Negotiation is an art form, a delicate ballet of give and take. And while many might believe it’s all about splitting differences, actual negotiation delves deeper. Echoing the philosophy of “never split the difference,” real negotiation is not about compromise—it’s about collaboration.

As we train and coach sales teams, we find less than 25% of salespeople have received negotiation skills training, and over 75% of professional buyers have been trained. This negotiation skills mismatch results in companies leaving millions of dollars on the table that could have ( and should have) flowed to their bottom lines.

In this post, we will discuss negotiation and the critical role it plays in increasing your gross profit margins.

Understanding the Core of Negotiation

Negotiation is more than just a transactional conversation; it’s a dance of dynamics.

At its heart:

• A mutual conversation aimed at reaching an agreement: Both parties are active participants, each bringing their desires and constraints to the table.
• A dynamic process, not a static event: Negotiation evolves with every exchange, every counteroffer, every nod of agreement, or furrowed brow of disagreement.

Whether in boardrooms hashing out million-dollar deals or at local markets haggling over the price of fruit, negotiation plays a pivotal role in our professional and personal lives. But to master it, one must shift from viewing it as a compromise, where both parties lose something, to a collaborative effort where everyone can win.

At the root of good negotiations is win-win intent.

Hard Bargaining Techniques

Hard bargaining is the poker face of negotiation, often seen but rarely understood.

Anchoring: The aggressive approach starts with audacious demands or resorting to threats. It’s like trying to win a race with sheer force without considering the stamina needed to complete it.

The guilt trip: Ah, emotional Manipulation! Whether feigning disappointment or playing the victim, it’s about trying to win concessions through sympathy.

The Flinch: you share your proposal, and the other person verbally and visually flinches. This is a tactic to make you make concessions.

Red Hearing: The person you are negotiating with brings up things unrelated to the current negotiation.

Stonewalling: Have you ever faced a wall of silence? Some negotiators use non-responsiveness as a tactic, hoping the other side will cave under the Pressure.

The “salami” technique: Instead of going for the whole pie, they’ll ask for it slice by slice, wearing you down gradually until they’ve taken the entire thing.

The decoy: Like a magician’s trick—while you’re focused on the flashy distraction, they’re working their real agenda.

Good cop, bad cop: you are in a meeting with your decisionmaker, and the new person enters the room. They are difficult and demanding and often leave the meeting early in frustration. This is a play orchestrated by the person you are negotiating with to make you lower your guard.

Anchoring: The other person starts the discussion with an anchored price, often much lower than industry standards.

Deadline Pressure: Creating a sense of urgency or time constraint to force a quick decision.

Emotional Manipulation: appealing to the person’s emotions or relationship with the other person.

Nibbling: you thought you had a deal, and the other person keeps asking for more concessions.

Silence : ( salespeople hate this one) Using silence to make the other person uncomfortable and likely to make concessions to fill the silence.

Threats: Issuing direct or implied threats to gain compliance. The threat of losing their current business, the danger of damaging a long-term relationship.

Limited Authority: Claiming to have limited decision-making power to justify hardline positions. One example as of late my sales teams I am seeing: We must have 120-day terms to do business with you. I cannot enter any new vendors who do not offer 120-day terms.

Lying: I hate to break it to you, but people lie in negotiations to help their bargaining position. Working with the manufacturer of industrial products, their buyers shared you are 30% more expensive. Not 11%, 8.5%…but 30%. There is a strong probability their products are more expensive, but we doubt it is 30% based on our competitive research and win/loss analysis.

End of quarter End of Year– here, the other person has made a remarkable discovery and understands what closing this negotiation means for the other person at a critical timeframe.

Strategies to Handle and Counter Hard Bargaining Techniques

Navigating the choppy waters of negotiation, especially when faced with hardball tactics, requires strategic thinking, empathy, and assertiveness. In the four negotiation courses we offer, we help sales teams to handle brutal bargaining tactics as well as how take a consultative sales approach with a strong business case that often eliminates negotiations together and quickly moves to a close. Here’s a deeper look into strategies that can turn the tables and bring balance to even the most challenging negotiations.

The Power of Patience

In the fast-paced business world, there’s a temptation to respond quickly, to be seen as proactive. But sometimes, the most potent weapon in your arsenal is patience.

Not reacting immediately: When confronted with a highball offer or an ultimatum, take a step back. An immediate reaction might be emotional and not strategic. Please allow yourself some time to process the information and make a thought-out response.

Taking time to think and respond: This can also unsettle hard bargainers. They often expect a quick concession or compromise. By delaying your response, you’re sending a clear message: you won’t be rushed or bullied into a decision.

Active Listening

Every word, pause, or inflection in a negotiation carries weight.

Seeking clarity: Instead of making assumptions, ask questions. If a negotiator makes an aggressive demand, a simple “Can you help me understand why you believe this is fair?” can shift the dynamic, placing the onus on them to justify their position.

Asking probing questions: These delve deeper into the other party’s interests, revealing underlying motivations or concerns. It’s a way of peeling back the layers, getting to the heart of what the other party truly wants.

Establishing Clear Boundaries

Every negotiator has their limits. Recognizing and asserting these boundaries can prevent resentment or regret later on.

I want you to know about your non-negotiables: Before entering any negotiation, please be clear about what you’re willing to flex on and what’s off the table. This clarity provides a firm foundation upon which to negotiate.

Communicating them assertively: It’s one thing to know your boundaries and another to share them. Use clear, assertive language. Instead of “I’d prefer if…” say, “I cannot go beyond this point.”

