Naomi Kokubo
by Naomi Kokubo
This is one of the hardest problems startups face. How do you close deals when you’re a young company without a proven track record.
Here’s some advice from my experience:
1) Set a deadline – you’d be surprised at how well this works. Create a deadline (real or artificial), and tell the customer that they need to give you an answer by this time. Without a deadline, many potential customers will just sit on the fence. By simply saying, “I need to know by Thursday what your decision is,” you will get results. You don’t even have to explain why you picked Thursday. It’s just part of the process you establish.
2) Move on – when the deadline passes, don’t hold out hope this deal will ever happen. Move on to other opportunities.
3) Push for a NO! That’s right. If the prospective customer can’t decide, then push them to say NO. At least that way you’ll have an answer. You don’t want to keep wasting time following a dead lead. In most cases, the deal will never happen, so you might as well find out early and save yourself a lot of trouble. Remember, time is money.
4) Create competition – for example, you may say to your customers, “We only have bandwidth to take on two more clients this quarter, and if you want to work with us, you need to let us know ASAP, otherwise those slots will be taken.” Again, the customer needs a reason to commit, and competition is a great motivator.
5) Listen – Many startups don’t listen to their potential customers, so they don’t learn anything in the sales process. Most of the time, the customer will tell you whether they truly “need” your product or not. If they don’t need it, you are wasting your time. They may also tell you something else they need, and this may give you a better idea of what you should be selling.
I hope this tried and true advice helps get your business off the ground!
Very simple. Listen to the customer and work out the business driver that created the need for your product. Hook your car to that locomotive.
If you can’t connect to one of their critical business needs then move on. You will not close.
This is all good advice. If you don't have your lawyer in touch with the lawyer for the other side, you might consider that, as well. I know that sounds counterintuitive (lawyers are famous for wrecking deals). If the lawyers start turning drafts, though, it can shift the business people to thinking about precisely how they want to do the deal, rather than abstractly pondering if they want to do it (or not thinking about it at all). That can show people how close they are and build momentum to finish.
I've had mixed success doing this for clients. I'd say there are four basic factors that determine if it's a good strategy: First, the deal has to be something that needs real documentation (i.e. not just a large but one-time equipment sale) and can justify whatever you have to spend on your lawyer, assuming you don't have one in-house. Second, your lawyer has to be with the program and willing push things along. Third, the other side has to make their lawyer available. Big organizations and people who are only vaguely interested in you may resist putting you in touch with their lawyers (as to the latter, though, it's a good gauge of seriousness). Finally, the lawyer on the other side has to have an interest and ability to get her business people moving. This is the real wild card. Some lawyers are part of the business team. They can get things done and may be eager to do so. Other in-house lawyers think and act like bureaucrats: If they're not getting pressure from above to work on something, they'll ignore it and go home at 5:00. On the good side, your lawyer will not have to expend many billable hours to determine that you're facing that kind of lawyer.
I hope that helps a bit. Good luck.
I assume they can't afford to hire anyone. Most early-stage startups are cash strapped, and it's usually the founder doing all the biz dev.
I like this idea, but would be cautious of the term Biz Dev. To me that means 'sales without a quota' or some one who talks a good game for a long time but does not produce results. I'd look to add VPs of Sales to your advisory board; they can help you with your go-to-market model as well as tactical deal execution advice.
Find a Biz Dev Consultant with a track record to help you figure out the closing strategy – I have a genius in mind (not me) if you want a recommendation.