Yaneek Page | Rallying from misfortune in business
ADVISORY COLUMN: SMALL BUSINESS
In October 2018 a desperate entrepreneur contacted me for help. Her marketing consulting business was on the verge of collapse, and now posed a serious threat to her financial security and personal liberty.
The entrepreneur’s own assessment was that it was the loss of a single but her most-profitable client that resulted in a 46 per cent decline in revenue, which threw the company in a tailspin.
To make matters worse, that single client was poached by their former creative director who had launched a competing enterprise. The problems were many and mounting.
While struggling to cope with what she called the ultimate betrayal, the problems only worsened for the business owner, who we’ll call Marsha, as the business loan she had personally guaranteed for her company was in default.
Marsha’s weak financial position left her unable to secure appropriate legal representation to file a defence and a default judgement was entered against her. Her creditors were now threatening judgment debt proceedings which could result in jail time if Marsha was unable to satisfy the outstanding order.
Strategise and apologise
My advice to Marsha was threefold:
1. Don’t panic. Finding solutions to her complex challenges would require incredible faith, confidence and a calm, pragmatic approach. Faith, would help her settle down and shore up the confidence she needed to make critical decisions and execute the actions;
2. Create a credible plan to drastically increase revenues and profitability in the short term. The plan had to be as inspiring as it was robust; and
3. Apologise, appeal and ask for help. To meet her creditors, apologise for her poor handling of her loan account, share the transformation plan and appeal to their business sense by showing how a little leniency would give them the best chance of getting their money back. Then, ask for help from friends and family to execute the plan.
Fast forward to today, almost 16 months later, Marsha’s story may well be a study in entrepreneurial turnaround. She took the advice to the letter, swallowed her pride, and shared her challenges with her inner circle at church, which rallied around her in prayer and support.
She then developed a strategic turnaround plan which was driven by a strong focus on sales which she shared with her creditor after they agreed to meet with her. Though sceptical, the creditor agreed to a two-month ‘hold’ on proceedings if she made good faith payments and kept them informed with bi weekly updates.
To shore up and execute the plan, she took a leap of faith, asked for help, and partnered with a relative who freelanced as an insurance sales executive, to take the lead as sales manager. The business had never assigned anyone exclusively to sales prior.
Sales strategy matters
Her relative’s strong training and experience in selling services was a tremendous asset for the business, which for the first time developed and put in writing a detailed sales action plan, with weekly and monthly targets by customer type and service. They spent 80 per cent of their time and effort pushing only the most profitable services.
Before, the company had no strategic selling focus and instead simply provided whatever services the clients asked for, even when those services were delivered at a loss.
The new strategy required another first for the business – which was a detailed profitability analysis, followed by direct upselling of the most lucrative services to existing and past clients.
They gambled on the statistic that it is seven times easier to sell more to an existing customer than it is attract and sell to a new customer. This is because people who have done business with you in the past and were satisfied, know your competence, trust you as a service provider and are usually more comfortable going with ‘tried and proven’ than a new kid on the block.
The gamble paid off. It paid off. In doing so, the company soon realised a huge opportunity in content creation and production which they leveraged by hiring subcontractors on a project basis for maximum efficiency.
Lessons from misfortune
Last week Marsha contacted me with the wonderful news that she has now paid off the financial institution in full and is on a steady path to growth.
Though she had to terminate her office lease prematurely to operate from home, the change has been a blessing in disguise as it also forced her to become tech savvy, and utilise more detail tools and apps, which have actually brought her closer to clients who are impressed by how innovative and efficient the company has become.
When I asked Marsha to share her top lessons with other entrepreneurs, professionals and small businesses facing tough times her response was simply: “Spit out the bitter, swallow the pride, enlarge your faith and trust that for every dark cloud on the journey called business, there are a whole lot more silver linings”.
Yaneek Page is the program lead for Market Entry USA, a certified trainer in entrepreneurship, and creator and executive producer of The Innovators and Let’s Make Peace TV series.