You can’t borrow your way to prosperity. You can’t steal your way to prosperity. You can borrow your way into debt, and you can steal your way into prison, but you can only sell your way to prosperity.
Excelling at selling more, which means selling more at better margins, is the only surefire way to ensure financial prosperity and wealth creation in your business. Anything else is a grand illusion. While a line of credit from your local bank or a home equity line of credit (HELOC) against your personal home may give you a temporary break from the stress of managing cash flow in your business, eventually the house of cards will collapse if you don’t get really good at selling.
Ironically, despite the reality that only sales and sustainable margins can ensure the long-term financial health of your company, the sales function is often viewed with disdain in the contracting industry — almost as something to be avoided. If I had a dollar for every time I heard a contractor and/or service technicians say, “I don’t want homeowners to think I’m a salesman,” I wouldn’t have time to write this article, because I’d be down on the beach in Zewatenao drinking beer and chasing senoritas.
I remember a time in my business that illustrated the futility of trying to borrow my way to prosperity and the awesome power of selling more at better margins.
The year was 2007, and my business was rocking and rolling. We were on an aggressive growth path, having doubled our sales to $7 million from $3.5 million the year before. The sunshine was in my face, and the wind was at my back.
Things were going so well I decided to start consolidating a few competitors. Between the money I borrowed and the debt I assumed from the new companies, I was looking at about $2 million in new debt, but I wasn’t worried, as I had my sights set on at least $10 million in sales in 2008.
Then, reality came crashing in with the Great Recession as the housing market began to collapse, taking everything and everyone else with it.
By the end of 2008, our sales were closer to $6 million rather than the projected $10 million, and the pressure of $2 million of debt was becoming increasingly hard to service and cash flow.
At one point I was contacted by our equipment distributor and reminded that between the debt owed by the companies I purchased and our current amount due, the total was $480,000. The owner of the distributor was getting nervous and needed me to sign a promissory note and put up collateral to secure the note.
I had no choice to agree as the other option would have been for them to file liens against the homes where the equipment was installed. That would have been the end of my business, and I would be forced to take the company into bankruptcy. That was not an option for me.
So, I signed the note, put up my home on Maui as collateral, and agreed to pay $20,000 per month for 24 months. It was a scary time. The financial pressure was suffocating.
At that point, borrowing more money wasn’t an option. The banks weren’t lending. Robbing a bank didn’t really seem like a viable option either.
The only option was to sell more systems at better margins, which was a tall task during the Recession, when homeowners no longer had the safety net of lines of credit on their homes.
I refocused my efforts on making my sales team as tough as nails. They were a strong team already, but I needed them to get even better. I added additional training and intensive role-play sessions. We worked harder and sold better.
Selling better really came down to anticipating homeowner objections before they came up rather than waiting until the homeowner raised the objections at the end of the presentation.
For example, knowing that most homeowners would raise the price objection at the end, I trained my team to address the price objection up front. To accomplish this, I searched for information from third-party experts, which stated that price was not the most important factor in making a purchasing decision on a heating and air conditioning.
I found two sources of information that made the point perfectly. The first was a Consumer Reports article and the second was a report from the U.S. Department of Energy. Both articles essentially stated that finding a trustworthy contractor and having the system properly sized were the most important factors in making a decision.
We would share these articles with the homeowner and, after reviewing them, we would simply ask the homeowner, “Mr. and Mrs. Homeowner, would you agree or disagree with Consumer Reports and the U.S. Department of Energy that there are other factors as important, perhaps even more important, than a cheap price?”
With the articles directly in front of them they had little choice but to agree. Once they agreed, it became more difficult to argue about price at the end of the presentation.
Moreover, when the inevitable price objection came up at the end, we easily dealt with it.
To illustrate, imagine at the end of the presentation the homeowner raised the price objection by stating my company was $1,000 higher than the competition. At that point we would simply remind the homeowner of our previous conversation by asking, “Mr. and Mrs. Homeowner, earlier you said that you agreed with Consumer Reports and the U.S Department of Energy that there were other factors more important than price. Has that changed in our time together?”
Having been reminded of their previous statements, the most common response was, “Well, no, but uh, you know, the other guy is cheaper.”
To which we would simply respond be asking for the order: “I understand the other guy is a little cheaper, but with your permission I’d like to start the paperwork.”
When homeowners are confronted with their previous statements they are inclined to take consistent actions with those previous statements. The consistent action, of course, was to buy from us rather than going with the cheap competitor.
The principles of consistency and cognitive dissonance that drive this purchasing behavior are too lengthy for a single article, but the “Consistency Selling” strategy can be used to proactively deal with “I want three bids,” “I want a different brand of equipment,” or “I want to think about it.” For a detailed explanation of the strategy and how to implement it you can check out my new book, Consistency Selling.
By 2009, we had perfected my sales strategy and despite being in the depths of the Great Recession, we found our sales stride. We had all adjusted to homeowners’ new concerns about spending money, but when your HVAC system goes out, not replacing it isn’t an option.
We knew people were going to replace their systems, and it was our job to make sure we were outperforming our competition on those opportunities and show homeowners why we were the best. We reminded them that during this recession it was more important than ever to choose the right contractor.
By the beginning of 2010, we had paid off the entire $480,000 — in fact we did it four months early. We also paid off hundreds of thousands of dollars of additional debt and had the company back on its feet. And we did this during what many refer to as “the worst economy since the Great Depression.”
As Andy Dufresne famously said in The Shawshank Redemption, “You gotta get busy living or get busy dying.” It’s the same in sales — you gotta get busy selling or get busy going broke.
There is only one way to reach the promised land of financial prosperity, and it’s the path that is often discounted in our industry. It’s the path of selling on a consistent basis. You need to get better at selling. Elevate your sales department to the same level of importance as your service department.
You can’t borrow or steal your way to business success. You can only sell your way to business success.
Weldon Long is a successful entrepreneur, sales expert and author of the New York Times bestseller, “The Power of Consistency – Prosperity Mindset Training for Sales and Business Professionals.” His new book, “Consistency Selling – Powerful Sales Results. Every Lead. Every Time,” is available at Amazon.com. For more information, visit www.weldonlong.com