From redundancy to a profitable small business

15 May 2009

Making sales remains the biggest fear in going from employed to self employed

How to go from redundancy to a profitable small business in a hurry

Getting customers and making sales can be the biggest challenge for people moving from redundancy in to their own small business, but a quick, simple solution is to tap into existing relationships.

Graham Southwell, national director of BNI New Zealand – the country’s largest business networking organisation – says anecdotal evidence from people making membership inquiries is that they feel ‘cut off’.

“The panic is that if they do take the step of starting their own business that they won’t find enough customers or that it may be too time consuming, and time and money is in short supply when you’re in that situation.

Graham says it’s natural for most people not to see the ‘obvious’

“The reality is that we are never completely alone. We all have large personal networks which we can tap into quickly; including former colleagues, clients (if no restraint of trade agreements exist), close family, extended family, friends, parents associated with their children’s sports teams...

“The time immediately following redundancy is a huge opportunity. People have heard your bad news and they’re eager to help.”

Graham says enough research has been done to establish that almost 90% of Kiwis rely on word of mouth from other consumers when making their purchasing decisions.

“The good news is that word of mouth is the quickest way to close a sale and also the cheapest. It is important that people who are starting their own small business tap into their own networks and then look to broader organisations like the local chamber, local enterprise development organisations and BNI.”

He gives four steps for getting a referral business network up and running quickly:

1.    Make a list of every single person you know, even vaguely – including former colleagues, friends, members of your PTA, family, your partner’s colleagues – along with a note on what they do for a living.

“Even a stay-at-home-mum can be a powerful source of referrals. We know – having been in this business for more than 25 years – that women are the best networkers. They communicate differently to men in that they will relate stories about how their day went – and it is in those stories that opportunities for referrals arise.”

2.    Compile a short 60 second elevator speech with your name, company name, location, description of what you do, a benefit of your product or service, and what kind of referrals you are looking for. Be specific in naming what type of referrals you need.

“Make contact with everybody on your list, explaining your situation and what you are doing – ask them if they can help you get started in your new business. Read them your 60 second blurb – and then ask for referrals. Follow-up with a letter or email summarising the conversation.

“Most people will understand your situation and be sympathetic; you will be surprised by how many people are eager to help,” says Graham.

3.    Give feedback to anybody who gives you a referral. Tell them how it turned out – even if it was unsuccessful, it’s an excuse to make contact again and retain top-of-mind awareness with that person. If it was successful, thank them. Their own success in giving you a good referral often prompts them to think of more.

“Keep a list of everybody you have contacted, what the outcome of the discussion was and your plans to follow-up. Sometimes you have to make six or seven approaches before the message begins to filter through – although that can be shorter when people understand your predicament and are eager to help.

Join a networking organisation like BNI. People who are members of networking organisations are experienced business people and networkers and most are always happy to share what they know, offer a sympathetic ear and send business your way – all of them had to start out at some stage.
 

“Joining a networking organisation is easy because it overcomes that ‘sales’ embarrassment that some may feel because everybody who is there is there to sell. But, as in most things, building strong relationships is the number one priority.

“Starting a business is not easy. It requires persistence; but there are also always a tremendous amount of people out there ready and willing to help.”
 
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