Here’s how to get consistent cash flow in your business

The number of businesses that fail within the first year or two is high. Massively high. There are many reasons for failure but one of the reasons is that the bills are consistent but the income isn’t. The income rises and falls as the business owner learns how to market, sell, and deliver their offering.

The sooner you can build your business to be consistent, the higher chance you have of beating the odds and surviving to year 3 and beyond.

So how do you get consistent cash flow in your business?

The only way to do it is to build a consistent sales funnel.

A sales funnel is the system in your business that attracts people toward you so they learn more about you and become prospects and then customers. I content that sales funnels are the most important part of your business because they’re the tool you use to get customers and make money. (I wrote an entire book on it called The Sales Funnel Bible #shameless plug)

So, how do you build a sales funnel that runs consistently?

You need clearly defined steps that are systematized (and preferably automated), and you need a way to keep prospective buyers in a holding pattern.

Let’s break that down…

CLEARLY DEFINED STEPS THAT ARE SYSTEMATIZED

Your sales funnel is made up of a series of steps. These steps are defined by the mindsets that your prospective buyers go through as they journey from “I have a problem” to “This company can help me solve my problem.” Along the way they’ll transition through mindsets like “I can live with this problem” to “I wonder if someone can help me” to “There are several companies that can help me solve this problem” and so on.

So, whether your prospective buyer has to transition through just a few steps or many steps, you need to figure out what those steps are (approximately) and then help the prospective buyer to move through them.

Once you’ve figure that out, you can systematize each step to some degree. Automation is one type of systematization but there are other ways you can systematize it — even if it’s just something as simple as writing out templates so you can customize them when a prospective buyer reaches a certain point in your sales funnel.

By systematizing, you attract people into your sales funnel and move them through with as little effort on your part as possible. (It’s a balance — you’ll want to maintain some visibility and control over the process and it might make sense to build a personal relationship with your prospective buyers. But all of this can be managed through some well-thought-out systematization).

KEEP YOUR PROSPECTIVE BUYERS IN A HOLDING PATTERN

This is the more challenging part. For consistent cash flow, you need to find a way to keep your prospective buyers in a holding pattern. By “holding pattern” I mean: you need to find a way to keep them in your sales funnel without necessarily buying from you today.

You do this through ongoing communication that adds value to them, and makes offers, and promises to add value in the future. My favorite way is to use email or print newsletters, although there are other ways to create a holding pattern.

You should do this while they are still in the Lead stage (that is: they’re learning more about your business and weighing their options). In my opinion, the Lead stage is the best stage to put people into a holding pattern because they are still seeking out information, which positions them perfectly to sign up for your newsletter or some other ongoing communication.

(If you wait until they are at the Prospect stage, they are already getting serious about buying and your newsletter will either entice them to buy right away or will push them out of your sales funnel because it seems to push them backward in your funnel).

HERE’S THE BENEFIT OF A CONSISTENT SALES FUNNEL

By building a sales funnel that systematically attracts people in and puts them into a holding pattern, you create a list of people that you can sell to very easily whenever you want to. This will have a huge impact on your business and its cash flow: An inconsistent business realizes that it needs more customers so it goes out to find them, creating an inconsistent cash flow because of the time lag between finding a customer and getting paid; A business with a consistent “holding pattern” sales funnel already has a bunch of prospective buyers in a holding pattern and can just pluck out a few from the holding pattern when more customers are needed.

Are you using both types of marketing in your business?

I was putting together a marketing plan for a client recently and I was listing all of the places where they had already been marketing. Just in social media alone they were marketing on Twitter, LinkedIn, Google+, Facebook, YouTube, a blog, Tumblr, Storify, Disqus, Quora, plus a couple of other industry-specific channels.

On top of that, there were other media channels as well: Multiple websites, print and display advertising, banner ads, and the list goes on and on. And they were looking to add more marketing methods to the mix.

It was turning into an awful lot of effort for my client. And there was a high cost. And the worst part was: There was very little understanding of what the results from each channel were. She was becoming overwhelmed at how many different media channels she needed to juggle and how much of that was eating into her bottom line.

