Business Acumen

B2B sales pro's need to understand how a business operates. They need business acumen. Sounds obvious doesn't it? Some of us miss this point. The better you understand the inner workings of a business, the better and more credible your probing questions become during the discovery phase. Your questions will be better targeted and you'll more likely uncover hidden pain and/or the reasons for that pain.

There are two aspects of a business that should be understood, accounting statements such as the Balance Sheet and Income Statement, and the Cash Flow Cycle. Today, let's address the cash flow cycle. I like an appreciation for the cash flow cycle because it helps us to sell to all job functions and titles within the company. Information and questions from an Income Statement, for example, will not often be understood by your relationships within the prospect company.

Bear with me through what may appear to be extremely obvious. A business is in business to make money or profit. Profit equals revenue minus expense. To the extent that the CXO can control expenses while driving revenues AND collecting on those revenues, s/he is making profit. Every employee, every job function and title has an impact on the cash flow cycle. That's why I like it so much - you can find opportunities and people to talk to all around the cash flow cycle!

Please direct your attention to the cash flow diagram in the upper right. It suggests a certain direction, certain objectives, i.e. sell and deliver, and typical job functions responsible for those objectives. It all starts at the top doesn’t it? The CXO suite oversees the raising and return of equity into the business so that first, infrastructure needs may be met. Let’s say your prospect is selling widgets. Your prospect has to build an assembly line to manufacture those widgets, hire people through HR to staff the line, invest in IT infrastructure to help manage the business etc. etc. These functions and activities are heavily expense-oriented. Continue moving clockwise around the circle. Now that the widget has been produced, it must be sold and delivered. The widget now begins to represent revenue rather than expense. Once the widget has been delivered, the organization must now collect on that revenue, as effectively and quickly as possible.

Notice that the CXO suite oversees all aspects of the cash flow cycle and will appreciate and understand every aspect of it. It makes the CXO suite a great place to be positioned! But often it is harder done than said. So let’s assume you are positioned with a team of IT managers. They are positioned squarely in the expense side of the cycle. Guess what their overwhelming concern will be? “How will your product or service reduce my costs?” They won’t react to an interest gaining statement that might suggest, “my product will increase your revenue stream by x%” nor will they normally have any answers to questions around revenue generation challenges or issues. Moreover, those types of questions will make them feel uninformed. This is not a good way to start a relationship!

Instead, deliver questions that address cost concerns surrounding their IT infrastructure. If your product or service is considered too expensive for them, look for ways that your product or service might drive cost out of other aspects of their IT operation. Your job as a sales pro is to make the price point of your product or service a side-point to the overall cost-benefit it can provide.

Let’s say that you sell a software application that helps to improve the DSO’s (days sales outstanding) of the prospect’s receivables. Finance, your logical point of first-entry, initially pushes you off to IT. Any reference related back to IT about the improvement of this prospect’s DSO challenge, if they have one, will not necessarily be appreciated. They’ll want to know, “Does it interface with my other applications…..how will it be installed….who will manage it?” etc. Most of all, they’ll want to know, “how much does it cost?” So in your discovery phase, try to get a sense of where the budget might exist (functionally) for this type of expense. Would your product be replacing something else? What is IT doing to support AR efforts currently? Where might there be other cost concerns within IT? You get the point.

Keep your business acumen sharp at all times. Learn not only from the web, existing courses and publications but also from your trusted associations with existing clients. Ask them what their day is like, who and what are they trying to satisfy and why. During discovery with a prospect, keep your questions pertinent to the position your contact occupies around the cash flow cycle. In the end, you will have performed extremely well in discovery, and your sales cycle will be much shortened with a positive outcome!