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Tuesday, November 27, 2012

Entrepreneurs must excel at selling

Entrepreneurs learn to sell and negotiate or they never get to YES!
A recent comment via friends (@RevenueDoctor & @Bill_Simmel ) on Twitter reminded me of the quote by Zig Ziglar:   Every sale has 5 basic obstacles: No Need, No Money, No Hurry, No Desire and No Trust.”   The need to overcome the obstacles and close a sale is critical if a company wants to survive.  Sales are essential to prepare for even before the product comes to market.    

Marketing and sales of medical products are even more complex than many other types of products.  The regulatory requirements of the FDA ensure that approvals are supported by validated and solid statistical studies.  Any marketing claims not properly documented supported by data result in severe responses by the FDA.  It is even possible to go to jail if the infractions are severe enough.   The need to match the marketing claims to data collected to support the claims is the reason many companies have a marketing person closely involved in any study designs leading to a product approval.  Thus, an additional obstacle to overcome is “insufficient data.”   This obstacle also flows to the medical site where the sale takes place.  The physicians review the data and may fail to adopt the product usage for lack of data, loss of patient to a different practice, or other means, i.e. “loss of revenue.  The control of the patient and revenue to the medical practice is critical to each practice.  As a sales person, you may overcome all of the 5 basic obstacles Ziglar lists, but the insufficient data and loss of revenue are two that will kill a medical sale even quicker.

Entrepreneurs need to understand the dynamics of the market place for medical sales and they need to convince investors to participate with their money.  This attraction of investors is no small task.  The last decade has contributed to a downturn in the VC funds and other investors willing to take on such risky investments.  There are numerous companies with fantastic product ideas in development all competing for the limited capital in the sector.  The risk tolerance of the investors is understandable since many of the VC firms fail to come close to the returns their partners thought were possible.  The larger number of companies in later stages of development results in a wider selection and greater competition for the money from the remaining viable funds.  In turn, this results in cherry picking of the more developed and therefore less risky investment opportunities.

The selling process to the investors by the entrepreneurs in the medical sector is requires two selling aspects:  1) they need to demonstrate that they understand and can competitively market and sale their developed product, and 2) they need to convince the investors to support the growth of the company.  The investors will actually review the first criteria as part of their diligence on the company.  The diligence never starts if the entrepreneur fails to sell the idea of the company to the investor. 

A different set of issues and criteria may occur in other fields.  The thought that starting a company requires a great idea is only part of the equation.  Entrepreneurs must understand their markets and sales criteria for the products.  They must also be able to sell the idea of the company to the investor community and negotiate the best deals possible.  Getting to YES is difficult and knowledge of selling and negotiating is essential.  Several criteria help take a company grow from the early startup to a huge success.  Nearly every criterion requires some ability to sell something to someone and negotiate the result.  In short, entrepreneurs must become master salespeople and negotiators and use these skills to grow the company.