And, like all business owners, she was tempted to adopt even more media channels to promote her business, because she wanted to grow. As I reviewed the channels she was currently using, I realized that “turning up the volume” on her marketing wasn’t necessarily going to help her.

And the same is true for your business, too. More marketing doesn’t necessarily turn into more clients. Here’s why…

Think of your marketing in these two different ways:

  • You’ve got the marketing that directly pushes people into your sales funnel, and further along in your sales funnel, until you are ready to ask them to buy from you.
  • And, you’ve got the marketing that doesn’t necessarily move people forward directly but it helps to support your credibility if and when they research you online.

Let’s call the first one “sales funnel marketing” and the second one “credibility marketing“.

Sales funnel marketing drives people into your sales funnel. Credibility marketing may have that impact but it does so indirectly. Rather, it acts as a promoter, credibility-builder, and helps to lock up your search results on Google.

Both types of marketing are necessary, but not in equal amounts. Unfortunately, a lot of business owners don’t differentiate between one type of marketing and the other and so they take the shotgun approach to marketing, just trying whatever channels they can get their hands on, and then doing more and more and more and more.

Here’s what should happen instead:

Your sales funnel marketing should receive the largest portion of your investment and it should also be the most measurable. And if you are going to overwhelm the market with one type of marketing, this sales funnel marketing should be the one you choose. The reason should be clear: This type of marketing pushes more and more prospective buyers toward a sale. It is directly responsible for the revenue you earn and the profit you keep. And it should be as measurable as possible. You need to pay attention to the numbers — how many people does it drive into your funnel with every deployment? What is the cost of deployment versus the return?

Your credibility marketing is where you can probably cut back. Choose a couple of different channels that you enjoy using, that have reasonable time/money/effort costs, that you can excel at. Don’t try to take on every marketing opportunity imaginable. Just pick a few things and do them well. Build a voice and an audience and a brand. Establish yourself in a few channels and you’ll gain more credibility that way than if you spread yourself thinly over several channels.

Now you’re going to ask me which channels are sales funnel marketing channels and which ones are credibility marketing channels. Unfortunately, I can’t answer that for you. It’s different for every business (and the answer is influenced by the target market and the industry and your skill in using that channel). For example: Twitter is a good credibility builder for some businesses but other businesses use it really well to as a sales funnel marketing channel. It really depends on how you use the channel and, again, on which channels that your target market is interested in.

So, if you are counting the cost of your marketing and trying to decide how you’ll possibly squeeze in ANOTHER marketing channel, first consider the role it plays. Is it a sales funnel marketing channel or a credibility marketing channel? Determine this, invest more of your time and money in the sales funnel marketing channels, and you’ll have a far greater return on your marketing effort.

The 5 steps to identify your sales funnel… This is the starting point of a more profitable business!

I frequently assert that your sales funnel is the most important asset in your business. It’s the structure around which you build your business, it’s the pathway that prospective buyers follow on their way to giving you money, and it’s a strategic tool you can use to grow your business.

The starting point for you to master your sales funnel and take control of your business is to draw out your sales funnel. Draw it out, add notes to yourself, and the document becomes the useful tool you can refer to daily in your business to help you make decisions and work on your business.

Here’s how to draw out your sales funnel…

1. IDENTIFY YOUR TARGET MARKET

You need a narrowly defined target market — one that is large enough to to market to, has enough money to pay you for your product or service, but small enough that you can establish yourself as an expert. (Note: “Everyone” is NOT your target market). Take some time to research your target market and learn about them. When researching, dig beyond the point where your target market’s needs intersect with your solution. Learn everything you can about your target market and you’ll uncover new ways to market to them and new opportunities to add value. To get you started, use this tool I created: 55 questions to answer when defining your sales funnel’s target market.

2. IDENTIFY YOUR TARGET MARKET’S MINDSETS

People buy a product or service to solve a problem or fulfill a need. They never rush out and buy the very first solution the millisecond they discover their problem or need. There’s a progression in their thinking:

  1. At first they discover their problem or need.
  2. Then they realize they have to do something about it.
  3. Then they seek out some solutions.
  4. Then they weigh those their solution options.
  5. Then they decide whether the solutions are worth the cost.
  6. Then they buy.

