How To Balance Your Business Cycle

Cut to four months later. Your project is coming to a close. It's a great success. Your client loves you. Users are getting on board. The program works like a charm. Everything is coming together. Except for your business. You have absolutely no opportunities lined up to pursue. Worse, your vendors thought you went out of business. You lost your status as a premier reseller, which means all the privileges from your vendor's reseller program--leads, special promotions, co-op dollars, attention from their local field representatives, and most important, a higher volume discount rates--are gone.

If this has happened to you, you could be experiencing the Sawtooth Effect (see chart, above). Even though it's simple to understand, not many SMBs recognize it until it's too late. Here's how it works. Draw a horizontal line. Above the line are marketing- and sales-related activities. Below the line are technical- and implementation-related activities. In the beginning of your sales cycle, you spend all your time above the line marketing your business, generating leads and closing a sale. Then you "disappear" below the line, implementing the solution you just sold. When that job is completed, you go back to the above-the-line activities.

But here's the problem: While you were below the line, you did nothing above the line, and vice versa.

One telltale sign you're suffering from the Sawtooth Effect is your purchasing patterns. Do you purchase a lot of software every other quarter, for instance? Or is there some sort of pattern that has you purchasing something now, then nothing for a while, and so on? What about sales that go up for a while, then down, then up again and down again, repeatedly? These are all signs you might be going through a specific mode of operation of buying products, implementing, then buying more and implementing then, over and over, instead of having a consistent and perpetual flow of selling and implementation.

Get Out From Under
To resolve this self-defeating situation, you may need to do a lot of soul-searching to decide what it is you are really good at doing. You may realize that you truly enjoy selling solutions and would benefit most by concentrating all your energies on the sales and marketing activities. Let's say that's the case. You'll then need to hire a staff to do the technical work.

For example, hire a project manager who is experienced with planning. Next, hire a technician who would concentrate on implementations. Then you or your project manager would handle the initial training until you have enough business to sustain a full-time trainer.

These simple, while temporarily cash-draining, steps will allow you to spend your time marketing, selling and running your business, which are all above-the-line activities. While others are doing the implementations, you'll be generating new business for them to work on. You will build and feed your pipeline, and any cash drain caused by hiring new workers will cease to exist. In the end, it's a matter of balancing resources. Some resources should be dedicated to marketing and selling, while others should focus on implementing. Using the same resources to do both can cause the Sawtooth Effect and result in inconsistent revenue and growth. In turn, that can lead to a variety of negative effects, including harming relationships with your vendors.

Russ Lombardo ([email protected]) is president of Peak Sales Consulting and author of "CRM For The Common Man."