One Company’s Budget: Cold Calling Saved My Company
With some of his peers in the IT sector experiencing revenue dives of as much as 70 percent, SoftNice CEO Zafar Shaikh needed to find a way to stem the damage within his own company. Shaikh founded the Allentown, Pennsylvania-based company in 2001 to provide programming and web development services to clients. It wasn't until 2006 that he began to focus on the IT subfield of business intelligence, a service that helps a company cut costs by organizing and analyzing historical data. This shift allowed SoftNice to grow from five employees and $600,000 in revenue in 2006 to 22 employees and $2.4 million in revenue in 2008.
But in the fall of that year business deteriorated. 'Things started going down so fast that basically as each day went by things started sliding,' says Shaikh, 'that is something I had never seen.' Clients were slashing their IT budgets and some were 'so scared they were not talking about spending a single penny.' The company was losing $50,000 a month. Shaikh's strategy: compensate for his clients spending less by driving his sales department to be more aggressive and stepping up new customer recruitment. The result: Shaikh was able to stem loses at $200,000, roughly 10 percent of total revenue, compared to the larger losses experienced by others in his field.
|ANNUAL REVENUE||$2.4 MILLION||$2.05 MILLION|
|ADVERTISEMENT AS A SHARE OF REVENUE||1.3 PERCENT||0.8 PERCENT|
|FOOD, TRAVEL, & HOTEL BUDGET
|FOOD, TRAVEL, & HOTEL BUDGET AS A SHARE OF REVENUE
|REAL ESTATE (RENT) BUDGET
|REAL ESTATE (RENT) BUDGET AS A SHARE OF REVENUE||1.9 PERCENT||1.2 PERCENT|
|SALES BUDGET A SHARE OF REVENUE||6.5 PERCENT||9 PERCENT|
SoftNice was able to shave $13,000 off its advertising budget by skimping on promotional products and retreating from efforts to seek new top talent. The company let its membership with online job boards lapse since they were no longer looking to expand, and they reduced spending on things like t-shirts, key chains, pens, and coffee mugs emblazoned with the company's name.
Food, Travel, and Hotel Budget
Travel is an essential part of SoftNice's business because their clients are geographically spread out and much of the work the company does for them must be handled on site. Shaikh had to scale down the comfort level for his employees on the road by choosing less expensive hotels and only subsidizing breakfast, instead of three daily meals, but he says employees understand the cut backs.
SoftNice isn't afraid to spend money, but Shaikh wants to make sure it gets spent wisely. In the only area of increased spending since last year, Shaikh forked over $60,000 to boost his sales force from two to three employees. Through Internet research and repeated cold calling, this small team has managed to double the number of projects the company is handling each month. But in particular, by taking advantage of the richer talent pool resulting from the recession, Shaikh hired a highly-skilled salesperson who single-handedly brought in $700,000 in business.