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Updated 25 Feb 2020

The dangers of letting first sales go bad

Early sales are vital for start-ups, but early bad sales are dangerous. 

Ed Hatton, Entrepreneur, 16 November 2013  Share  0 comments  Print

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When you open the doors of a new business your immediate thoughts are likely to be about income- producing sales. If it’s a retail business you will be watching anxiously for the first people to enter the store, restaurant, hairdresser or filling station.

If you sell business to business (B2B) you must build new prospects to develop early sales. Expenses mount up, and insufficient sales income means your business could run out of cash and be forced to close before it really got started. Making early sales is that important.

Low hanging fruit

Everyone has heard about ‘low hanging fruit’ and you, the new entrepreneur, should look for those sales which you can most readily close. ‘Low hanging fruit’ is usually understood to mean potential customers that are easy to start selling to, but there is a problem in trying to sell to anybody who will listen.

If the prospects are obvious to you they will also be obvious to competitors, who are more established, have customer references and will be more assured than you. They will also be eager to shut out a new competitor.

To really be ‘low hanging fruit’ the prospects should be those that your new business can easily close. This means retail customers who buy rather than browse, and a high ‘strike rate’ – the ratio between sales cycles begun and closed – in B2B organisations.

If you are in retail this means doing anything that persuades browsers to make an initial purchase, to sample your goods and services. Entrepreneurs usually offer opening price specials, but a better option is giving those early shoppers reasons to buy from you. You will (I hope) have set out your differentiation from competitors in your planning, so tell them why you are different and better.

Use posters, sales pitches and your actions. Return-if-not-satisfied options, retail staff who can really advise customers, smiles, easy parking and access, owner involvement – the choices are wide. Select the ones that will be most appealing to the hesitant buyer.

B2B sales

If you are selling B2B and have provided substantial funds for a powerful advertising campaign you may have lots of enquiries, but this is not usual for start-ups, even those with a big marketing budget. Most B2B start-ups struggle to find sufficient prospects to sell to, which makes differentiating from competitors even more important.

Hopefully you started this process in the planning stage, where you should have tightly defined the types of buyer you can help, and how to approach them. You are now in a much better position to be selective about focusing on the easy-to-close deals, rather than those you take in desperation.

Be careful

In the first few sales it’s advisable to stay away from very big and complicated sales challenges, particularly where you have to make substantial modifications to your products. Be equally careful about sales where your obligations are not clearly spelt out. The combination of these two is lethal.

Customers can be bullies, and it’s not unknown for customers to refuse to pay for delivered goods or services while making a string of demands for more benefits. Collecting your money through legal action could take a year or more, and you may not be around by then.

Make sure that both the buyers and your obligations are clearly understood and recorded. If you have any doubts, walk away, however tempting the sale appears to be.

There is a strong temptation to sell desperately to anyone who looks like they could buy, but if the prospective buyer senses that he or she is being pressurised in order to satisfy your needs they will walk away or take advantage of your desperation.

It is far better for you to identify what the buyer needs and then offer them the solution, resisting the temptation to make silly concessions.

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About the author

Ed Hatton, Entrepreneur

Ed Hatton is the owner of The Marketing Director and has consulted to and mentored SMBs in strategy, marketing and sales for almost 20 years. He co-authored an entrepreneurship textbook and is passionate about helping entrepreneurs to succeed.

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