Business Ownership and Management
Knowing When to Stop
What’s the hardest decision you’ve ever had to make? Why?
Jetpack Question of the Day
In 2000 we started developing a Franchising System for Business Consulting. We had invested over $100K and were making progress, but we were about 6 months behind schedule when 9/11 occurred.
Everything came to a standstill for a few months. In early 2002 we reevaluated the situation. We were about $50K and less than 6 months from completion. But the total addressable market had shrunk considerably, and there was no telling if or when it might recover.
We had to decide whether to invest more and potentially lose more or kill the project and cut our losses. The decision was difficult. We ultimately decided to cut our losses and walk away from our investment in time and money. It was probably the right decision, but it was still very difficult.
For anyone interested, this post goes into more detail on this topic.
The Million Dollar Deal How-To
Eight years ago, one of my peers asked me to produce a two-hour sales training session for the combined global sales team. He suggested a session named “The Million Dollar Deal How-To,” which would show people how to go about finding and closing large deals. It was a good idea, so I went ahead and did it.
The presentation started with a list of my Top 20 deals to date and a brief description of each deal, the biggest of which had an $8.5M+ ARR and a 7-year total value of over $60M. I included an additional negotiation for a deal closed by another VP shortly before he left the company. It was a complex deal with a very large System Integrator worth $1M-$2M/year over five years.
The underlying assumption is that the seller performed proper qualification before this step. While this would be considered a “given” by many, I have seen far too many sellers focus on deals that would never happen. To be successful, you need to spend your limited time on the opportunities that you are most likely to win. The better your upfront qualification and ongoing validation, the more likely you will succeed.
My goals with this section were:
- Demonstrate credibility.
- Demonstrate how the concepts apply to both products and services.
- Help the team see some commonalities between the deals.
- Explain how a lack of attention to negotiations or the contract can ruin a great deal.
Next, I presented a comprehensive list of the key topics, providing examples of each, followed by a very active Q&A session. The session was well-received and resulted in an increase in deal size and sales volume over the next year.
The contracting part showed examples of how a simple missing or additional word (e.g., “Discounts calculated based on the Annual Cumulative purchase volume, where the word “annual” was a mistake that reset the value that would have cost us over $5M in revenue over the life of that agreement) and similar mistakes. As an aside, I was negotiating a deal a year ago, and someone in our Operations team made a small mistake (adding a period to the annual increase language) for a multi-year deal that would have cost us over $40K on the first renewal. The point of this section was that you only assume the deal is complete once it is correct and complete.
Below are the Top 10 concepts from that training session that were common to all wins:
- Relationships Matter – People buy from people they like and trust. Moreover, they tend to like and trust people with integrity who have the customer’s best interest at heart. Create Customers for Life.
- Just because you can sell something to someone doesn’t mean you should – especially if it is not a good fit or won’t bring them value.
- Understand the Needs and Quantify the Impact – Use their terms, phrasing, and figures to increase the relevance of their use case and seek their validation.
- Understand Their Constraints – Document the various assumptions to determine how real or rigid they may be.
- What Happens if They Do Nothing? – Ask questions like, “Why Now?” and “What is the impact of waiting a year or more?” The answers will help with qualification around genuine business needs.
- Understand their Timeline and Milestones – Working back from the targeted end date can create a sense of urgency and avoid unnecessary delays.
- This is where Project Management can help you close the deal.
- Be Creative – The key is to get the prospect to focus on the outcomes (the “Fundamental Objectives”) rather than the approach (the “Means Objectives”). Focusing on “what they need” versus “how it is done” can be more challenging. Consider other aspects of their business that could be impacted and proactively raise any potential concerns and your ideas to address them.
- Remember, you are trying to solve their problems and not hide things that will become apparent later.
- Don’t Discount Someone Based Solely on Title – Many mediocre salespeople dismiss everyone except the Economic Buyer. A better approach is to ask various stakeholders about their roles in the purchase process and how they make decisions.
- Alienating people you will need to develop a long-term relationship with doesn’t make sense.
- Learn about the Alternatives and the Competition – How does our offering fare against the others? Why would they choose us over the competition?
- It pays to be brutally honest when you are doing this.
- Dream Big – You only know if you ask, and if it was too easy for the prospect to say ‘Yes,’ then you left money on the table.
- It doesn’t mean you must extract every penny from the deal. Instead, consider what else you could have included to make things easier for the customer, accelerate the project, increase the probability of success, etc.