Shifting the Focus

Hard bargainers often fixate on positions, but the true magic of negotiation lies in uncovering interests.

From positions to interests: While a job is a stated demand (e.g., “I want a 10% discount”), interests delve into the ‘why’ behind it. Maybe they’re facing budget cuts or have financial targets to meet. They are knowing the ‘why’ allows for creative problem-solving.

Seeking mutual benefits: Once interests are bare, look for overlap—a space where both parties’ needs intersect. This is the sweet spot of collaborative negotiation.

Know Your BATNA

BATNA is your Best Alternative to a Negotiated Agreement. It represents what the other person can do if the negotiation fails. Knowing your BATNA is critical in negotiations because it serves as a benchmark to evaluate the proposed agreement.

Why is BATNA so important?

• Strengthens Negotiation Position
• Informs Decision-Making
• Reduces Pressure
• Encourages realistic expectations
• Promotes Creativity
• Facilitates trade-offs

Building Rapport

Beyond tactics and strategies, negotiations are, at their core, human interactions.

Finding common ground: Maybe you both enjoy golf or attended the same university. These shared experiences can break the ice, making subsequent discussions smoother.

Humanizing the interaction: Remember, behind every hard bargaining move is an individual—with pressures, concerns, and motivations. By empathizing and connecting on a human level, negotiations can shift from confrontational to collaborative.

As we share in our relationship-building course, we must build a strong business relationship. We need to make deposits in the other person’s emotional bank account long before we enter into negotiations.

We instruct our trainees to move from sales rep to trusted advisor, adding tremendous value.

“Never Split the Difference”

Derived from high-stakes scenarios like hostage negotiations, the philosophy of “Never Split the Difference” goes beyond mere compromise. Authors Chris Voss and Tahj Raz share this approach challenges the conventional wisdom of finding a middle ground.

The origin and essence of this philosophy rest in its emphasis on achieving optimal outcomes for both parties. Splitting differences may result in both parties walking away unsatisfied. Imagine two parties arguing over an orange. If they split it, both might not get what they truly wanted—one needed the zest for a recipe, the other, the juice for a drink.

Actual negotiation, as embodied by this philosophy, is about delving deep, understanding core needs, and crafting solutions that serve these fundamental interests. It urges negotiators to go beyond superficial compromises, urging a focus on shared benefits and value creation, leading to solutions where both parties genuinely feel they’ve gained.

Conclusion

In the intricate dance of negotiation, every step, twirl, or pause matters. But it’s essential to remember—it’s a dance, not a battle. Leave your ego at the door. Or, as one of my mentors once asked…” do you want to win or feed your family?” By approaching negotiations with a blend of firmness and empathy, understanding when to lead and when to follow, you ensure that both parties leave the floor with a sense of accomplishment and harmony. After all, in the world of negotiation, a win-win is always the most elegant finish.

When we help teams improve negotiation skills, we have the best results with a blended spaced training design with live real-life scenario role plays to practice and perfect the skills they learned throughout the course.

Yes, you can take negotiation skills training online, but as I shared in a recent presentation, you can learn about how to ride a bike on a YouTube video, but you need to do it with someone running alongside you to master it truly.

Have your salespeople and buyers received negotiation skills training?

What impact would it have to win an additional 4%-7% or even 10% of gross profit margins to your bottom line?

Could your team be leaving money on the table?

Schedule a sales effectiveness assessment and figure out your team’s current negotiation skills.

Let’s be blunt: a poorly performing sales team can be the downfall of any business, no matter how great the product or service is. The stark reality is that the sales team is the backbone of revenue generation. But hey, if you’re reading this, you’re not interested in watching your business falter—you want actionable strategies to propel your sales team to stardom. This article delves into what might be holding back your sales team and provides pragmatic steps to enhance their performance.

The Paradigm Shift: From ‘Salespeople’ to ‘Problem Solvers’

Traditionally, salespeople have been viewed as, well, just that—people who sell stuff. It’s time for a paradigm shift. In today’s competitive market, the most effective salespeople act as problem solvers. This means equipping your team with the tools, knowledge, and mindset they need to understand the unique challenges each customer faces. Resources for this transformation could include targeted workshops, mentorship programs, and ongoing education on industry trends and pain points.

Common Sales Skills Gaps That Impact Your Net Income

1. Closing Skills

One startling statistic reveals that a whopping 67% of salespeople never even ask for the order. Imagine going on a date and never asking for a second one because you’re scared of rejection. That’s pretty much what’s happening here. This could be due to a variety of reasons, including the lack of adequate training in closing techniques and a deep-rooted fear of rejection. To tackle this, incorporate role-playing sessions where team members practice different closing scenarios, guided by experienced mentors.

2. Business Value Conversations

In the B2B world, you’re not just selling a product—you’re proposing a change in business operations. Therefore, skills like discovery, rapport building, and qualifying are indispensable. Falling short in this area is like trying to play poker but not knowing when to fold. Teach your team how to ask the right questions that guide a lead through the sales funnel effortlessly.

3. Build and Deliver a Business Case

Your sales team should be able to convey the benefits of your product or service as a solution to a problem, not just as a standalone offering. If your sales rep can articulate how a feature will significantly improve a process for the client, they’re more likely to make the sale. Workshops focusing on crafting compelling business cases can make a world of difference here.

4. Handling of Objections and Negotiation

Resistance is inevitable. Every salesperson will face objections; the key is to not just anticipate them but to address them effectively and professionally. A good salesperson listens to objections as these could be the steppingstones to insights that seals the deal. Run regular role-playing sessions that simulate various objection-handling and negotiation scenarios.

