Sales Compensation: Keeping the Company Profitable and Sales Stars Happy

Keeping a close eye on your sales is key to ensure your business success during a recession. A key a part of your small business strategy should be sales compensation.

If you are struggling with compensating your sales team, review these tips from our business coaches from across the U.S. and Canada:

• Understand what motivates your sales team. Like most sales professionals, money may top the list. But, listen to your sales team and you may find other key motivators. You can also do a behavioral assessment with each team member, which helps you understand what makes them tick. Be sure you have a licensed professional/coach give the assessment and help you understand the results.



• Evaluate and determine the dollar value to the company by salesperson. If you don't understand it, how can you manage it? Dig into the value by salesperson.



• Think long-term value. Sales create value and equity for your business so be sure to include the value to the company for the time the CEO, who usually drives sales in a small company, gets back to lead the company.



• Manage expectations and restructure carefully. Good salespeople are hard to come by so restructuring is fine, but don't interfere with their motivation to sell. If you do restructure, get creative! Create bonus plans targeting goals in levels to foster the motivation and competition common in sales personalities. Also, remember that many sales-oriented companies expect the top sales performers to make more than the CEO.



• Do a cost-benefits analysis. Ensure commissions aren't paying out more than the profit margin of the product/service. And, the bulk of your profits should be going to the company...not any one individual. Then, review your other sales overhead. Do you have unnecessary fat in the budget that could be dipping into margins?



• Find and invest in other sales stars. Your company sales can't be dependent on any one person. So, you should constantly be on the lookout for more high performers. As a part of this, ensure the sales team is selling the value of the company and not just relying on their relationship and reputation with the client/customer.

Overall, you have to get a good understanding of your business performance so you can make the best decisions for your organization. Good luck!

The Tide is Out- Are You in the Sand or the Rocks?

Take a look at your business--do you have the necessary strategic plans in place to take advantage of new opportunities becoming available once the economic downturn is on it's way back up?

Ray Brun, TAB business coach, discusses the importance of having the necessary plans in place so you can achieve business success once the tide is on its way back in:

"So the tide is out. When it comes back in, will you be positioned for smooth sailing, or will you be struggling in the rocks like your peers who are just focused on surviving? Planning for entrepreneurs today is at an unprecedented complexity. As business owners navigate today’s treacherous waters, they need what I call 'tri-focal vision'. You must focus on surviving the recession that is in your face and prepare to leverage on the inevitable recovery while keeping an eye out for dealing with the emerging 'new economy' down the road.

One way our business owner TAB Members do this is by preparing long-term plans, intermediate plans, short-range forecasts, and contingency plans. They know their trigger points that would command automatic (not-so-fun) actions if they fall to designated thresholds; however, they still have their sights set on being prepared for the recovery.

On top of all that, while you are just trying to survive these storms, you must also envision how the 'new economy' will impact you. For some the new economy is technological advances or telecommunications, sweeping changes in speed and efficiency of information, impacts of the global financial crisis or biotechnology and/or health trends. For others, it is automated production and distribution, off shoring, conserving vs. consuming, lowering transaction costs and increased collaboration through the internet. Perhaps 'the new economy' means something entirely different to you, however, one thing is for sure- the way you conduct small business is changing...."

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Should You Sell Your Business During an Economic Downturn?

Is it better or worse to be selling you business in a tough time? Like most business questions, the answer is “That depends on a lot of things.”

TAB San Antonio business coach, and author of 11 Things You Absolutely Need to Know About Selling Your Business, John F. Dini, shares his small business advice:

There is no good time to sell a business that is suffering from the “Dismal D’s.” Those motivators for a sale include Death of the principal, Divorce, Declining sales, Disinterest of the owner (burn-out), Disease, Debt and Disaster. If a business is selling for any of these reasons, it is almost always a bad time to be on the market.

For a profitable business with good management, systems and prospects, even slowing sales due to an economic downturn may not mean a deep discount on your selling price. This is particularly true if you have long-term records that show repeated rebounds after slow times.

In a recession, a new crop of qualified buyers enters the market. Growth-driven companies turn to acquisitions to make up for the lack of organic sales increases. Downsized executives buy small businesses to maintain their lifestyle. Investors seeking better returns than the market offers look for companies with solid cash returns.

Most importantly, when supposedly “safe” financial investments become more risky, owning a small business doesn’t look like such a roll of the dice in comparison.