- Create a Shared Vision of Success – Help people “see and feel” what success is like. That can be very compelling, especially if challengers come forward later in the process or some other issues arise.
- The worst thing you can do is sell something that does not solve their problem. You make your Economic Buyer and Champions look bad, which helps ensure you will not do more business there anytime soon.
While there are still several other components of the overall approach, these provide the foundation. Selling is not easy, but it is rewarding to help your customers prosper and grow, and financially beneficial to exceed your quota by selling large deals. Good Hunting!
Perfection is the Enemy of Progress
The title is a quote from Winston Churchill. I have learned in my career that these behaviors can be very costly from a business perspective, especially when decisions affect large parts of a business. It took me years to learn this lesson as I transitioned from perfectionist to “reformed perfectionist,” which was challenging.
Below are a few examples that could help you better understand people like this, and if you are someone like this, it might even provide motivation to try to change.
Early in my career, as I expanded my role from a Programmer to an Analyst Programmer to a Systems Analyst, I often found myself spending too much time and effort on things that only made a minimal impact. Applications and subsystems looked a little better, ran a little faster, integrated easier, were easier to modify, and generally had fewer problems. Those are all good things, but in hindsight, those benefits often did not justify the associated costs.
Some industries and applications require a degree of quality and reliability, such as nuclear power plants and lifesaving medical equipment. Since very few things are perfect, there are usually a variety of built-in safeguards to mitigate the impact of errors and failure. I have worked on a few of those systems, and I get it. But they are not in the majority.
Identifying the intersection of meeting the stated requirements, delivering the required quality, and knowing what “good enough” looks like is essential. That point is where there are diminishing returns on every additional hour spent on an activity.
I worked with a hardcore perfectionist at a small software and services company. On a consulting engagement, he spent two days on a task that I viewed as having a 2-4 hours level of effort. We discussed it, and he told me he had at least three more days to finish. We had a heated discussion, and he was frustrated with me for a while. Years later, he admitted I was right, talked about how difficult it was to change, and how much more productive he is now.
I consulted with a small software company that spent 10+ years on a SaaS product and was still “just two to three weeks away” from their MVP (minimally viable product). I started working with them over three years ago, and they are still at that point today.
I have also sold to companies stuck in analysis paralysis because they (leaders and teams) are always second-guessing decisions and want to be 100% certain before making a decision. Those companies need to solve a problem, or they would not be seeking a solution. In most cases, making an informed decision on a proven solution now will solve their problems and deliver value quickly. There is an actual business cost for every month of delay.
Are these behaviors costing you or your company money? If yes, dig a little deeper to understand the potential positive impact making small changes could have. Daily improvement is a great thing!
Success is a Mental Game
This assertion is as true in business as in sports, individually and in teams. So, let’s break it down.
When I watch my local football team, I occasionally see a shift in facial expressions from excitement to frustration – often right before the end of the first half. Sometimes, they recover during halftime and come out renewed and ready to win, but the “gloom and doom” expressions usually translate into suboptimal performance and mistakes. It is frustrating because you know they have the talent to win.
The same thing happens in business – especially in Sales. Sometimes it occurs in the middle of a sales cycle, similar to the example above. Unfortunately, too many people allow a few data points to determine their future trajectory. Why is that?
Whether you own a company or manage a group of people, good leaders aim to optimize their workforce by balancing factors that result in happy and loyal employees doing their best for themselves, their customers, and their company. Many motivational theories exist, such as Expectancy Theory, Reinforcement Theory, the Role of Instrumentality, Intrinsic vs. Extrinsic Motivation, and more. Since one size rarely fits all, the challenge becomes an effort of reward-focused personalization, which can be a lot of work.
People will often win or lose before they even start. Their negativity, self-doubt, and anticipation of failure become a self-fulfilling prophecy. This post focuses on self-motivation, attitude, mindset, and creating the habits that lead to better success.
Below are four simple questions that someone should ask themselves when they question their ability to succeed in a position, company, or industry. There are always many ways to point the finger of blame elsewhere, but the first step should be to look in the mirror.
- Do you believe that you can win where you are today? If not, why are you still there? Customers and prospects can sense insincerity, so if you don’t believe in yourself, you shouldn’t expect them to believe in you. Maybe the company is terrible, and everyone is failing. If that is true, then it is probably time to look elsewhere.
- What have you learned from past successes and failures, and how have you adapted based on those lessons learned?