When we train and coach sales teams, we identify the top 5-10 common sales objections and train team members how to handle sales objections not overcome them. When the objection occurs, the salesperson is prepared, and the discussion is conversational not confrontational.

5. Sell Based on Value, Not Price

The market is full of competitors who can easily undercut you on price. Now that  most teams have fixed their supply chain problems, everyone has inventory they are hungry( often desperate) to move. But what they can’t do is deliver the unique value that your product offers. Training sessions should focus on how to communicate this value to potential customers convincingly.

When surveyed 86% of C-suite executives said they would meet with a salesperson who could present a business case to improve their bottom-line.

Process to Get More Results from Your Current Sales Team

1. Assessing Sales Skills, Motivations, and Beliefs

Before we can figure out how to fix something, we need to know what’s broken, right? Assessment is like the diagnostic phase, an MRI of your sales team,  where you identify the current state of sales skills and beliefs. . It’s not just about asking, “Can they sell?” It’s also about understanding why they sell and what could potentially hold them back from selling more. Does the sales team have a high will to be liked? So high they are not asking great discovery and qualifying questions?

There are many ways to conduct this assessment. One teams often use is the sales manager assesses the skills of salespeople. The trouble with this method is the managers often just look at sales and profit results and not the actual skills to be a top performing salesperson. Sales managers often compare how the salesperson sells to how they sold “back in the day” and not considering the skills needed today.

However, for a more objective view, you might employ third-party assessments or even customer feedback. The assessment instrument we deploy reviews 21 sales skills, competencies and beliefs. Don’t forget about beliefs—sometimes, a salesperson may have all the skills and motivation but still fail due to limiting beliefs like, “I can’t close deals with big clients.” Or “ my customers will buy when they are ready”

2. Identifying Strengths and Skills Gaps

Now that you have the data, it’s time to put it to good use. You’ll likely find that your team excels in some areas while lagging in others. For example, many sales teams have strong product and service presentation skills but lack other skills like discovery, closing and negotiations/  The key here is to be as specific as possible. Instead of saying, “We need to improve sales,” say something like, “We need to work on improving our closing rate for inbound leads.”

Being this specific helps in crafting targeted training modules and application exercises that yield quick and efficient results. You don’t just want to know that your sales team needs to improve—you want to know exactly where they need to improve so you can apply the right remedies. Often we prescribe sales skills training, a formal sales process and sales coaching to close the gaps discovered.

3. Designing Sales Training and Coaching Programs to Close Skill Gaps

Okay, so you’ve assessed your team and identified their strengths and weaknesses. Now what? Now, you train them. But not just any generic training modules will do. What you need is a tailored program that specifically addresses the issues you’ve identified.

For instance, if your team struggles with handling objections, you don’t want to waste time teaching them how to improve their cold-calling skills. Instead, focus on objection-handling techniques, providing them with real-life scenarios and role-play exercises. And remember, training is for imparting new skills, but coaching is for refining those skills. Make sure your program includes both these elements. A good sales training program isn’t a one-and-done experience; it’s an ongoing spaced and stacked process that adapts as your team grows and evolves.

4. Ensuring the Right KPIs Are in Place and Measuring What Matters

KPIs, or Key Performance Indicators, are like the gauges on your car’s dashboard. They tell you what’s happening under the hood in real-time. But here’s the thing—KPIs can be deceptive. Vanity metrics, such as the number of calls made, might look great on paper but do nothing for your bottom line.

What you want are actionable KPIs that give you an accurate picture of your sales team’s health. Think metrics like customer lifetime value, conversion rates, meetings and quotes delivered and deal closure rates. These are the indicators that tell you not just how hard your team is working, but how smart and effectively they’re working. By focusing on the right KPIs, you can make data-driven decisions that lead to tangible improvements.

The Role of Sales Leadership in Sales Effectiveness

Leadership is the cornerstone of any effective team, and your sales team is no exception. Effective leaders don’t just dictate; they coach and inspire. Open communication channels between the leadership and sales reps can help identify issues before they escalate into problems. Leaders should be approachable, open to feedback, and should create an environment that encourages learning and innovation. When we train sales managers and leaders we teach coaching skills, pipeline management skills and how to have a weekly sales meeting that drives growth.

Conclusion

Don’t just skim through this article and forget it. If your sales team is underperforming, you have a wealth of actionable strategies at your fingertips to rectify that. From skill development to leadership approaches, these are not just theories but tried-and-true methods to propel your sales team and, by extension, your business into success.

We recommend assessing the current state of sales effectiveness of your team and developing a plan to strategically improve their skills. It is not unusual the wrong mindset is impeding sales results and lowering profit margins. If that is the case the salesperson needs training and coaching.

How effective is your sales team today?

How much more effective could they be?

What skills and beliefs might be hurting their sales results today?

Let’s schedule a call if you would like to discuss improving the effectiveness of your sales team.

The global landscape of sales is different from what it used to be. In this new era, marked by the aftermath of a pandemic, the post-pandemic hybrid sales environment has emerged, intertwining the virtual with the physical. For sales professionals, the mandate has become clear: adapt to this changed scenario by refining strategies and sharpening specific skill sets to resonate with today’s demands. Unfortunately, as high as 60%, based on our assessment data, salespeople have yet to adapt their skills to a hybrid sales environment.

The Shift to a Hybrid Sales Model Post-Pandemic

Historically, sales thrived on handshakes, face-to-face meetings, and in-person presentations. The pandemic, however, redefined these norms. We witnessed the birth of the hybrid sales model—a synergetic blend of traditional face-to-face sales and remote, digital interactions.

