This article is written by Markus Laakkonen, Regional Director at Finnvera plc
In any discussion about entrepreneurship and its significance for the national economy, the focus tends to be on growth enterprises. In my view, this is exactly the right approach. At the micro level, I would go so far as to say that a growth orientation is a fundamental requirement for the continued existence of any enterprise. Growth is not just an opportunity for an entrepreneur – it is also an absolute necessity. Costs have a habit of increasing, and no enterprise can survive in the long term on a strategy of continuous cost-cutting. Under such conditions, any enterprise will wither sooner or later.
Discussions about growth tend to emphasise innovation. What is the competitive advantage of the enterprise: a new service, product or raw material; a new production method; a new procedure; etc.? While these are vital, they are also useless if the enterprise is unable to convert them into turnover – money – which, by the way, is also what pays for the development costs of all of the above. There is no business without cash flow. As a nation, we are world leaders in problem-solving but spectacular underachievers in productising solutions.
Indeed, our discussions tend to ignore the very source of growth, i.e. the increasing of cash flow, and the concrete means for achieving precisely that: SALES. We Finns find it extraordinarily difficult to talk about sales. Experts/specialists in particular seem to have a particular aversion to selling things. Sales is an area that many Finns associate with pushy and demeaning solicitation and cold-call terrorism only practiced by ‘helppoheikit’. In many cases, people tend to focus on their development projects to the exclusion of everything else, trusting that sooner or later someone will notice our excellence and come to us from across the world to do a deal. This is known as the ‘aggressive waiting’ sales strategy, and I can assure you it does not work: you will run out of money before anything happens.
Let’s take a closer look at this with a few simple examples, from least difficult to most difficult:
– Selling to current customers. In order for your enterprise to maintain sales at the current level, to be able to raise prices or to increase the number of units sold, your customer satisfaction must be outstanding (unless you have a monopoly on the market). This means that your customers are actively willing to do business with you and to pay a premium price for the product or service that you offer. There is a high threshold to switch suppliers. Indeed, it is often said that customer satisfaction is an important early indicator for your enterprise along with personnel satisfaction. I have no doubt that this is true!
– Poaching a customer from a competitor. Generally, any potential customer of yours will already have a partner in your field. In such a case, you need to be able to build trust and to convince that customer that he would definitely be better off doing business with you. With reference to the previous example, this is obviously much easier if your competitor has not ensured that his customer satisfaction is excellent. Unless your service or product is incredibly superior, building trust and succeeding at sales efforts will take a longer time. It is also important to understand the strengths and weaknesses of your competitors. This scenario, by the way, is often faced by enterprises that are starting up.
– Gaining a new customer with a new solution on a new market. This is the king of all growth strategies. Actually, there are extremely few enterprises that may be described as ‘Born Global’. In order to achieve this leap, you need to have international expertise resources and lots of money and time. At the same time, you need to ensure that your business continues to develop at your home base. In practice, you have to be prepared to have an expert presence anywhere at any time. An enterprise generally has to be of a fair size in order to achieve this quantum shift.
All of the above is a gross simplification, for the purposes of illustration. I feel that it is important to understand in all situations what the skill set is that is required of a salesperson to succeed. I would point to good interaction skills as the most important thing. By this, I do not mean just smooth talking, but especially listening skills; the ability to understand and find out what the customer’s actual need is, and then to provide a solution for it. Networking skills are a close second: you need to know the important stuff that is going on in your operating environment. You need to be able to offer your customers and your own enterprise significant added value.
When you look at it this way, I believe that your appreciation of good salespeople should be very high indeed; often it takes a true specialist to be a successful salesperson. A specialist, moreover, who has good people skills and who is able to constantly update his or her expertise. I hope you can agree with me on this!
At Finnvera, our purpose is to finance growth projects. We are a genuine risk financer. Our funding decisions are not based on collateral; we genuinely want to understand what your business is about. What is important for us is to understand how your business and your project will be profitable, with a healthy funding structure. Every year, we foster funding solutions for growth projects for thousands of enterprises, and I can promise you that we can provide not only money but also expert brainstorming. Interaction is paramount in projects like this. For funding solutions having to do with operating capital on a small scale or in the short term, we aim to provide the solution quickly.
Regional Director, Finnvera plc
PS. In the cases described in the second and third examples above, I often ask my clients to consider whether they could jump-start themselves by buying existing business operations and/or shares in an existing enterprise. Here, too, we can help: we are involved in the funding of almost half of all corporate acquisitions in Finland.