- What are some early indicators of success or failure that you have identified? Are you adapting to the situation if you run into those indicators now? It could be that the best approach is to cut your losses on this attempt and move to the next sooner rather than later (i.e., qualify out quickly).
- What are you doing to improve your skills? It is funny how small, continuous improvement efforts lead to a greater sense of confidence. Greater confidence often translates to increased success.
I have found that consistently doing the right things is the best way to maximize my success. Start developing habits and routines that have led to winning in the past, but don’t expect them to work forever. Everything changes, and you should change, too. Look for things that are working for others, try them out, and if they work, incorporate them into your routines.
Success truly is a mental game, and everyone can win. The person who continues to win over time is the person who does not get stuck in time. Be curious, get excited, and adapt. And once you get there, start helping others. Having mentors is nice, but it is also great to become one.
As the saying goes, The rising tide lifts all boats. Winning can be a team sport, but it begins with individual contributors having winning attitudes. Unfortunately, the same can be said for losing, so decide now what you want and go forward with energy and confidence.
“Acting Like a Startup”
Over the years, I have heard comments like, “We operate like a startup,” “We act like a startup,” and “We are an overnight success that was 10 years in the making.” These statements are often euphemisms for “We are small and not growing as quickly as we would like.”
There are numerous estimates of startups in their first few years. One of the best descriptions I have found is from Failory, but Investopedia and LendingTree have similar but differing take on the statistics and root causes. All three articles linked to are worth reading. The net result is that the outcome of failure is much greater than success, especially over time. So, “acting like a startup” is not necessarily good, even when true. You want to act like a successful startup!
Understanding the data and various causes for success and failure are great inputs to business plans. I have been a principal with successful startups, both early employees and founders. Understanding the data and various causes for success and failure are significant inputs to business plans focused on long-term success. As a Founder, there are a few points that I believe to be key to success:
- You have specific expertise that is in demand and would be valuable to an identifiable number of prospective customers. How would those customers use those skills, and how would they quantify the value? That understanding provides focus on what to sell and to whom.
- A detailed understanding of the market and key players is needed to hone in on a niche to succeed.
- Understand your strengths and weaknesses, then hire the most intelligent and ambitious people who complement your weaknesses and strengths.
- Understand how to reach those potential customers and the messaging you believe will compel them. Then, find a way to test and refine those assumptions as necessary. Marketing and Lead Generation are very important.
- Have a plan for delivering on whatever you sell before you get your first sale. A startup needs to develop its track record of success, beginning with its first sale.
- Cash flow is king. It is far too easy to run out of money while looking at an excellent balance sheet because of receivables. Understand what matters and why.
- Founders need to understand the administrative side of a business – especially the financial, legal (especially contract law), insurance, and taxes. Find experts to validate your approach and fill in knowledge gaps.
- Consistency leads to repeatable success. You standardize, optimize, and automate everything possible. Wasted time and effort become wasted opportunities.
- Finally, there needs to be sufficient cash on hand to fund the time it takes to find and close your first deals, deliver and invoice the work, and then receive your first payments. That could easily be a 3-6 month period.
Those are the foundational items that are reasonably tangible. What is not as concrete but equally as important are:
- Having or developing the ability to spot trends and identify gaps that could become opportunities for your business.
- An agile mindset allows you to pivot your offerings or approach to refine your business model and hone in on that successful niche for your business.
- Foster a sense of innovation within your business. Always look for opportunities to deliver a better product or service, improve the efficiency and effectiveness of your business, and create intellectual property (IP) that adds long-term value.
- Focus on being the best and building a brand that helps differentiate you from your competition.
- Become a Leader, Not a Manager. Create your vision of success, set expectations for each person and team, and help eliminate roadblocks to their success. Trust your team to help you grow and replace members quickly if it becomes clear they are not a good fit.
Steve Jobs once said, “It doesn’t make sense to hire smart people and then tell them what to do; we hire smart people so they can tell us what to do.”
Winning is hard, so focus on the journey. Making your customers’ lives easier and allowing your employees to be creative while doing something they are proud of will lead you to your destination. But when things start going well, don’t sit back and convince yourself you are successful. Instead, continue to focus on ways to improve and grow.
Success means different things to different people, but longevity, growth, profitability, and some form of contributing to the greater good should be dimensions of success for any vision.
Where Ideas, Experiences, and Lessons Learned Intersect 