s eyes, Roger’s own eyes were lit up. The blood in his veins burned with red hot with enthusiasm. He would list and learn from his mistakes; he would carefully plan and plunge back into business, he would solider on and succeed.

Visit www.eva.co.ke to see how Roger got his groove back.


Martha said...

This is the most insightful piece i have read in a while. Am interested in starting up a business really soon and this has been a real eye opener.

Harry Karanja said...

Thanks Martha.

I wish you all the best in your plans for starting a business. If you need any assistance I'd be happy to help.