SCORE

By Tom Nixon, Volunteer Mentor, Southeast Michigan Chapter of SCORE

Budding entrepreneurs understandably want things to move faster than they typically do. If there were a fast-forward button to success, most would lunge for it instinctively.

But there is a danger in getting too far ahead of oneself. Too many entrepreneurs, in my opinion, are being seduced into thinking the path to fame and fortune is paved with viral videos, digital marketing campaigns and the miracles of social media. I'm here to caution you, however, that the Dollar Shave Clubs of the world are the exception...not the rule.

When to Sell, When to Market

I understand the temptation. Business owners want to quickly move past the "painful" part. They want to be cashflow-positive, quit a day job, or start to scale. We hear success stories like the aforementioned Dollar Shave Club, that jumped seemingly instantly into our collective consciences via a silly—and yes—viral video, and we are eager to sign up to what seems like the Overnight Success Association.

What these stories don't tell you is just how big the production budget was for such a video, how much they spent to make that video visible in the first place, and the amount of investors and backers that made it all possible.

Most of us don't have those luxuries. So we need to be realistic about the returns such a marketing endeavor will yield...especially if one tries to replicate it on a tight budget!

In general, I believe that "marketing" is something a Stage 1 company should not fast-forward to—especially at the expense of sales. And I say this as a 30-year veteran of the marketing industry! As a Stage 1 company—generally defined as a start-up, with no or few employees, little cashflow, and limited resources—the most important activity an entrepreneur can engage in is customer/client acquisition. And despite what you may have heard, marketing is not an efficient and expeditious path toward client acquistion.

Instead, 90-100 percent of one's client acquisition activity should come in the form of sales. Once the company evolves from Stage 0 (an idea) or early Stage 1 to a late Stage-1 company, or even a Stage 2 (marked by 10+ employees, positive cash flow, and proven business model), client acquisition activity should begin to be more heavily weighted toward marketing activities. By that time, the business owner has proven the model, paid employees, and perhaps begun to run out of his or her personal rolodex, and needs to sustain the business by acquiring customers who don't know the entrepreneur personally. In other words, the "market."

So what's the difference?

I don't like how people often lump "sales and marketing" into one category of activity. They are separate and distinct functions, and in mature companies, they are different departments, with different personnel, each with different skillsets. You should think in those terms now, even if you're just starting out.

  • Sales is a transaction; marketing is a process.
  • Sales is one-to-one in nature; marketing is one-to-many.
  • A sale can take a matter of hours; marketing takes a prolonged commitment.
  • Sales activity has an immediate and identifiable return on investment; marketing has a long-term ROI.
  • Sales will result in client acquisition; marketing focuses on customer affinity and attraction.
  • Sales is measured in win-loss metrics; marketing's success can be hard to measure.
  • Sales makes the cash register ring; marketing protects your brand and marketplace for the long haul.
  • Sales will enable you to test theories, iterate your product and push out new offerings; marketing may take a long time to return customer feedback.
  • Sales activity is relatively inexpensive; marketing will require an investment.

My advice? Unless you are well-funded, you probably can't afford to do marketing well early on in your endeavor...at least not to the point where you will realize tangible ROI. Sales, on the other hand, requires only a phone, a pitch, and a willingness to pound the pavement! Get out there and sell, and leaving marketing to the time when you can truly afford to do it well!

About the Author

Tom Nixon serves as volunteer mentor with the Southeast Michigan chapter of SCORE. He has spent his nearly 30-year career advising startups and established businesses in all areas of marketing, including advertising, public relations, corporate communications, digital marketing, social media and more.