A global crisis, in the form of COVID-19, made this shift unavoidable. Traditional sales interactions faced significant challenges with lockdowns, travel bans, and social distancing norms. However, even as we gradually return to some semblance of normalcy, the hybrid model’s advantages are hard to ignore. It offers unparalleled flexibility, extends reach beyond geographical confines, and can be more time and cost-efficient.

Yet, this evolution isn’t without challenges. The digital shift requires mastering new technologies, guaranteeing effective communication over virtual platforms, and ensuring that client relationships remain robust without the regularity of physical meetings.

Salespeople who still need to adapt and build virtual selling skills are struggling. As I shared in one post, salespeople who have not made virtual selling skills are basically selling naked, like in the story of the emperor’s new close.

The Top Sales Skills for Success in a Post-Pandemic World

Navigating the sales domain in a post-pandemic world demands more than just conventional tactics; it calls for a blend of old-school principles, novel strategies, and an adaptive growth mindset. Here are the most sought-after skills in this hybrid sales era:

Building Business Relationships

Even in a digitized environment, the human-to-human connection remains at the core of the business. The relationships forged with clients go beyond transactions:

Personal Touch in Digital Interactions

It’s not about replacing face-to-face meetings but about replicating their essence in a digital context. This could mean using video calls more often, remembering personal details about clients in your CRM, or even sending a quick note on special occasions.

Leveraging Technology

Tools like CRM software can remind salespeople about follow-ups, ensuring no leads fall through the cracks. In addition, analytic insights can indicate the best times to reach out or offer personalized suggestions to clients. As CRMs add AI functionality, the CRM will recommend actions for sales managers and salespeople.

Value Addition

In the post-pandemic era, relationship-building means being an active partner in a client’s success. This involves understanding their challenges and proactively suggesting solutions—even when there’s no immediate sale involved.

Identifying Goals and Challenges

As I shared in my book, Driving Explosive Growth, human-to-human interactions will become the determining factor for sales teams who reach and surpass their goals and those that miss their sales plan again. More salespeople missed the plan that was achieved in 2022, and we do not expect 2023 to be much different.

Salespeople trained in building business relationships know how to build rapport and know industry trends and everyday struggles their customers have. They have been trained to use discovery and qualifying questions to get below-the-surface discussions with buyers and truly understand the problems to be solved.

Virtual meetings, building rapport, and asking great discovery and qualifying questions are essential for salespeople today. Opportunities they once would see as they walked around prospects’ facilities now must be heard from insightful questions that demonstrate competence and build trust.

Discovery and Qualification

Recognizing potential clients and understanding their needs is an art in some companies and a science in market-leading sales teams. We spend much training and coaching helping salespeople develop strong discovery and qualifying questions today.

Digital Profiling

In a world with extensive digital footprints, salespeople can use social media, company websites, and online reviews to get a preliminary understanding of a lead. Some sales teams are using sales AI tools.

Active Questioning

Instead of generic questions, salespeople should aim for specific queries that uncover needs. For instance, instead of “Do you need a new software solution?“ one might ask, “How are you addressing your current data analytics challenges? “By the nature of your questions, you can demonstrate competence and build trust.

Continuous Learning

Staying updated with market trends and potential client challenges becomes crucial with rapidly changing industry landscapes. Often teams leverage the voice of customer research to understand customer satisfaction and gain insights into any unresolved problems customers have today. Voice of customer research helps identify current challenges your customers and markets are experiencing.

Empathy and Active Listening

In a world bombarded with information, genuine understanding becomes a premium commodity. Unfortunately, too many salespeople ask questions, listen to reply, and do not learn. Active listening is critical to becoming the trusted advisor clients want and need today, and it is a skill that can be learned.

Emotionally Intelligent Responses

Recognizing and acknowledging a client’s emotions or frustrations can create a rapport. For instance, understanding the added stress businesses may have faced during the pandemic and tailoring conversations accordingly.

Feedback Integration

Active listening isn’t just about the present conversation. It’s about integrating feedback from past interactions. If a client mentioned a challenge in a previous conversation, bringing it up in subsequent discussions showcases genuine interest.

Digital Etiquette

On virtual platforms, active listening might involve non-verbal cues such as nodding or using reactions on platforms like Zoom.

Customer Personality Profile

Salespeople today must have solid situational awareness and be able to identify the personality style of their prospects. We teach sales teams how to adapt their presentations based on DISC,

Acting like the CEO of Their Region of Responsibility

The modern salesperson needs to be a strategist, viewing their portfolio with an owner’s lens. Time is one of their significant assets, and current salespeople must be able to allocate time based on opportunity. They must make decisions based on ROI and consider the cost of sales.

Data-driven Decision Making

This involves closely monitoring metrics like lead conversion rates, client feedback scores, and return on investment for particular strategies. They review what customers buy and recommend other products based on what similar customers purchase.

Risk Management

As a CEO would for a company, salespeople should be adept at anticipating challenges—be it potential objections from a client or external market shifts—and crafting contingency plans.

Stakeholder Management

Just as CEOs manage various departments, salespeople must liaise with delivery teams, product managers, or finance departments to ensure seamless client experiences.

Collaboration – Building and Delivering a Business Case

The essence of sales is solving a problem. Crafting a compelling narrative around this can sway decisions. As we assess sales effectiveness, we often find salespeople need to improve or have a low figure-it-out factor. We must upskill salespeople to build and deliver business cases, not just product features and benefits.

