Greg Nutter - Building Business Value Through Predictable Revenue Growth (G2018)

Welcome to the Exit Coach Radio show, the show for baby boomer business owners who are looking for cutting edge information as they plan their 3 to 10 year business succession and exit. Every week we interview top professional advisors. Their best tips, strategies, and precautions so you can be well planned. And don't miss our one minute exit coach tip of the day on exitcoachradio.com. And now here's your host, the exit coach Bill Black. Welcome to the show. Thanks so much for joining us today. You know, one of the things that we hear a lot from our business owners is how do we build our business value. Um, and of course there are many ways to build your business value. You can get your um employee costs in line. You can motivate your employees to do more, you can get your, your expenses in line, um, and you can go out and. Uh, get predictable revenue growth. That's what we're going to talk about with my next guest building business value through predictable revenue growth. Greg Nutter is joining us from Solouin Inc. in San Diego, and they help small and mid-size business owners solve revenue growth. problems for companies that sell products or services consultatively either through a direct sales force or through a reseller channel. And so we're going to talk about some ideas and strategies. So get a notepad, get a pencil, and get ready to take some notes. Greg, welcome to the show. Thanks so much for joining us today. Thanks, Bill. Let me start by saying it's great to be here on your show. Thanks very much for having me. Oh, that's very nice of you. Thank you. It's, you know, I'd love to get people on that uh can help our listeners open up their minds with some new ideas. Tell us a little bit about your background and soloquin. Great. Well, my background consists of about 25 years in sales, sales management, reseller, or distributor management, and for the past 11 years I've been working on sales and channel performance consulting. My specific expertise is working with companies to establish a foundation that enables revenue scalability and predictability, whether they're selling, as you mentioned earlier, through a direct in-house sales team or which happens more and more through an external distributor or reseller channels. OK, and so, uh, how did you get started again in, in this particular line of work? What, um, was there, uh, at some point did you decide, you know, I really want to get into specifically helping business owners through this channel. Yeah, that's a great question. Um, my early career was with big companies that had good sales processes, sales management processes, um, so that they could predictably forecast. They knew which revenue was coming in and what revenue wasn't coming in. Um, since I've been in San Diego for the past 20 years, I worked for smaller companies and I found those companies just didn't have the same kind of rigorous processes or even Um any kind of process to help them with revenue predictability and scalability. So what I discovered was if you take a subset of the big company processes and apply those to small companies, you get dramatic difference on their ability to scale their sales capability. Excellent. OK, that, that really makes a lot of sense. I think if you were taking um things that are available to companies with a lot of resources and we're bringing them back down to companies that need those resources but not on the same scale. Tell me, uh, Greg, how did, how does your consulting practice relate to increasing business valuation? OK, great question. And I'm sure given the focus of your show, that's probably the top of my question for your listeners. Certainly our recommendations and support help companies achieve higher sales and greater profits, which can translate into a higher company evaluation. However, what's equally and in some cases more important is that we can help owners reduce a buyer's perception of risk, and that risk is related to the company's ongoing performance. And as many of you know, this reducing this risk reduces the potential for valuation discounting. So when any diligent investors looking at the value of a company, they'll almost always look at three risk areas within the sales organization. First, how dependent is the company on the owner for ongoing sales? What happens when he or she is gone? Is the, is the business sustainable? Um, also, how predictable and consistent are the sales, how accurate are the future forecasts? And to answer this, they often look at how accurate they've been in the past. Have they been able to predict within 10, 15%, uh, quarter on quarter, year on year. And lastly, what's the revenue flow look like? Are annual revenues based on a couple of big deals or mostly through a couple one or two large clients, or does the company have a consistent and steady revenue flow spread across a larger client base where they have multiple members of their sales team contributing? Excellent. All, all big indicator. I'm taking notes. That's why, that's why the delay. I always love to take notes on, on guests and what you what you're telling us is that one thing we talk about a lot is, is the sales effort by the owner the primary sales effort of the company. So what's gonna happen when you're gone, Mr. Oer? Uh, are your sales gonna dry up? Uh, big, big, big problem for a lot of small businesses we see and again the predictability and the consistent. Are you, are you meeting targets now or are you setting targets now and how well are you hitting those and how well are you going to hit them in the future? That's what buyers want to know, right, Greg? They want to the more predictable, they want to buy a predictable stream of income and revenues, and that's a steady, like you say, and those are great tips. Yeah, one of my unofficial taglines is you can't scale lucky. And without sounding. A condescending. A lot of business owners have been successful with a great idea, some good customers, hard work, and some really deep expertise in their chosen areas, but that can't scale. What you need is a foundation of mostly around management processes so that you can um bring in average sales people and make them successful. I think you just uh leaked the title of your next book there, Greg. You can't scale lucky. I love that. That's really great. So what are