2005 Business Value Improvement Series, Buying a Business or Franchise Article

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2005 Business Value Improvement Series

A business valuation is an assessment at a specific time of how effectively and efficiently all the components of a business have been integrated. My monthly column discusses the key components that underlie a valuation and provides proven strategies that improve the value of each of these. Key components include sales and market positioning, products and services, manufacturing efficiency, distribution and the effective use of people and financial resources. My Valuations Resource Center inaugural column starts off with a three part series on the most critical component -- sales.

Developing the Effective Sales Organization -- It Starts with a Plan

Nothing is as satisfying as seeing a sales organization unfold, grow and bear fruit. Properly developed and maintained it's the engine that drives revenues and the pipeline through which new products and services are quickly sold to existing customers and presented to prospective new ones. It is one of the most valuable assets a business can create.

At the core of each successful sales organization is a plan. This sales and marketing plan includes goals, objectives, responsibilities, timelines, evaluation criteria, and budgeting. It addresses areas such as:

Sales objectives: These should be tied to a timeframe, and be measurable and realistic.
Territories: Typically dividing your market into territories is done geographically taking into consideration account concentrations. As territories are developed, they can be divided further.
Customer evaluation: Not all customers are created equal. I suggest firms examine potential customers with a high degree of scrutiny paying attention to financial stability, growth, and loyalty.
Sales organization development and compensation: Take the time to thoroughly think this through. Will there be territory managers? Will sales people be compensated on a commission basis?
Sales support: Be sure to commit resources to supporting your sales organization.
Training: Develop of training plan that will lead your team to success.
Sales coordination: Who will be responsible and have the authority for the sales function? There should be a central person to coordinate efforts between outside and internal activities to avoid confusion.
Customer support: Procedures and programs should be in place to support inquiries, quotes, order placement/tracking, and shipping. There are a variety of off-the-shelf contact management programs that allow you to quickly and efficiently track customer and sales related activities. ACT and Goldmine are two that are widely used. More recently, Internet based platforms have been developed t