Cross-functional Partnerships

Collaborating with technical experts or product teams can lend more credibility to a pitch, especially in B2B sales scenarios.

Storytelling

Data is essential, but stories resonate. Whether it’s a success story of a past client or a hypothetical scenario illustrating the impact of your product/service, weaving a story can make your case more compelling.

Create Customer Champions

When salespeople are skilled in collaboration, the customer feels ownership in the plan and becomes an internal champion. Salespeople who pitch slap their customers lose that critical step of cooperation.

Negotiation and Closing

This phase is where the rubber meets the road. Mastery here dictates success. Unfortunately, our sales effectiveness assessment data shows less than 14% of salespeople have received negotiation training. As we learned in a buyer study, over 75% of professional purchasing agents have been trained in negotiation tactics, which often leads to a mismatch of negotiation skills. If salespeople do not receive negotiation training, they leave money on the table that could have flowed to your profits.

Understanding the Client’s Position

Often, negotiations stall because of unseen constraints on the client’s side. Unearthing these—be it budgetary restrictions, past experiences, or internal processes—can lead to more fruitful discussions.

Win-Win Solutions

Negotiation isn’t about victory but alignment. Instead of hard discounts, offering extended support or training could sweeten the deal for the client without compromising the price.

Professionally Handling Customer Objections and Not Trying to Overcome Them.

Top-producing salespeople know customers’ top objections and are prepared to handle them professionally. Our sales skills training teaches salespeople how to handle objections and not try to overcome them professionally.

Selling Based on Value Delivered, Not Price

In the information age, competing on price is a race to the bottom. The focus needs to shift. As we assess sales effectiveness in teams, we find many sales teams sell based on price and not the value their product or service delivers.

Highlighting Long-term Benefits

A slightly pricier solution might offer benefits that, in the long run, lead to cost savings or greater value for the client.

Building Trust

Often, resistance to higher prices stems from a lack of trust. Regular client testimonials, case studies, or pilot projects can bolster confidence.

Building a Business Case

Top-producing salespeople act as trusted business advisors and know how to build and present business cases to close the sale.

Acting as Consultants Rather Than Sales Reps

Today’s clients are looking for partners in growth, not just vendors. I want you to know that clients wishing to have trusted advisors share insights not found on your company website.

Offering Tailored Solutions

This might involve understanding a client’s industry in-depth, recognizing trends, and offering resonating solutions.

Educative Approach

Sometimes, it’s about educating clients about potential challenges they still need to recognize and showcasing how your product/service can address them.

In essence, the post-pandemic world has upped the ante for salespeople. It’s no longer just selling a product or service; it’s about offering holistic solutions, building genuine relationships, and navigating the nuances of the digital world with finesse.

Conclusion

The future of sales in a post-pandemic world isn’t just about selling—it’s about understanding, adapting, and providing genuine value. As the line between physical and virtual continues to blur, mastering these skills will not only be advantageous but also imperative. The message for sales professionals gearing up for this new era is clear: refine, relearn, and reignite your sales strategy—the future promises for those ready to embrace it.

Do your salespeople have the skills your customers and prospects expect today?

How effective is your sales team today?

How much more effective could your sales team be?

What impact would higher close rates at higher gross margins have on your bottom line?

Let’s go ahead and schedule a call if you’d like answers to questions like the above and to improve your sales effectiveness for today’s customers.

As a manufacturing business owner, it’s crucial to unlock the full value of your business before selling or seeking investment. To do this, you need to maximize your company’s return on investment (ROI) and ensure that it’s well-positioned for a successful future. In this article, we’ll cover various strategies to help you achieve maximum ROI, including conducting a business valuation, focusing on EBITDA improvement, streamlining operations, reducing costs, investing in growth opportunities, diversifying your customer base, building a strong management team, and developing a succession plan.

Conduct a Business Valuation

A business valuation is essential for understanding your company’s worth and identifying areas for improvement. It helps you negotiate better deals with potential buyers or investors, and it allows you to monitor your progress as you implement strategies to increase the value of your business.

There are several methods for valuing a manufacturing business, including:

1. Asset-based approach: Calculates the value of the business based on its net assets, which include tangible and intangible assets minus liabilities.
2. Income approach: Estimates the value by projecting future cash flows and discounting them back to their present value.
3. Market approach: Compares your business to similar businesses that have recently sold, using multiples like revenue, EBITDA, or net income.

To prepare for a valuation:

1. Gather accurate and up-to-date financial statements and records.
2. Analyze your company’s historical financial performance to identify trends.
3. Engage an experienced business valuation professional to ensure an accurate assessment.
4. Sales skills assessment – how skilled is your sales team? How effective are they and how much more effective could they be?
5. Voice of Customer Research– why do customers buy from you? Here we are helping determine the Rembrandt in your attic.

Focus on EBITDA Improvement

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a key financial metric used to evaluate a company’s operating performance. It’s important in business valuation because it provides a clearer picture of a company’s profitability, excluding the effects of financing, accounting, and tax decisions. A manufacturing company might improve EBITDA by investing in automation technology to increase production efficiency, reduce labor costs, and minimize waste.

To improve EBITDA:

1. Increase revenue by expanding your product offerings or targeting new markets.
2. Improve operational efficiency to lower production costs.
3. Minimize overhead and administrative expenses.

Streamline Operations

Efficient operations are crucial for maximizing the value of a manufacturing business because they lower costs, reduce waste, and improve productivity. A manufacturing company might implement a just-in-time inventory system to minimize stock levels and reduce carrying costs.

