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Tuesday, June 26, 2007

Over a year ago I posted about "Sales Outsourcing as a Bootstrapping Strategy".

I mentioned that "most of our start-up and small business clients are bootstrapping their businesses and our services are a low-cost and low-risk option for them."

This certainly hasn't changed too much. For international companies entering the UK market, many are investor backed, but they are still looking to contract us to test the market and develop a beach-head rather than launch full scale operations in the UK.

In fact, even if a company has raised a significant round of funding for international expansion, it is still a sound strategy to utilise third parties (outsourced sales/channel partners, etc) rather build your own local office and team.

In the book "Other People's Money", Michael Lechter talks about the sources of Other People's Money (OPM), which is generally equity investment, bank loans, as well as factoring, leasing, etc and also the concept of OPR (Other People's Resources).

Included in sources of OPR are co-venture, strategic alliances, partnering, licensing (including franchises) and outsourcing.

Michael's simple definition of outsourcing is "purchasing a functional service from another business" and he explains that it is effectively a way to leverage Other People's Resources in a similar way to Other People's Money.

In the same way that you pay a premium (or interest) for immediate access to money in the form of a loan, outsourcing provides you immediate access to resources without the time and expense of developing the capability or performing the task in-house.

Today, many people think of "outsourcing" as moving jobs to a lower cost region (which is off-shoring, really).

In reality, outsourcing could cost you more, even if some of that cost is deferred in terms of commission, with sales outsourcing, for example.

In the case of entering the UK, rather than paying the (large) up-front costs of recruitment, offices, etc and the time it takes get everything in place you could contract an interim sales manager to put feet on the street within days.

Instead of "buying it"... you "rent it"

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Posted by: David Regler @ 6:43 am |  0 comments  | Links to this post  

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Monday, June 18, 2007

I read an interesting article for small businesses in the Sunday Times yesterday, "Think hard before selling a stake".

The article looked at the pros and cons of selling equity in small business. Lots of good points in the article, including a quote from Doug Richard, former Dragon and Chairman of Library House:

Any entrepreneurs who can get by without the cash for as long as possible are doing themselves a favour because whatever they can accomplish increases the value of the business and reduces the risk of the business - and therefore it means that whatever equity they do sell, they can sell less for more.

To me this is a very good point. For example, the other day I was speaking with a potential client who was considering a further round of funding to support sales expansion. We were discussing our proposals to help them get traction in a specific new market.

By bringing in a senior sales manager on a flexible contract, we can add value through testing the new market and establishing a beach-head. The company could then resource appropriately once the stage of the market was validated.

Plus any initial traction we achieve will make for a more attractive (and valuable) funding round.

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Posted by: David Regler @ 7:15 am |  0 comments  | Links to this post  

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Saturday, June 09, 2007

If you've been following the latest BBC series of The Apprentice then you'll know that it's finally nearing a conclusion. After Katie's dramatic removal from the running (I wonder whether she secretly wanted to be offered the job just so she could turn it down... if so, I admire her balls) we are now left with Simon & Kristina.

Echo's of last year, perhaps... with a "sales person" in the final two?

And here's my thoughts about this. Because it appears that SAS has a bit of a split personality on this point. All the way through this series (and others) we hear the mantra of "if you can't sell you're no good to me".

Tasks in each episode to date include selling coffee, designing & pitching a new product, starting up a business, selling trainers, selling art, selling at a french market.... you can see where I'm going with this.

Sure, there are, of course, a wide range of additional skills needed in each of these tasks but, boy, if you don't sell then you will get canned.

So, almost the same as we saw last year, why do we get to the final and then we hear "Oh, but you're only a salesperson. Do I need another sales person?"

In terms of the two candidates left, clearly "yes you do".

Kristina will surely win. She's a solid performer who (if SAS doubts she is CEO material) can be developed further. It is the apprentice after all.

Simon's a likable character but basically far too flaky.

The thing is... "sales person" is a broad label. Kristina closes major contracts with the NHS. Andy Jackson (the Car Sales Manager who was booted out after the first episode) was not in the same league.

It's like comparing someone who sells shoes in a shop with someone who closes multi-million pound outsourcing contracts. No comparison.

Selling is the life-blood of business. Of course SAS needs an Apprentice with strong sales skills.

And who knows... he may even hire a "sales person" to get it.


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