Of course, getting financing for a small business acquisition is more difficult now than it has been in years. Banks are warier and are charging a higher premium. This can be a decided advantage for a seller who is willing to hold private financing on a sale to an economic buyer (usually one who is purchasing a business for less than $3,000,000.00). Well structured stock or installment sales could save many thousands of dollars in taxes—if completed before the expiration of the current tax structure.

If your personal vision (an integral part of your strategic plan) calls for exiting in the next year or two, don’t allow the bad news in the media change your plan. There are still many opportunities for a successful transition.

Small Business Strategy: Communicate Your Super Power

Here’s a simple tip to help your small business strategy. When you go to a networking event, conference or are at happy hour and someone asks you about your business, what do you say?
Do you give your name and what you do? Or, do you give your name and tell them how you can help them?

Take each introduction with someone to another level—and generate additional business for yourself—word of mouth marketing is a very powerful—and low-cost—tool! Plus, you may end up getting valuable small business advice or ideas to achieve business success.

Seth Godin, a well-known marketing guru, boiled it down for us in a recent blog post explaining the value of your super power. Read the article.

How to Keep Your Company From Becoming a Commodity

Businesses everywhere are slashing prices, offering incentives and promoting rewards programs to generate sales to achieve their business goals. Not only do these lower sales result in lower profit margins, but if you’re not careful, it can end up doing more damage than good for your company. How can a business owner differentiate themselves from their competition in order to avoid becoming a commodity? TAB business coach, Joe Zente in Austin has several prevention tips to aid in business improvement and help keep your products and services ahead of the curve.

From the ZThree blog:

1. Develop a Proactive De-Commodization Strategy: If you think your product or service is so unique that you are immune, you may want to think again. Over one million people have viewed the Did You Know 3.0 video. If you haven’t seen it, please take 5 minutes to check it out on YouTube. Those who have watched it are struck not only by the speed at which the world is changing, but also the rate with which this speed of change is increasing. In your business planning, make sure to incorporate the fact that commodization happens 10 to 1000 times quicker in the Information Age than in previous generations.

• Develop an Innovation Mentality: This is not an easy feat. It requires an unconditional commitment from the owner and from the entire leadership team. Changing the way people think can be tough, but the rewards of developing an Innovation Mentality will be well worth the effort in the face of changing marketplace that all businesses face today.
• Develop a World Class Sales Organization: Your competitors are the biggest readers of your website and marketing material. If a product or service is valuable and there is a decent sized market for it, someone, somewhere will soon be trying to duplicate it. An effective, differentiated, scalable Sales Culture is something that cannot be duplicated.

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Lessons Learned: What You Can Learn from Big Businesses

If you're like most of us at The Alternative Board, you're tired of this recession. Tired of hearing the next bad headline, the next company folding, the next stock plummet.

In fact, many of our business owner members have declared they are no longer participating in the recession. We applaude their positive attitude toward business success!

With the recession doom and gloom, its a perfect time for small business to take some business advice from big companies.

Harvard Business recently had a great article reminding us of a few of the advantages of small business. Read it now...

What You Can Do To Take Control Of Your Business During Troubled Times

News of the economy continues to keep small business owners lying awake at night thinking about tactics and best practices they need to implement in their organizations in order beat their competition, increase business and overcome the difficult times.

As stated by Awakeat2oclock:

“Small businesses do not have the resources to “ride out” a recession. As an owner, you are the most dependable resource in your arsenal. Here are a few things you should be doing.

1. Plan. If you don’t have a written business plan, start writing one now. The planning process will force you to think through the strengths and weaknesses of your business, and identify the opportunities and threats that could vastly improve or damage your company. Luck is preparation meeting opportunity, and volatile times offer the chance of experiencing great luck.
2. Manage to the profit line. In good times, we get lazy. Revenues grow 15%, profits increase only 10%, and we are happy. Tough times call for a ruthless focus on profitability. Decide that a failure to make an appropriate return is just not an option, and be relentless in your commitment to it.
3. Start topgrading. This recession has put 600,000 potential new employees on the street in January alone. Identify the ideal skills and behaviors that you would like to see in a better employee. Mentally inventory your current staff for weak links that could be replaced. Clearly define positions and duties so that new hires can be integrated quickly. Make sure that your company remains visible to job seeking candidates.
4. Keep your powder dry. Cash is your primary resource in a downturn. It gives you the power and flexibility to grab opportunities and survive disasters. Hoard your cash; the more, the better.”

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