some of the key challenges small businesses have in predictably growing their sales capability? Great, great question. The first one, I normally see three main challenges. Um, the first one, which is a bit counter counterintuitive, is the belief that a company's sales success is primarily tied to being able to hire the best salespeople. Now I'm sure a lot of your listeners go, What? That's what we're trying to do, hire the best salespeople. But there's two problems with this. One is I often tell owners that the really best sales reps generally don't want to work for you. They want to work for a big fast growing organization that's got good benefits and lots of opportunities for advancement. So it's really hard to get the best employee when you're a small mid-sized business. And secondly, just because a sales rep's been successful at one company, it is no guarantee they'll be successful at yours. The environment that a salesperson finds himself in, finds themselves in is often the key deciding success factor. And chances are high your environment is different. Um, the idea that some sales trainers will tell you that selling is selling no matter what the product or environment, it simply isn't true. Um, a second challenge I think that a lot of small businesses have is that, you know, as I mentioned earlier, the owners, CEOs have limited sales or partner management training. They tend to be experts in their field, um, but generally not experts on how to develop and manage a sales team. And even if they've learned the hard way how to sell, they rarely know the key management processes that are critical to building a successful sales capability. And thirdly, it can be really expensive to recruit and hire capable management, whether it's direct sales management or channel management personnel, particularly if you're a small company with 1 or 2 sales people and you don't need a full-time manager. Good point. Yeah, and a lot of uh in small business, Greg, a lot of um specialty areas are fractionalizing. Right, like we see a lot of um part time CFOs if you will or or as needed um so in a in a smaller company you just need some something you know really good for the amount of time you need it for uh, you might not be able to afford more than. That so that's a great idea. So, uh, so what I heard you say there was that some of the biggest challenges are that sales are tied to the best sales reps, but you can't always get those people because they want to work for bigger companies and um. Just because they sell one product well doesn't mean they're going to come over to yours and sell it well. That's it's not always transferable. And then smaller companies tend to limit their training and they can't afford to recruit the best and the brightest sales managers to manage a small sales team. Did I get that right? Absolutely what you want to do is build a foundation of management processes. Programs, tools so that you can get an OK sales rep. And have them become very successful. Mhm. And that's really important when you go beyond the first salesperson to the 2nd, the 3rd, the 4th. You want a formula. We bring someone in, we take them through these things, we give them this playbook and they run, um, but the key is those people still need to be managed and you raised at an excellent point there, bill around fractional management. Uh, I work for a small software company on a part-time basis for 8 or 9 years. Until the sales were large enough they could afford a quarter of a million dollar sales manager and during that time the sales people still needed to be managed. The pipeline needed to be managed. The large accounts needed to be managed, and they wanted someone with some oversight to do that. But first you need to build the processes and systems and the structure so that you can hit the ground running with people that you bring in and and and not have to, you know, let's face it, when you're a small business owner, you already wear a lot of hats. Um, this might not be a hat that you want to wear uh as far as building the structure, maybe getting somebody to hit the ground running with a structure that's been built, it'll be a lot easier than that, so. Uh, so that's a very interesting, um, introspection. I talked to a lot of business owners that say we need to build up our sales team. We need sales management, but boy, you don't just. You don't just start that without a lot of thought as to what's going to go into that structure, right? Yeah, I, I was talking to a CEO just a few weeks ago and uh Uh, he was embarking on hiring his, his first rep sales rep, and, um, again looking on for the strategy of I want the best sales rep out there and I said well. What do you want them to do? And he said, Well, I want them to sell to who? How, how are you going to know he's doing well? You know, what are the things, activities specifically you want to look at to review? Because at the end of the day, a number, a revenue number, uh profit number is not manageable. All you can manage is activities, and so you need to have clearly in your mind what activities contribute to success. And then you need to have some process of oversight to make sure that those activities are being reliably and successfully executed. You know, and 11 other point there is that sales is, is not like a machine that you create that creates the same widget every time it stamp comes down. Sales needs to be tinkered with. The message needs to be changed if it's not working. You need to really be willing to move the needle a little bit this way or that way to try to see if it, if it affects your efforts, don't you? Certainly that's correct, and that goes back to the comment I mean earlier is that, you know, um, Because the sales person has been successful in one environment doesn't mean that they will be in another 11 environment they have uh certain management processes, certain tools are going after certain maybe CFOs, but in another company they're going after IT directors, um, so that the target market, the kind of product, the sales cycle all always require some tinkering as you say, to make sure you've got it right. However, What the mistake some people make is that they believe that sales is more of an art than a science, and I think, you know, give me, give me a salesperson who's moderately skilled with a really strong process, and I'll beat. A sales rep with no process