Every company has some version of MSP — marketing, sales and production — and it is an extremely valuable tool. However, few use it in the manner I am about to describe, and I think we are often doing it all wrong.
Most companies spend money advertising, then they or their salesperson runs to the appointment to make the sale. We need commission and will sell whatever the customer needs, or whatever we can make money on. Production starts getting items ordered and hurries to do the install because the company needs the money, and cash flow is key in our businesses.
A better way? Know what it is your company does; saying you install pools is not enough. Then, sit with your sales team (even if it is only you) and put together a presentation. After it’s complete, practice it. Your first professional presentation should be to your production team.
This is where you will, or should, get honest feedback. Things like: Yeah, we can do that, but it takes us a really long time, it costs us a lot of money and we always end up making more trips because of it. If you sold this instead, we’d seldom have a service call for it; it’s easy to install. Oh, did you know Supplier A always takes this long to get that, and this company’s pumps aren’t as reliable, but Company B’s just seem to last and last? Even though it is 50 percent more expensive, we save time in labor and callbacks. This is being the owner of your company. You are conducting your business as a business, being smart about how you design it. You are gathering the information to make decisions and implement them.
Now that you have this valuable information, you can customize and restructure not only your sales presentation, but also your sales and production teams (or tweak them a bit). You have identified exactly what your marketing is going to say. You know what you are going to market, because you know specifically what you are going to sell and produce. You have created your system of systems: MSP. I mentioned the cash-flow issue that often haunts businesses. My solution will stop the Peter to Paul routine quickly. From now on, all your contracts should start with a down payment: maybe 5 to 20 percent. This, as you may explain to your client, allows you to start paperwork to secure permits, etc. All future payouts (which may be several) now are “Prior to….” This keeps your cash flow constant; you get paid before performing the next phase. You are never behind on your payments, and you can pay subcontractors immediately upon completion, which allows you to hire and keep the best guys. It is not your responsibility to finance your clients’ work. Your final payment should only be $500 to $2,000. Even on a contract of over $100,000, I will leave a final payment of only $500. This does a few things: Firstly, $500 is not much to pay at the end of a project. It is easier to let go of than $50,000 after the work is done. They have your money; you have to pay an attorney and end up settling for less. The positive here: By finishing everything before you ask for that last $500, you continue to build and may earn referrals.
