Selling to Small Businesses in Down-Times

Guest Contributor: Albert Luk
Albert's Posts - Albert's Site

We are halfway through 2008 and it is clear that the economy is going through some adjustments. The days of easy sales are pretty much over unless your clients are in the oil and gas industry. Small businesses have always been the harbinger of economic tidings- they know when things are going good or bad before big companies do; small businesses simply don't have the resources to see how things will go. They have to adjust quickly to changes in the economic environment.

How does that affect someone who sells to small business?

1. Lowering the price is not the answer (even if headquarters will let you).

Competing on price is a dangerous game. Wal-Mart has no natural competitors for a reason: more often than not, a business with a unique value proposition of the lowest price doesn't survive for long: low prices do not attract customer loyalty, someone will always offer a lower price and what you make up in revenue you lose in profit (which is what the boss is really concerned about). Stick to what works- offering valuable service and building on your relationships.

2. The major threat is not small businesses will buy less but they will take longer to pay for it.

Receivables cycles always lengthen during down-times. People want to max out their financing and it becomes a cascading effect: as small businesses are stretched on their receivables so will their suppliers. If you offer a product with vendor financing, consider adjusting your financing rather than your pricing. Lengthen the amortization to reduce the monthly carrying costs or waive interest for the first month. Small businesses still need your product. They just don't have the same cash flow to pay for it. So alleviate that pain with creative financing.

3. Stop selling and start servicing.

Have you ever heard "you only call me when you want to sell me something?" If you have, you are on the cusp of losing a customer because you do not have a relationship with your client; they are merely another sales call. Statistically, the average length of every recession since 1957 is approximately 8 months. That is a little less than 3 sales quarters. Rather than use those 3 quarters trying to make a sale that may not happen, use that time to tell your client you are there for them and find ways to add value to them beyond selling a product or service. A simple coffee where you do not sell at all could mean a lot. Over the long term, using the down times as an opportunity to strengthen the relationship could pay off in spades down the road.

No one has all the answers in down-times. The leads are not as numerous and the sales cycles lengthen for small sales but that is part of the process. The key is to stick to what made you a good salesperson to small businesses in the first place and not to change your approach 180 degrees to what is, in the long run, a small bump in the road. Best of luck.