but great skills every day. Great point, great point. So now, uh, from from what I understand, a fair bit of your consulting practice is focused on established and growing reseller channels and how is that different from building a direct sales force? That's a that's a great question and that's an area that really differentiate the consulting we do from other sales performance consulting, um. I like to say selling direct versus indirect is like the difference between golf and tennis. Uh, both are involved taking a ball and hitting it straight with some kind of club, but there's a lot of different nuances. And if you try and take what you know from direct sales and apply it without change to indirect sales whether you're selling to distributors or wholesalers or agents or value added resellers, you're gonna have challenges. Um, on the plus side, you know, if you look at developing a successful reseller channel, it often offers smaller companies the opportunity to scale the revenue faster and more cost effectively than using a direct sales force. Um, on the challenging side, developing a reseller channel requires a lot more planning, uh, it relies much more heavily on process and often demands developing more supporting tools and programs. So if distribution channels are implemented correctly, they're much cheaper than building out a direct sales team, but they're not free. Of course yeah it makes a lot of sense you need to to really back up a little further and and really think through a lot more detail because you're that much further from the actual sales effort is that why? Yeah, um, it's, you know, if you look, if you have a direct sales team you can hire someone, you can put them in the office and say here's what I want you to say, here's what I want you to call on, uh, go. And when you've got a someone who doesn't work for you, you say, please go and talk about my product, please say this, um, and um they're under no direct obligation. So it requires a lot more finesse. I'd say it's more like golf and um you can't not manage the partner, which a lot of people try and do. They try and manage a partner through. A compensation plan. Hey, we're going to give you a lot of margin if you sell our products, but there's a lot of management process that's involved to ensure that the partner is making investments and learning how to sell your product and support your product and develop a market for your product. I'm talking with Greg Nutter of Solouin Inc. in San Diego, California, and we're talking about the importance of building business value through predictable revenue growth. Greg, what kind of tips or ideas or precautions could you share with our listeners? Um, sure, here's, um, I guess 3 that come to mind, and these are ones I'd recommend all business owners who are really interested in growing the value of their business and. Other than a few that are close to retirement, I think pretty well all fit in that category. So to start, you know, a lot of business consultants will tell you, you've got to put together a business plan. But what's often missing is what I would call a revenue plan. Where do you want to sell? What markets? Uh, what are your ideal clients? Why do you want to target those people? Um, is it more profitable? Is it an easier sales cycle? And specifically, how are you going to do it? How are you going to generate leads? How are you going to nurture those leads? How are you going to move the sales cycle forward and how are you going to eventually close the sale? Secondly, um, establishing solid selling and sales management process is really critical to, um, building this predictable scale scalable sales engine. Um, a few of you will know a guy named Edward Deming who was the father of quality movement. He once said, you know, a bad process I'll be a good person every time. So putting some science into selling rather than just crossing fingers and hoping that I'll find the best sales person. And lastly, there's an old proverb that says, you know, there's no shame in not knowing. The shame lies in not finding out. So if any of your listeners today have come across some of the issues we've talked about and they resonate, I'd encourage you to reach out to some person who can give you some guidance on how to resolve them. Those are great tips, great points um I think that a lot of our business owner clients, our listeners think that the sales part is going to be fairly easy and it's obviously a complicated area. You need to think about a lot of issues before you just rush out with a with a half baked sales plan. And Greg Nutter is there to help you through Solouent Inc. Greg, how do they, how do our clients, uh, our listeners rather get in touch with you best? Sure, um. Any of your listeners who are interested in sharing a comment or asking a question or learning more about a problem, they can reach out to us via our website, soloquint.com, and Soloquint is spelled like eloquent, only you take the first e off and put an S and an O there instead soloquint. Um, you can reach me directly at greg at soloquint.com, um. and we'd be happy to talk to you about a free initial consultation where we can make some quick assessments and suggest some possible approaches. That's wonderful. Well, you've made up a lot of great points and tips today. I got a whole page of notes here, Greg, great job. And I, you know, one of the things that sticks out if you're just joining us, Greg was talking about the fact that you can't scale lucky. You need to have a systematic approach, process, structure for your sales, and you may not be able to go out and hire in the best and the brightest right now, but you can hire in the best and the brightest from Solouin. And they'll help you get your plan and your planning started so you can hit the ground running with a great sales effort. Greg, thank you so much for joining us today and I really appreciate all of the great information you you brought us. I think we ought to schedule another interview for sometime soon because I think we just scratched the surface, right? Great. Yeah, it's there's a lot to talk about, but I really appreciate the opportunity. Thanks, Bill. It's a huge area. I really appreciate your time and I look forward to the next time that we get to talk together. Great, thank you. All right, we're going to take a short break. We'll be right back, so please stay with us.