Why small African businesses fail, and how to avoid it

A short series, in very few words, that will save you big business headaches!  Reason #4: Forgetting that sales should be managed too -...

A short series, in very few words, that will save you big business headaches!  Reason #4: Forgetting that sales should be managed too - By Kevin Bresson MBA, M.Eng


In one my earlier articles, I pointed out how North American businesses were extremely focused on sales, sales and more sales.  Unfortunately this is one of the big weaknesses of businesses in Africa – regardless of size.  Maybe it’s because many established and larger African businesses do not face fierce competition, and therefore do not put money into developing a sales culture; which would trickle down to smaller businesses on the continent.  As a result, while all small businesses know that sales is the most important thing they need to do, most of them fail to manage it effectively!

Reason #4: Forgetting that sales should be managed too

Cause: Too busy with other aspects of the business
How to avoid it: Understand the sales funnel & keep generating leads

To manage sales effectively, do the following:

1.    Understand the Sales Funnel

The sales funnel (or ‘sales pipeline’) is a popular method used to manage how a large group of potential customers at the top of the funnel will eventually result in a smaller group of final, buying customers at the narrow, bottom of the funnel.  There are various funnel layers:
  • Targets: A wide group of people who don’t know or care about your business
  • Leads: A bunch of the ‘targets’ that, as a result of your advertising or other efforts, show some interest in what your business offers
  • Opportunities: A bunch of the ‘leads’ that, as a result of your further display/presentation and pricing/quoting efforts becomes very interested in what your business offers
  • Sales: A final bunch of the ‘opportunities’ that actually buy the product(s) or service(s) of your business
The beauty of this process is that it helps you visualize how many ‘targets’ you need every month to achieve a certain amount of monthly sales.  Furthermore, it will show you all sorts of areas that may need improvement. 

From the retail clothing shop example above, if you are advertising to 5,360 ‘targets’ each month, and only 10% visit your shop, you may decide to change the type of promotion or advertising to increase this conversion rate to 20% (i.e. 5,360 x 20% = 1,072 ‘leads’). 

From the landscape & gardening services example, it is clear that if you expect sales of $5,000 per month, at this low rate of conversion, you will need significantly more ‘targets’ than the clothing shop, and that could become costly.  The best thing is to improve your selling skills (maybe by following a sales course) so that you can improve the conversion rates.

2.    Manage your sales funnel continuously

I am sure you can now see and understand the need to continuously feed the top of the funnel so that you can reach your target sales at the bottom.  Continuously hit ‘targets’ through good marketing and continuously improve your skills and abilities to convert these to ‘leads’, then ‘opportunities’ and then finally to ‘sales’. 

Even try ‘cold calling’.  This is used extensively in developed economies, whereby cheaper or more junior employees are used to call or approach many potential leads.  The movie Wolf of Wall-Street has an inspiring scene on how a cold-calling script was perfected to win sales, and grow a nefarious business quite rapidly. 

Some of you will by now realise that my small business articles have one thing in common – planning!  While many can relate to a cash-flow plan, given that it is part of the more established accounting or financial activities of a business, today’s article shows that even the more instinctive and natural skill of selling needs a plan, if you want to achieve continuous sales success.  After all:

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