10 cent Apples
I keep thinking that some of the most productive moments happen in coffee shops. A few days ago I had the chance to chat with Luis Rodríguez Salgado, enthusiast professional devoted to a very ambitious project: provide knowledge and inspiration for new and not so new entrepreneurs so they can crystallize their particular dream: launch successful companies to compete in the Market.
Since Luis gives consultation to dozens of entrepreneurs, my premise for our talk was to have his expert opinion on how important is selling for new startups; in other words, what is the relative weight they give to Sales and their sales operations in their businesses?
Apparently a great number of entrepreneurs come to the idea of creating a company given they have a product, or a design of a product that is interesting and appealing. However, there is a frequent disconnect that may be relevant to examine here: Creating or designing a product or a service is one thing, and launching that product or service to the market is a totally different thing. Likewise, creating a product (un)fortunately has little to do with creating a company. Let’s see:
- A strong motivation to create a firm, let’s be clear, is to make profits to reward our creativity and effort. Fine, however, what the market shows is that the value (and the profit) are added only after the product or service has been created/designed. Luis offers the clearest example of all: a kilo of apples. A producer sells 1 kilo of apples at 10 cents, nevertheless we pay 1€ for that same kilo. Who in the world is keeping 90% of the price?? The value chain (perfect name, uh?) is no other thing that all the components added to the original product to turn it from an agricultural product –in our example- to a consumer product: clean, packed, polished, red and shiny, plus available in our nearest store. Conclusion 1: The –real- margins and profits are in the sales and distribution, not in the production.
- Time in hours: Hours are a limited resource. If in our firm we dedicate most of the time to production and design, from the perspective we are analyzing, what we are doing is dedicating most of our clock resources to one activity, no matter how noble and creative it is, that produces ONLY 10% of the sale price. Conclusion 2: Our firm should dedicate as much time to selling as high margins it plans to have.
Whether it will be us entrepreneurs, or somebody else who will make the sales leap, or we will hire a Sales Director or Sales Staff, is a decision that depends on many factors. What we should consider in any case is that it is possible to learn how to launch a product, how to sell successfully, and how to compete in our Industry. Implications? Changing beliefs, learning, testing; becoming expert researchers, expert idea hunters and model implementers from sources OUTSIDE our immediate realm, and outside the many or few ideas we received at the university.
Social competence. In my own environment as a coach and consultant, I agree with Luis that one of the success factors of entrepreneurs – and as mentioned, an ability that can be learned and developed- is their degree of social competence. Selling is no other thing than creating and feeding a quality contact network, than communicating our enthusiasm and expertise, than conveying how our product or service solves a problem, helps reaching a goal or satisfies a need.
To check more of Luis insight, check his blog at: www.imaginaunaempresa.blogspot.com