It's a Stretch
Planning Ahead
It goes without saying that many entrepreneurial companies
manage to negotiate the impasse. Licensing, joint ventures,
progressive expansion--also known as bootstrapping--and other
techniques allow their capacity to grow to the point where they can
achieve precisely the kind of success its ideas qualify it for. If
you anticipate facing such a Catch-22, the first thing to do is
plan for it before you need to, says Jeffrey S. Davis, chair of
Needham, Massachusetts, small-business management consulting
company Mage LLC. Set up adequate financial controls and record-keeping to
convince a potential lender, equity investor, licensee, partner or
other entity you are a worthy recipient. Find out what the various
sources of expansion capital require. Know, for instance, that
banks will lend money against purchase orders but probably
won't advance funds until you have the order actually booked.
Also study how to negotiate with banks, VCs and others. "Good
entrepreneurs think some of these things through ahead of
time," Davis stresses. Don't neglect the human component, either. A big
prospect's reluctance to place a sizable order may be due as
much to your lack of qualified employees as to a dearth of
financial or production wherewithal. Greg Kelly, CEO of 20-person
Biotech Corp. in Glastonbury, Connecticut, found it relatively easy
to outsource manufacturing of the natural herbal supplements he
sells through national drugstore chains. But he still wasn't
able to get the big orders until he hired salespeople--who had
experience selling to those customers--away from his competitors.
"The main thing," says Kelly, 43, "was surrounding
myself with people who already had the relationships set up to get
in to see the major chains." | LOOK THE PART | | Sometimes the absurdity of a Catch-22 is only
skin-deep--or, as the case may be, as deep as the clothes
you're wearing. John Curtiss, a sales and marketing consultant
with Houston-based Silver Fox Advisors, says that failing to look
like a worthy supplier can be as big an impediment to selling to
big customers as your financial status. Content Continues Below
"Act the part," Curtiss advises.
That may mean wearing a power suit for meetings with prospects or
renting offices at a prestigious address. It may also mean having
the poise to refrain from making promises you aren't sure you
can keep. "Anybody can promise the moon,"
says Curtiss. "But when you can't deliver, that'll be
the last sale you make. The trick is to portray yourself with
staying power, without setting up expectations in your
customer's mind that you can't meet." |
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