Strategies for Streamlining Manufacturing Operations

1. Adopt lean manufacturing principles to eliminate waste and enhance efficiency.
2. Implement automation and advanced manufacturing technologies to improve production processes.
3. Optimize supply chain management to reduce lead times and inventory costs.

Reduce Costs and Increase Profit Margins

Effective cost management is essential for increasing a manufacturing business’s value because it directly impacts profit margins and the bottom line. A manufacturing company might invest in energy-efficient machinery to lower energy consumption and reduce utility bills, ultimately increasing profit margins.

Strategies for Reducing Costs and Increasing Profit Margins

1. Implement cost-saving initiatives like energy efficiency programs or waste reduction efforts.
2. Negotiate better terms with suppliers to reduce material costs.
3. Consolidate and optimize your vendor base to achieve economies of scale.

Invest in Growth Opportunities

Investing in growth opportunities is vital for increasing a manufacturing business’s value because it demonstrates the company’s potential for future success and scalability. A manufacturing company might develop an innovative product that addresses a market need, leading to increased sales and market share.

Strategies for Identifying and Investing in Growth Opportunities in a Manufacturing Business

1. Conduct market research to identify emerging trends and untapped markets.
2. Develop and launch new products or services to meet evolving customer needs.
3. Expand into new geographical markets through organic growth or strategic acquisitions.

Diversify Your Customer Base

A diversified customer base reduces reliance on a few key customers and minimizes the impact of customer loss, ultimately increasing the value of your manufacturing business. A manufacturing company might expand from serving only the automotive industry to providing components for aerospace and electronics industries, thereby diversifying its customer base.

Strategies for Diversifying a Manufacturing Business’ Customer Base

1. Target new customer segments or industries.
2. Offer customized solutions to attract a wider range of clients.
3. Develop strategic partnerships or collaborations to access new customers.

Build a Strong Management Team

A strong management team is vital for increasing a manufacturing business’s value because it demonstrates the company’s ability to execute strategies, make informed decisions, and adapt to market changes. A manufacturing company might implement a comprehensive leadership development program to groom high-potential employees for management positions, ensuring a pipeline of talent for the future.

Strategies for Building and Retaining a Strong Management Team

1. Hire experienced professionals with proven track records in your industry.
2. Invest in employee training and development programs.
3. Create a positive work culture that encourages employee retention and motivation.

Develop a Succession Plan

A well-defined succession plan is essential for increasing a manufacturing business’s value because it ensures continuity and stability, reduces the risk of disruption, and demonstrates to potential buyers or investors that the company is prepared for the future. A manufacturing company might establish a mentorship program where senior leaders mentor high-potential employees, preparing them for future leadership roles and ensuring a smooth transition.

B. Strategies for Developing a Succession Plan for a Manufacturing Business

1. Identify potential successors for key leadership positions.
2. Develop a comprehensive succession planning process that includes mentoring, training, and development programs.
3. Continuously evaluate and update the succession plan to account for changes in the business environment or organizational structure.

Increase Multiple

Here potential buyers and business valuation experts will share common industry multiples of EBITDA. If you take an offer based on this standard multiple you are often leaving millions on the table. One industry I served was a three multiple of EBITDA, another was four. However, we need to improve your multiple by finding that Rembrandt in your attic as I shared in a recent video. We ask questions then develop a plan to make your business much more valuable to buyer’s and investors. We need to discuss questions to help us understand your value today and plan to increase your value in the future.

Questions for Identifying Areas of Value and increasing your Multiple include

1. Do you as the CEO need to work 15 hours a day of 15 hours a week?
2. Does your leadership team meet regularly for strategic planning?
3. Are there documented systems in place and proof your team follows them?
4. Do you set and track key performance indicators by department?
5. Is your gross margin increasing as a percentage of revenue as revenue increases?

Conclusion

Unlocking the full value of your manufacturing business before selling or seeking investment is essential. By conducting a business valuation, focusing on EBITDA improvement, streamlining operations, reducing costs, investing in growth opportunities, diversifying your customer base, building a strong management team, developing a succession plan, and strategically increasing the multiple you can significantly increase the value of your business. Now is the time to act and implement these strategies to maximize your company’s potential.

If you would like to discuss your business and ensure you are pulling the right levers to drive shareholder value, let’s schedule a call and discuss strategies to increase the value of your manufacturing business.

Imagine playing a game of whack-a-mole at an arcade. As soon as a mole appears, you whack it down, only for another to promptly surface elsewhere on the game board. This frantic, reactive approach might be entertaining in a game setting, but it’s far from effective in the business world. Yet, surprisingly, many organizations apply this approach to address their sales and revenue challenges. They respond to issues haphazardly as they pop up, neglecting to identify and address the root causes or design a sales plan. This article underscores the critical need for a strategic, targeted approach to navigate sales and revenue obstacles and to drive sustainable growth.

The Pitfalls of Whack-a-Mole Tactics

Businesses operating on reactive modes can find themselves ensnared in a frustrating cycle of temporary solutions. They may stifle the immediate symptoms of problems but fail to address the deep-seated issues that continue to fester. This is akin to applying a plaster to a deep wound—it might halt the bleeding momentarily but doesn’t promote long-term healing.

This whack-a-mole approach can lead to the wastage of critical resources, inconsistent sales performance, deteriorating morale among sales teams, and eventually, a stagnation or decline in revenues. It’s akin to alleviating the symptoms of an illness while blithely ignoring the disease’s root cause. Thus, it’s pivotal for businesses to take a step back, diagnose the real problems, and implement strategic solutions.

