Engineering Services Firm
For the last two years, now well into a third year, I have been working with the two owners of this niche opto-electronics engineering services firm. We meet regularly using Skype videoconferencing.
After being in business for four years, they realized that their business was going nowhere. It was lurching ahead with a few regular client firms, but there was no organized, productive marketing and sales system in place. They had no pipeline of work and frequently had very lean periods.
We began meeting to talk about what kind of company they wanted and how it might fulfill their personal goals and objectives. This discussion evolved into an effort to define what their value proposition was to customers and how to express it. As we began to delve into how marketing might work for them, we developed a list of all the people they knew, people they had worked with or for in the past, and another list of technology oriented meetings they attend or might attend.
We used a two prong approach to the marketing program. First, each partner contacted people they already knew to renew the conversation. We used Google Docs to have a shared list of the target people, who was the main contact, and dates and results of contacts. Second, they selected and scheduled time to go to technology meetings on a regular basis.
These activities provoked a series of discussion about what marketing and sales is about in the world of technical firms. We talked through the usual manipulative models and they came to focus on the happy idea that discussions with people and firms should be about shared values and interests. They could abandon the notion that they were pushing some snake oil. The idea is to engage customers and prospects in an exchange of ideas and experiences. Not far in the background is the notion that through this process the parties would find areas where they could do some business together.
Along the way they figured out that some people and some firms are more worth talking to than others. They learned to delve into the decision making processes at the firms they have been working with and with prospects.
The results came in little bits at first but by the end of the first year the sales pipeline was filling up. With regular prodding from me to keep up the drive on the marketing, they experienced good signs of momentum.
Now we began to talk about different topics: proposals, contracts, negotiations, intellectual property, project management, new outsourced engineering resources, to name a few.
Today, they are so busy with work that a primary topic that I bring up at the beginning of every session is how their marketing and sales efforts are progressing. They must continue to work at this because as the principals they are the ones who must find new customers and maintain relations with existing ones.
Our most recent new topic is cash flow management. They have finally hired a part-time bookkeeper and now have to learn the language to manage this person. They have to learn the language of accounting, at least in a rudimentary way, to ask for reports that will help them manage the business more effectively and with less pain.
Each year I schedule a review session or two to talk about the future of the business. Where do you want to be in two to three years? During this year’s review, we found that several objectives that had not been acted on earlier, but had remained on their list, came into a fresh, revised focus. Now, they are taking some small steps towards those objectives. Incremental, experimental steps that perhaps will clarify whether these objectives are still valid and achievable.
Web-based Information Services Company
For almost five years I have worked with the CEO and co-owner of this firm. An early discovery was that there was no product line sales/profits analysis available. Using spreadsheets and existing data, this analysis was completed and immediately revealed that a product line with low sales and not much sales growth, despite quite a bit of effort, was actually showing negative profitability. More significantly, much of the development effort of the company was focused on this product. This lead to a painful decision to abandon that product line and focus on others in the existing product lines.
Another outcome of the spreadsheet analysis was to focus on Cost of Goods Sold where, after discussion of vendor management, the firm launched a clearer strategy of vendor management. An immediate outcome was a 50% price reduction from the primary information vendor.
Ongoing, the CEO and I have spent time talking about how to focus more efforts on marketing and sales. Since the founders of the company are software engineers, there is a natural tendency for the firm to return to its roots and dream up more development projects and further embellishments on their internal support systems. With some care to the strengths of the primary players, we have been able to shift energies towards marketing and sales.
Overall results over the last three years have been greater than 40% sales growth each year and an improvement in net profits from 3% to the mid teens.
Recently the CEO sold his share of the company and has started a new company, also in the web-services field. I continue to work with him on the development of this new venture.
Over two years I worked with Principals to analyze this five year old firm’s customer base, product lines, pricing structure and marketing strategies. We pared down the service offerings, raised prices, pruned customer list, refocused marketing efforts. Sales rose 55% with almost 30% improvement in Net Profits.
A critical situation emerged when the partners began to move in different directions in their lives. During a meeting with them I listened to their now diverging life objectives and their solutions to these problems. They had developed complex business arrangements to allow one partner to move to Florida while another wanted to exit. All of this was based on partly believable virtual work processes and the increasing number of clients with whom they never interfaced personally.
When I suggested that they think of selling the business, it was a moment of “Aha!”. This idea was hardly a breakthrough idea except that their inward focus had prevented them from seeing it as an option.
Firm has now been successfully sold. The three partners are off on their own new adventures.