Have you been approached by a small company about leaving your big corporate sales job and "jumping ship" for an opportunity to come and work with their "riskier" venture?
You might want to look into it, according to business author Michael Masterson. he points out that you can reduce the risk to an acceptable level by asking questions about the company's financial health in order to make the most of what could be a fantastic opportunity:
- What were its last three years of revenue?
- What were its last three years of profits?
- What does it currently cost to acquire a new customer?
- What is the lifetime net value of a new customer?
- What is the average amount that a first-time buyer spends?
- What other, more expensive products are offered to that buyer?
With larger companies (and public companies), it's usually relatively easy to get the answers to such questions. Smaller companies tend to be protective of their financial information - particularly about net income.
But find out as much as you can. What you are looking for is:
- A strong, three-year (or more) history of revenue growth.
- A steady improvement in the bottom line. (It doesn't have to be very high for newer companies, but it must be moving in the right direction.)
- A healthy relationship between how much it costs to acquire a new customer and how much that customer is worth.
- Good margins. It's always better if the cost of goods is a small fraction of the sale price.
- A strong "back end." A company that knows how to upgrade $20 customers with $200 and even $2,000 ancillary and/or vertical products is one that can generate the cash it needs to grow.
- Good cash flow. This is vital for a growing business.
If the small company passes financial muster, then you have to turn the tables. Finances count, but so does leadership and compatibility. It's time for you to interview them - the CEO and anyone else to whom you might be reporting.
So ask for a second interview. If you are a superstar, they'll give it to you. At that second interview, your goal will be to make an intuitive assessment of its top executives. Specifically, you need to find out if they are:
- Experienced. Ask them what prior experience they have had in the industry they are in.
- Successful. Ask them about their past entrepreneurial successes. What you don't want are people who have jumped around a lot, from one business to another, but have little or nothing to show for it.
- Resourceful. Ask them what they consider to be the business's primary challenges. Then ask them how they intend to meet them. Look for fluidity and intelligence in their answers.
- Credible. Does your gut tell you that they are on the level? If your heart doubts them, your mind will one day discover why.
- Agreeable. Do you like them? Do they seem like they'd be fun to work with? Would you be happy to have them on your team if you were trapped in a remote place in some sort of survival competition?
There are some great opportunities out there for the right sales pros. Don't skip by them without looking into what they offer, and what it could mean for your career!
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