Those steps I’ve just outlined are an over-simplification of the “evolution of mindsets” that people go through before buying from you. For small purchases (like an impulse item in a grocery store check-out line), these evolutions are measured in seconds. For major purchases (like a house), these evolutions are measured in weeks, months, or sometimes even years. After researching your target market, write out the mindset evolutions that they are most likely going through. (Use the list above as a starting point but then make adjustments according to your knowledge of your target market).

3. OUTLINE THE ACTIVITIES

Once you know what your target market is thinking on their way to buying from you, you can craft marketing and sales messages around those thought processes with the goal of moving them from one step to the next. Activities are comprised of two things: The message you want to communicate and the action you want your target market to take.

Pro tip: Don’t try to get your target market to move from their current mindset to the point of sale. Just get them to move to the next mindset in their mindset evolution.

4. DEPLOY TO CHANNELS

Once you know who your target market is, you know where they like to spend their time and attention. Once you know what mindsets they have, you know what it takes to sell to them. Now you can use this information to put your sales funnel to work. Create marketing and sales messages (see Outline the Activities, above), and then put those messages in the channels (media) where your target market will notice them.

5. ADD PAYGATES AND DELIVERY

Your entire sales funnel “points” to a sale. And that can look very different from one business to another. Some businesses charge up-front and then deliver the product or service; some businesses deliver first and then charge. And there are other paygate/delivery configurations as well. (Check out my blog post Sales funnel paygates for more information and for a list of other blog posts on this topic). Select a paygate and delivery model that will encourage the most purchases from your customers but will also ensure consistent cash flow and manageable accounts receivables for you.

A FEW CLOSING THOUGHTS

This really simple step-by-step method to crafting your sales funnel is useful for new and existing businesses that need to optimize performance and improve profitability. It’s also just a starting point. Check out some of my other blog posts about sales funnels.

9 reasons why you need to become THE expert in your field

Each new level you ascend in your business may be the best you’ve ever achieved… but as you reach the summit of that particular level, your new vantage points reveals that there is still a bigger mountain — with a higher summit — just ahead of you.

In this blog post, I want to talk about the highest summit you can achieve — the expert status — and why you need to scale THAT summit as quickly as possible to make a difference in your business.

When I say “expert status” I don’t just mean that you know more than most other people. I’m talking “category of one” expert status. You’re not just AN expert in something. You’re THE expert in something.

And if I had to start my biz all over again, I’d do whatever I could to achieve this category-of-one expert status as quickly as humanly possible.

Here’s why you’ll want to become an expert in your category:

1. Experts are automatically credible

If you’re sitting in a seminar and a speaker is introduced as the world’s leading expert in [whatever], you will pay attention even if you aren’t familiar with the speaker. Expertise is credible. (If you’re faking it, it will be revealed soon enough so may I should say “true expertise has long-last credibility”).

2. Experts get paid first

Hat tip to copywriter John Carlton for this one. John Carlton says that experts get paid first, everyone else gets paid last. This is great advice and if you run a business (especially a service-based business) this should be the only reason you need to become an expert because getting paid first means no accounts receivables!

3. Experts get paid more

Don’t misunderstand me: Experts deliver more to get paid more. However, in my experience, the amount they get paid for what they deliver is proportionately higher than what non-experts get paid. You might say that experts don’t necessarily deliver a higher volume but higher value to get paid what they charge.

4. Experts are sought after

Most businesses spend a good chunk of their day searching for clients. With experts, it’s the other way around: Prospective clients are the ones seeking out the experts. The experts are in a position of power in the transaction, deciding who they will work with.

5. Experts have a long waiting list

Some businesses might find themselves temporarily booked up so that if they have to turn a customer away, that customer will simply go somewhere else. But a well-positioned expert has a long line of people who are eagerly waiting for the expert’s next availability and will wait as long as necessary for that expert.

6. Experts provide recommendations

When a business delivers its product or service, there is sometimes an unspoken question hanging in the air as if the business asks the client: “Is this what you were looking for?” or “Will this work for you?”. On the other hand, an expert makes recommendations and has the confidence that his or her recommendations will deliver exactly the solution that the client needs.

