Most business investors share a simple goal: They want to find the quickest, easiest return on investment. They aren’t looking for a fixer-upper. They want to purchase a well-oiled machine that requires little to no hands-on involvement.
Savvy investors leave no stone unturned when assessing businesses. They look at your people and your processes — and they especially want to see a strong, well-nurtured sales pipeline. The importance of a solid sales department and a healthy sales infrastructure cannot be overstated. These are key indicators of your business’s long-term viability. If they look subpar, a potential investor’s path to a profitable future will be unclear.
Improve Your Sales Infrastructure
Optimizing your sales team and processes can be daunting, time-consuming, and expensive. There are several ways to go about it.
Many startup leaders or small business owners take matters into their own hands. They try to solve problems and make improvements themselves. This might eventually yield good ideas and solutions, but it also distracts them from running the business.
Instead of taking a DIY approach, some entrepreneurs elect to hire an experienced, high-priced executive to lead their sales team. This strategy makes sense in theory, but often, it doesn’t pan out or causes more harm than good. A business in need of sales infrastructure improvements might lack the revenue to afford a great sales leader. Or it might overspend on a candidate and make its finances look even less appealing to investors.
More business leaders are recognizing the value of outsourcing sales management to a consultant. An outside set of eyes could accurately identify your sales department’s less-attractive attributes and address them quickly and inexpensively. This option allows you to gain top-level wisdom and skills for a fraction of the price of hiring a full-time employee.
Regardless of the approach, be sure to follow these five tips when optimizing your company’s sales infrastructure and increasing its appeal to investors:
1. Set clear goals.
A sales team must have clear objectives and goals. Otherwise, it will lack a purpose. If your sales department doesn’t appear to be working toward anything in particular, investors will struggle to forecast their potential ROI.
You need to show investors where you are heading by setting SMART goals: specific, measurable, achievable, realistic, and timely. Set a data-driven benchmark, and establish a firm timeline or due date. For example, aim to increase your annual sales by 15% by Dec. 31. Or strive to spend one hour every workday prospecting for new client opportunities.
Make sure your sales goals are aligned with goals set by other teams within your company. It should be evident that your entire business is operating on the same playbook and working toward the same future vision.
2. Create a sales action plan.
After setting your sales goals, identify the steps your team needs to take in order to achieve each of your goals. This written document of targets and tactics is called your sales action plan, and it will provide further evidence to investors that your team has a well-defined vision and path to growth.
Your sales action plan should be a living, breathing document. It will need to be revised whenever you set a new goal or adjust an existing objective to be more realistic.
3. Use customer relationship management technology.
Every modern sales team should be using CRM software to track its relationships and interactions with current and potential customers. These systems store countless essential pieces of information, such as a client’s account information, lead source, and purchase history. A CRM can also automatically generate reports that help your sales team track its progress toward the goals and metrics identified in its sales action plan.
4. Track a mix of KPIs.
Investors will investigate how your sales team is performing across several key performance indicators. Track a healthy mix of lagging and leading indicators. Lagging indicators (e.g., total units sold and gross revenue) will help you understand your historical performance. Leading indicators (e.g., leads generated and lead-to-opportunity conversion rate) can help you forecast future success or failure.
Also, familiarize yourself with important sales KPIs such as quota attainment, customer acquisition cost, lead-to-sale conversion rate, average deal size and length, and churn rate. Track them closely over time, and work to improve any deficiencies.
5. Demonstrate leadership.
Every sales team needs dedicated leadership. An in-house employee or outside consultant should be in charge of defining the department’s structure; hiring and firing personnel; mentoring young employees; and setting the sales process, strategy, and goals.
Ideally, this person or firm will have a proven track record of success in carrying out similar duties at other companies. It takes many years of experience to provide effective sales leadership.
Potential investors and buyers don’t want to roll up their sleeves and help you run your company. Because sales are the lifeblood of any business, you can be sure they will heavily scrutinize your sales infrastructure.
Document your goals, track your progress, and make sure your sales team has an effective leader. That’s how to get investors interested in your business.
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Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.