Six-Step No-Smoke-and-Mirrors Strategy for Fixing Sales and Revenue Problems

Instead of reflexively responding to emerging issues, businesses should adopt a proactive, strategic approach that addresses sales and revenue problems at their roots. Here’s a six-step, no-smoke-and-mirrors strategy that can help organizations effectively manage and mitigate sales and revenue challenges:

1. Sales Team Assessment

The first step towards strategic problem-solving involves a thorough assessment of your sales team. The purpose of this assessment is to identify the existing skills, performance levels, attitudes, and knowledge of your team members. This is a crucial first step because it offers a clear understanding of where your team currently stands and the areas that need improvement.

Remember, your sales team is at the frontlines of your business. Their competencies and performance directly affect your bottom line. Therefore, an honest, comprehensive evaluation can provide valuable insights into potential skill gaps, motivational issues, or systemic problems impacting sales performance.

2. Voice of the Customer Research

The importance of understanding your customers’ needs and preferences can’t be understated. Conduct a voice of the customer (Voice of Customer) research to glean insights into customer satisfaction, buying patterns, and your market share. Are your customers happy with your products or services? Are there unmet needs or unaddressed pain points that your offerings could address?

The findings from VoC research can significantly inform your sales strategy. It helps align your products or services with customer needs, enhancing customer satisfaction, and improving customer retention—all of which can significantly boost your sales and revenue.

3. Tailored Training and Coaching

Once you’ve evaluated your sales team and understood your customer base, the next logical step is to provide tailored training and coaching to your sales team. Use the information obtained from your assessment to identify the areas where your team requires training. This could range from improving their negotiation tactics, boosting their product knowledge, enhancing their relationship-building abilities, or learning a formal sales process.

Tailored training ensures that the skills your team acquires directly correspond to their roles, responsibilities, and the challenges they encounter. It’s a focused approach to enhance your team’s capabilities and improve their sales performance.

4. Systems and Process Improvement

However, a strategic approach to resolving sales and revenue issues goes beyond training the sales team. It’s equally about revising systems and processes to better meet customer needs and challenges. Consider reviewing your sales processes from end to end. Identify any potential bottlenecks that could slow down sales or find redundant steps that could be eliminated.

Improving systems and processes can lead to a more streamlined, efficient, and effective sales operation. Furthermore, it’s crucial to develop meaningful KPIs that align with your sales goals and provide an accurate reflection of your sales operation’s health.

5. Continued Coaching for Adaptation and Performance

Change is the only constant in the business environment. Therefore, even after your sales team has been trained and your processes have been improved, the work isn’t finished. The dynamism of the business landscape necessitates that your team continuously adapt to evolving customer needs, market trends, and competitive threats. Ongoing coaching can assist your team in responding to these changes, honing their skills, and improving their performance continually.

Remember, coaching isn’t merely about enhancing skills—it’s also about motivating your team, nurturing a positive sales culture, and driving performance.

6. Top-Grading Exercise

Lastly, consider conducting a top-grading exercise—a strategy that involves building a team of ‘A’ players, coaching ‘B’ players to become ‘A’ performers, and effectively managing ‘C’ players. The objective is to ensure your sales team consists of high performers who can drive sales and revenue growth.

While this might sound stringent, it’s about building a high-performing sales team capable of meeting your sales and revenue targets. Remember, your team’s strength is only as robust as its weakest link.

The Payoff: Impact of a Strategic Approach

A shift from a reactive whack-a-mole approach to a proactive, strategic one can result in marked improvements in sales effectiveness and revenue growth. This six-step strategy enables businesses to address the root causes of sales and revenue problems rather than merely treating the symptoms.

By aligning their sales team, systems, and processes with customer needs, businesses can enhance customer satisfaction and loyalty. The cumulative effect can be a significant increase in sales and revenue, driven by a high-performing sales team that knows its customers well and is equipped with the skills, tools, and motivation to succeed.

Conclusion

Solving sales and revenue problems effectively requires a strategic approach rather than a reflexive and often emotional reaction. This involves understanding your sales team and your customers, providing tailored training and coaching, improving systems and processes, and continually adapting to changes in the business environment.

While this approach may demand a greater upfront investment of time and resources, the potential payoff in terms of enhanced sales performance and revenue growth is undoubtedly worth it. In the realm of sales and revenue, strategy triumphs over reflexes. It’s time for businesses to relinquish the mallet, cease playing whack-a-mole, and embrace a strategic approach to resolving sales and revenue problems.

let’s schedule a call if you would like to fix sales and revenue problems by strategically assessing and training your sales team.

As a manufacturing business owner, it’s crucial to unlock the full value of your business before selling or seeking investment. To do this, you need to maximize your company’s return on investment (ROI) and ensure that it’s well-positioned for a successful future. In this article, we’ll cover various strategies to help you achieve maximum ROI, including conducting a business valuation, focusing on EBITDA improvement, streamlining operations, reducing costs, investing in growth opportunities, diversifying your customer base, building a strong management team, and developing a succession plan.

Conduct a Business Valuation

A business valuation is essential for understanding your company’s worth and identifying areas for improvement. It helps you negotiate better deals with potential buyers or investors, and it allows you to monitor your progress as you implement strategies to increase the value of your business.

There are several methods for valuing a manufacturing business, including:

1. Asset-based approach: Calculates the value of the business based on its net assets, which include tangible and intangible assets minus liabilities.
2. Income approach: Estimates the value by projecting future cash flows and discounting them back to their present value.
3. Market approach: Compares your business to similar businesses that have recently sold, using multiples like revenue, EBITDA, or net income.