7. Experts are quoted by others

The insight and thought-leadership of experts is frequently quoted by other people — both by the expert’s target market and by the people who are still scaling that summit of expertise but have not achieved full expert status yet.

8. Experts have names that sell

When someone is still climbing the foothills of business, simply trying to go from “good enough” to “pretty good”, their name doesn’t necessarily hold much cache. The customers those businesses acquire might not care who they work with. But an expert’s name sells. Clients of an expert will not only pay more for the expert but they’ll boast to their peers that they worked with the expert. They’ll “borrow” some of the expert’s name credibility because it has significant value.

9. Experts are self-fulfilling

I added this one just before publishing this post. It’s something I’ve been thinking about lately and I haven’t been able to fully articulate it yet… but I’ll try: Experts are self-fulfilling in that what they say is true. If an expert says something, it becomes true (even if it wasn’t true before) because their stating it makes it so, and because their audience may unwittingly participate in making it true.

When lead generation turns into lead DE-generation

One of the tasks of a business is to fill its sales funnel with leads. The more leads (and the more targeted those leads are) the better. But not all of those leads will buy from you.

Although most businesses will have some leads fall out of their sales funnel, it pays to spend some time investigating the causes of lead degeneration.

To find out how much a lead is worth to your business, determine is what the average spend on each sale, then determine your prospect-to-customer (conversion) rate, then determine your lead-to-prospect (qualification) rate. So, if your average customer spends $100.00 per sale, and if you convert 1 customer out of every 10 prospects, and if you convert 1 prospect out of every 10 leads, then each lead is worth $1.00. ($100/10 prospects = $10; then $10/10 leads = $1).

In the scenario above, if you can plug the holes in the lead stage of your sales funnel and save even one lead, you’ve saved $1.00.

So how do you plug the holes in your lead stage? First, you need to identify why leads leave.
Although each business’ leads will have their own unique reasons for leaving, here are some general observations:

  • The lead discovers that your product or service doesn’t solve their problem in the way they initially thought it might when they were in the audience stage.
  • You don’t qualify the lead at the right time (either too fast or too slow).

Although there might be other reasons, many of the reasons I’ve encountered are subsets of these reasons for lead fall-out. Here are a few practical scenarios of how leads fall out of the lead stage:

  • The prospective buyer realizes they have a problem and they start to investigate the solution. They sign up for your email newsletter to get more information but as the information starts to come in, they realize that they don’t have the problem they once thought they did.
  • The prospective buyer is price shopping and although your product or service seems equivalent or provides even better value than a competitor’s product, the lead discovers the price and heads away from your business to the cheaper price.
  • The prospective buyer asks to find out more about your product or service and although they want information to make an informed decision, they instead get a sales pitch that tries to push them to a sale faster than they are ready.
  • As the prospective buyer moves through lead the stage, they start to uncover objections about your product or service. However, your sales process doesn’t address objections until the prospect stage.
  • The prospective buyer learns more about your product or service, and seems very interested, but they discover other solutions (including alternates and replacements that they had not considered previously), which seem superior at the time.

The lead stage can be quite tenuous – you don’t want to come across as too pushy but you also need to take charge and help the prospective buyer understand what you have to offer and what value it provides.

You can keep leads from falling out of the lead stage by doing some of the following:

  • Take a poll of your leads and of your prospects and compare the two. Are there responses present among your leads that simply do not appear among your prospects? Chances are, something in your sales funnel is driving those specific leads away (or outside of your sales funnel is attracting those specific leads away).
  • If you have captured some contact information from your leads, follow-up when it becomes apparent that they are no longer responsive leads. Ask them what they chose instead, and why.
  • Examine the marketing you do at the lead stage. Test new methods or new ways of communicating.
  • Time your leads through the lead stage. Test a slightly faster and slightly slower rate and see what happens.
  • Look at where you handle objections in your sales funnel and try spreading them out a little so that some objections are handled earlier in the funnel.
  • If your qualification (lead-to-prospect) rate suddenly drops off, scour the news to pinpoint a possible cause. Did a news story related to your industry suddenly sour your leads?

Lead generation is vital to ensuring that your business sells its products or services and generates cash flow. But if you don’t pay attention, lead generation can easily turn to lead degeneration.