Why Entrepreneurs Should Understand Sales, Even If They Don’t Sell

Research & Sources / Sales & Revenue Growth

Imagine a brilliant baker who only works in the back, at the oven. The bread is excellent. But the baker never stands at the counter, never hears customers ask for smaller loaves, never sees people walk out because the queue is too long. Sales slowly drop, and the baker cannot understand why. The answer was always at the counter.

“I’m not a sales person”

Many entrepreneurs say this with some pride. They are product people, technical experts, creative minds. Selling feels pushy, or simply like someone else’s job. So they hire a salesperson, or hope that a great product will sell itself.

Great products rarely sell themselves. And even when someone else does the selling, the entrepreneur who does not understand sales is flying blind on the most important number in the business.

What failed companies teach us

CB Insights analysed the post-mortems of many failed start-ups. Two of the most common reasons for failure were running out of cash and building something with no real market need.¹ Both are sales problems in disguise. Cash comes from customers. Market need is something you learn by talking to buyers.

An entrepreneur who understands sales finds out early whether people will pay, how much, and why. An entrepreneur who avoids sales finds out late.

What “understanding sales” means

You do not have to make every call yourself. But you do need to understand a few things deeply:

• Why customers buy. In their words, not yours. What problem made them reach for their wallet?
• Why customers don’t buy. Lost deals teach more than won ones.
• How long a sale takes from first contact to signature, and where it usually gets stuck.
• What a customer is worth over time, and what it costs to win one.
• How your sales process works, step by step.

Companies with a clearly defined sales process tend to grow revenue faster than companies without one, according to research by Jason Jordan and Robert Kelly.² Somebody has to define that process. In a small company, that somebody is usually the entrepreneur.

Buyers have changed

Brent Adamson, Matthew Dixon and Nicholas Toman found that business buyers increasingly do their own research and define their needs before ever talking to a seller.³ That means the first conversation matters more than ever, and that the people who understand the customer’s problem best have an advantage. Often that is the founder.

Staying close without doing it all

Join a few sales calls every month. Not to take over, but to listen.

Read the lost deals. Ask your team for a short note on every lost opportunity: why did they say no?

Talk to five customers a quarter just to ask how things are going and why they chose you.

Look at the pipeline weekly. Fifteen minutes is enough to see whether next month is healthy.

What this means for you this week

• Call two recent customers and ask what made them buy.
• Ask for the last three lost deals and the reason each one was lost.
• Draw your sales process on one page, from first contact to payment.
• Sit in on one sales conversation and only listen.

The oven makes the bread. The counter tells you whether anyone wants it.

Sources

1. CB Insights. Why Startups Fail: Top Reasons. cbinsights.comAnalysis of start-up post-mortems: running out of cash and a lack of market need are among the most common reasons for failure.
2. Jordan, J. & Kelly, R. (2015). Companies with a Formal Sales Process Generate More Revenue. Harvard Business Review, January 2015. hbr.orgA defined sales process, regular pipeline reviews and clear stage rules go together with faster revenue growth.
3. Adamson, B., Dixon, M. & Toman, N. (2012). The End of Solution Sales. Harvard Business Review. hbr.orgBuyers increasingly define their needs before talking to sellers; the best sellers bring new insight rather than waiting for stated needs.