To prepare for a valuation:

1. Gather accurate and up-to-date financial statements and records.
2. Analyze your company’s historical financial performance to identify trends.
3. Engage an experienced business valuation professional to ensure an accurate assessment.
4. Sales skills assessment – how skilled is your sales team? How effective are they and how much more effective could they be?
5. Voice of Customer Research– why do customers buy from you? Here we are helping determine the Rembrandt in your attic.

Focus on EBITDA Improvement

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a key financial metric used to evaluate a company’s operating performance. It’s important in business valuation because it provides a clearer picture of a company’s profitability, excluding the effects of financing, accounting, and tax decisions. A manufacturing company might improve EBITDA by investing in automation technology to increase production efficiency, reduce labor costs, and minimize waste.

To improve EBITDA:

1. Increase revenue by expanding your product offerings or targeting new markets.
2. Improve operational efficiency to lower production costs.
3. Minimize overhead and administrative expenses.

Streamline Operations

Efficient operations are crucial for maximizing the value of a manufacturing business because they lower costs, reduce waste, and improve productivity. A manufacturing company might implement a just-in-time inventory system to minimize stock levels and reduce carrying costs.

Strategies for Streamlining Manufacturing Operations

1. Adopt lean manufacturing principles to eliminate waste and enhance efficiency.
2. Implement automation and advanced manufacturing technologies to improve production processes.
3. Optimize supply chain management to reduce lead times and inventory costs.

Reduce Costs and Increase Profit Margins

Effective cost management is essential for increasing a manufacturing business’s value because it directly impacts profit margins and the bottom line. A manufacturing company might invest in energy-efficient machinery to lower energy consumption and reduce utility bills, ultimately increasing profit margins.

Strategies for Reducing Costs and Increasing Profit Margins

1. Implement cost-saving initiatives like energy efficiency programs or waste reduction efforts.
2. Negotiate better terms with suppliers to reduce material costs.
3. Consolidate and optimize your vendor base to achieve economies of scale.

Invest in Growth Opportunities

Investing in growth opportunities is vital for increasing a manufacturing business’s value because it demonstrates the company’s potential for future success and scalability. A manufacturing company might develop an innovative product that addresses a market need, leading to increased sales and market share.

Strategies for Identifying and Investing in Growth Opportunities in a Manufacturing Business

1. Conduct market research to identify emerging trends and untapped markets.
2. Develop and launch new products or services to meet evolving customer needs.
3. Expand into new geographical markets through organic growth or strategic acquisitions.

Diversify Your Customer Base

A diversified customer base reduces reliance on a few key customers and minimizes the impact of customer loss, ultimately increasing the value of your manufacturing business. A manufacturing company might expand from serving only the automotive industry to providing components for aerospace and electronics industries, thereby diversifying its customer base.

Strategies for Diversifying a Manufacturing Business’ Customer Base

1. Target new customer segments or industries.
2. Offer customized solutions to attract a wider range of clients.
3. Develop strategic partnerships or collaborations to access new customers.

Build a Strong Management Team

A strong management team is vital for increasing a manufacturing business’s value because it demonstrates the company’s ability to execute strategies, make informed decisions, and adapt to market changes. A manufacturing company might implement a comprehensive leadership development program to groom high-potential employees for management positions, ensuring a pipeline of talent for the future.

Strategies for Building and Retaining a Strong Management Team

1. Hire experienced professionals with proven track records in your industry.
2. Invest in employee training and development programs.
3. Create a positive work culture that encourages employee retention and motivation.

Develop a Succession Plan

A well-defined succession plan is essential for increasing a manufacturing business’s value because it ensures continuity and stability, reduces the risk of disruption, and demonstrates to potential buyers or investors that the company is prepared for the future. A manufacturing company might establish a mentorship program where senior leaders mentor high-potential employees, preparing them for future leadership roles and ensuring a smooth transition.

B. Strategies for Developing a Succession Plan for a Manufacturing Business

1. Identify potential successors for key leadership positions.
2. Develop a comprehensive succession planning process that includes mentoring, training, and development programs.
3. Continuously evaluate and update the succession plan to account for changes in the business environment or organizational structure.

Increase Multiple

Here potential buyers and business valuation experts will share common industry multiples of EBITDA. If you take an offer based on this standard multiple you are often leaving millions on the table. One industry I served was a three multiple of EBITDA, another was four. However, we need to improve your multiple by finding that Rembrandt in your attic as I shared in a recent video. We ask questions then develop a plan to make your business much more valuable to buyer’s and investors. We need to discuss questions to help us understand your value today and plan to increase your value in the future.

Questions for Identifying Areas of Value and increasing your Multiple include

1. Do you as the CEO need to work 15 hours a day of 15 hours a week?
2. Does your leadership team meet regularly for strategic planning?
3. Are there documented systems in place and proof your team follows them?
4. Do you set and track key performance indicators by department?
5. Is your gross margin increasing as a percentage of revenue as revenue increases?

Conclusion

Unlocking the full value of your manufacturing business before selling or seeking investment is essential. By conducting a business valuation, focusing on EBITDA improvement, streamlining operations, reducing costs, investing in growth opportunities, diversifying your customer base, building a strong management team, developing a succession plan, and strategically increasing the multiple you can significantly increase the value of your business. Now is the time to act and implement these strategies to maximize your company’s potential.

If you would like to discuss your business and ensure you are pulling the right levers to drive shareholder value, let’s schedule a call and discuss strategies to increase the value of your manufacturing business.