Editor's note: This is the fifth in a series of case studies about business turnarounds. The name and identifying details of the company used as the example have been changed.
Problem: Sales Slump
A high-end landscape contractor in Nevada, which we'll call "Landscape Sculptors," is generating close to $6 million a year in sales but profit margins are razor-thin and starting to slip into negative territory now that regular customers are scaling back on projects. As work slows, competition intensifies. Compounding the problems is a flood of collection calls. Owner Sal is too busy acting as project manager out in the field to focus on the two areas of business he dislikes most: sales and his day-to-day financials. As things unravel, he blames the economy. But Sal should blame himself. He has done nothing to build up sales over the past few years. Recession or no recession, he'd be able to pay off all those bill collectors with ease if he hadn't neglected his sales effort—the sole area of operations that ensures steady growth.
Many business owners we see hate sitting behind a desk. Contractors such as Sal, who enjoyed a steady flow of clients during the housing boom, tend to regard sales with disdain. I call this attitude "treating sales like your mother-in-law"—or an unwelcome guest you'd rather avoid. Sal has the personality to sell effecttively and his existing customers love him, but he won't get out there to hustle for new business. He started out as a landscaper, worked his way up in the industry, and tends to gravitate towards the tasks he enjoys most, such as monitoring quality control at client sites or getting his hands dirty by laying sod and planting bushes. The rest he delegates to his small administrative staff at headquarters. But because Sal is so often away from the office—leaving his project managers to deal directly with potential customers—dozens of sales opportunities have been lost. With one exception, his employees are just as disinclined as their boss to answer the phone or make cold calls for new customers.
Solution: Hustle to the Max—and Beyond
What this company needs is discipline and a dedicated sales process. The owner acts too much like a laborer and management lacks the drive to go out and fight for business. In fact, the atmosphere at base camp is a little too loose. The office manager, "Debra," is the only woman on staff. She is attractive, flirtatious, and clearly a distraction to her male colleagues. She seems competent. But whenever any employees—or the boss—are looking for an excuse not to execute mundane chores, Debra's behavior can make the difference between finding the solution to a problem and overlooking it entirely.
At a recent staff meeting, we let it be known that we are looking to recruit more qualified sales people both in and outside the company. Suddenly, Debra lifted her blouse to showcase her new, surgically enhanced breasts. We sat there stunned as she explained that she belonged out in the field because she knew how to get a potential client's attention. Our first instinct was to fire her for being so unprofessional. But we quickly realized that "Landscape Sculptors" had been misusing one of its best assets. Instead of keeping Debra cooped up in an office, she should be out in the field, turning her charms on housing contractors who could throw subcontracting work this way. Debra has brains to go with her looks and she has been proving herself more than capable of closing deals. Less than a month into her new role, she has already brought in two six-figure customers. Meanwhile, the owner is dedicating at least 10 hours a week to working the phones, sending out mass e-mails, and expanding the sales footprint of his business beyond golf and spa resorts around Las Vegas. Finances are just beginning to improve. The most egregious outstanding bills have been paid and Sal is reinvesting profits from the new contracts to hire a small team of telemarketers.
To keep this momentum going, Sal needs to put his feet under his desk each week and make a detailed checklist of priorities before he goes out into the field to oversee operations. Ensuring a high caliber of work at client sites is important, but so is building sales and making a profit. Instead of allowing Debra and the project managers to handle all interactions with existing and potential clients, Sal must personally follow up. He has to know exactly how many calls were made, to whom, what they were offered, what they are paying, and what is owed. Digging in the dirt and letting others handle the most crucial aspects of his business, particularly sales, is a surefire recipe for financial mediocrity, or worse.
LIMITED-TIME OFFER SUBSCRIBE NOW