What All Non-VC Backed Businesses Need To Do…

Over the last few weeks Venture Capital firms have suggested their companies cut marketing and sales expenses.

Of course, they would say that…

VCs are looking for capital return not dividends.

They make a capital return when one of their portfolio companies gets sold, public or private, then they cash out.

Many of their portfolio companies don’t make any revenue, especially early on.

Technically they are not businesses.

And many of their portfolio companies generate revenue, but make no profit.

They stay alive but getting further rounds of VC funding.

So, yes cutting marketing and sales expenses makes a whole lot of sense for both VCs and their portfolio companies.

Why waste money when you don’t need to?

For the rest of the business world, i.e. the majority, making no revenue or running at a loss, makes no sense.

So, cutting marketing and sales expenses is a dumb idea.

Really, there are really only 5 generic categories that almost all businesses function sits under:

1. Generating leads;
2. Converting those leads into ales (including upselling, down selling and cross selling);
3. Delivery of said product;
4. Support of said delivery; and
5. Administration.

If you have no leads, you have no sales (and I am not just talking about new leads, I am also talking about past customers — a Next Sell still needs a lead!)

If you have no sales, you have no product to deliver.

You’re are also bankrupt.

If you have no product to deliver, you have no need for customer support.

Administration is just what we have to do it as the glue that holds the rest together.

Coronavirus pandemic, plus economies being on the verge of recession breeds fear.

Fear causes us to do stupid things like horde toilet paper and mass liquidate financial stocks.

Some brands are also going to be stupid and cut marketing and sales resources (I don’t just mean money, I also mean time, attention and effort towards marketing and sales).

I get it, it’s hard to stay level-headed and want to protect, but leads and sales are life blood and oxygen for your business.

In a 9-hour workday (you’re working at least 9-hours a day, right?) you should be spending time on the following:

• Marketing — 4 hours;
• Sales — 2 hours;
• Product delivery — 1 hour;
• Product support — 1 hour; and
• Business Administration — 1 hour.

That is 2/3 of your day working on marketing and sales and 1/3 of your day working on products, services or solutions.

In addition to time, your allocation of capital should be in similar proportions.

From my observation, it’s the way around, or LESS.

The amount of time I have heard people say “we have no marketing budget, what rabbit can you pull out of the hat for us” is immense.

I think to myself “are you serious about your business?”

If you have no money or time to get that ratio correctly, something is fundamentally wrong with your business model.

You need to add upsells, adjust margins etc.

And you need to get up to speed on those basics ASAP.

If you have, here is what you need to do:

1. Identify who your ideal customer is;
2. Identify what they want (it’s not a product, service or solution TBH);
3. Determine how can you solve that for them;
4. Identify where that ideal customer is/who has them;
5. Determine how you add value to that customer or gatekeeper;
6. Determine what you want in return from either; and
7. Determine how you can you get attention and awareness from both.

P.S. Don’t rely on the Government saving you.