Deal making is very different to most other activities, sports and business pursuits. In life, it generally pays to incrementally work our way up. To earn the right to play a ‘bigger game’. But when it comes to making a deal – selling something big, raising capital for our startup or doing something that requires a commitment from someone else the opposite is often true. In fact, I think it is easier to go big than small. Easier to make that big deal. Easier to raise a large amount of capital. While this sounds counter intuitive, when we consider the ‘why’ the reasons become clear:
- It takes the same amount of time to meet the prospects
- It takes the same amount of time to prepare the offer
- People in charge of small amounts of money, tend to watch it more closely
- People in charge of large amounts of money are mostly the decision makers as well
- People in charge of small amounts of money often need approval to spend
- Small investments get caught up in detail and administration
- Big investments are made by those who need ‘big outcomes’ and are less risk averse
- Big investments are usually made with OPM – other peoples money
Granted, getting the big meeting takes more work, but the simple truth is that raising 10 or 100 times the money, rarely takes 10 or 100 times the effort. In fact, it takes no more effort, and usually less. So when you’re next out deciding who to go for, remember the above and go straight to the top. While all rejections are created equal, all deals are not.
We are often told we need to be passionate about our work, our startup or the product we are selling. And while it is true, it is also a little bit ephemeral. Today I heard a better way to describe what we need to do to sell our ideas from Brian Tracy – whose an old school business coach, though his approach is still highly relevant today. Brain says we need to be able to do this:
Transfer our enthusiasm.
I love it, and I’m going to use it as a way to judge myself after I present an idea or project to people in the future.
If you’re an author it’s often an objective to get on the New York Times best sellers list. If you’re in any form of pop culture there’s usually a best selling list that is worth getting on. While getting on it is an indicator of how well you have done, it also perpetuates further success through attention and validation. The interesting thing about these ‘lists’ including the NY Times Best Seller list is the name itself. It isn’t the NY Times best ‘writing’ list. There’s a big clue in that. It isn’t the best work that wins. In fact, some of the most amazing work may remain hidden from the market forever because the person behind it couldn’t sell their ideas, or find some one to help them do that.
The lesson is simple and clear – If we want to be the best at anything, we need to pretty good at selling too.
In baseball a hitters average matters a lot. If you are hitting 100, it means that you score a run 1 out of 10 times you step up to the plate. If you are hitting 300, it means you are getting 3 runs per 10 steps up to the plate. In modern times, a season batting average higher than 300 means two things. The first is that you will be in high demand in major league baseball. The second is that you will be earning millions of dollars for that skill. Anything higher than .400 is regarded as an almost unachievable goal. The last player to do so, with enough plate appearances to qualify for the batting championship, was Ted Williams of the Boston Red Sox, who hit .406 in 1941, though the best modern players either threaten to or actually do achieve it occasionally, if only for brief periods of time.
It turns out that sales and baseball are very similar.
An average person will probably close a deal 1 out of 10 times. Someone who can get the job done 2 our of 10 times will make a very good living as a sales professional and earn an income well above the norm. If however, a person can get over 300 in selling, then they too will end up earning millions of dollars – just like the guys in the major leagues. All they need to do is find an industry that understands and appreciates the value of people who sell their wares. A big clue here is that it wont be a product that sells from a shelf. Another clue is that sales can be learned, it’s invariably a human skill that we all have, but very few people actually embrace their potential to do it.
When it comes to startups, we’ve all got to sell. We’ve got to sell our ideas, our passion, our product and our vision. We’ll even need to sell to our supply chain before we even get a chance to sell to customers. Success and selling are inextricably linked. No matter how advanced technology becomes someone has to sell it at some point, or revenue wont happen.
The thing to to remember though, is that we really only need a hit rate of 2 out of 10 to beat Joe Normal. Doing any better than that and we are on our way to stardom.
It has been said many times that ‘selling’ is the worlds highest paid profession. While I had my doubts early on in my career, I have never been more convinced of it that I am now. For quite a few reasons which I have shared below.
There is no limit
If we are in a real sales job, then there is no limit to what we can earn. That is, we work on commission. And while there are plenty of dodgy commission based sales jobs around, the serious sales roles allow sales people to earn as much as possible. It’s a simple formula to let a sales person take a piece of every pie they bake. If we are working in a sales role for a salary, then the truth is we are not really sales people. If we work in a sales role that has guaranteed distribution – then again we are not really in a sales role.
The truth about investment bankers
The general populous has been tricked into thinking that investment bankers (yes the type that hang out in wall street and ruin economies) are mathematicians and brilliant statisticians who work out innovative ways to generate more money than existed before they arrived. Well, the global economy learned the hard way that the people running the finance industry are not a bunch of geniuses who worked out algorithms beyond our comprehension. The reality is that the highly paid investment bankers are the sales people of their organizations simply extracting commissions. It just so happens that small percentages on big numbers really add up. The unfortunate thing for all of us is that they are unscrupulous operators who invent a bunch of bullshit (unsecured debt derivatives anyone?) to sell people sausages at steak prices. But the fact is the money goes to the guy who ‘convinces people to pay’ not the engine room.
Great entrepreneurs are gun sales people
It doesn’t matter how great our startup is, we have to sell the idea. First to investors, then to customers – and very often, even to employees and suppliers. The hardest part about what we do as entrepreneurs is getting people on board. Selling to all the members of our supply chain. Sure, the occasional new product or service enters the market and wows the world and spreads organically, but this is the exception more than the rule. It should be our assumption that we’ll have to sell startup to everyone it touches instead.
The definition of selling has changed
When we hear the term ‘salesperson’ we imagine the someone working in a car yard, or traveling sales guy with a brief case calling on prospects, or the telephone sales cold caller. We need to change our perception of what the sales person is these days. The sales person in the 21st century is the blogger, the tweeter, youtuber, the instagramer, the public speaker, the co-working space provider – anyone who is a self publisher. When we self publish, by definition we are building a personal brand that we hope to sell at some point in the future. It’s pretty much everyone. We’ve now entered the age of the micro entrepreneur and personal branding. And if we can’t sell ourselves, we certainly wont be able to sell anything else. We’re all sales people now.
The final human truth is that selling is technology agnostic. The sales process doesn’t care if we are selling potatoes, micro chips and iPhone apps. The process remains unchanged, even though the tools are broadening. And if we want to succeed at anything, at least financially, then we need to embrace the idea that selling is where the money is, always has been, and always will be.