Sales and Its Importance to Business Survivability

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According to Jeffrey Gitomer, nothing happens until a sale is made.  In his book “Be Obsessed or Be Average”, Grant Cardone states that “sales is not a department, a career or someone’s job. Sales is the god of any business”.  Bold statements? Yes! And so very much true. Many experts understand and appreciate the fact that our modern day economy is built by and driven by sales. Without it, businesses, as we know them, would not exist. Have any doubts regarding the truth of this statement?

Consider these statistics. 80% of new startups, fail within the first year.  Of the remaining 20%, half fail before the 5th year. Wow! Yes, let me repeat. Of the remaining 20% of new startups that survive the first year of being in business, half  fail before the 5th year mark. You think this is alarming? Consider this number.  Only 6% of the businesses that started out 10 years ago, are still operational. The other  94% have closed their doors long before their 10th year mark.

Of course, there have been many studies conducted articulating the “Whys”. Essentially, all these reasons boil down to two major factors. The first is lack of access to capital. Sadly, most small businesses do not have the connections, the credit history, nor the collateral necessary to get the capital necessary to start and sustain the working cash flows requirements of their businesses.  But even if they could, such a move would be a mistake according to Mark Cuban. In 2013, in an interview with a reporter from Bloomberg, Mark is quoted saying “only morons start a business on a loan. Is he right?  Regardless of whether or not you agree or disagree with Cuban’s statement,  there is a second reason more impactful at play.

Let’s say the business gets the loan. How will the loan get repaid? The answer is simple. The business owner repays the loan and cover all the other immediate cash flows needs, by generating sales. Yes, that is right. It is the failure to generate enough sales that causes the majority of business to fail. Grant Cardone makes this point eloquently, when he says that businesses fail, because not enough consumers buy products in large enough quantities and at margins high enough.   If a company does not continue to grow new revenue it shrinks. No sales; no business; period.  So, if your business is struggling to generate sales, I ask what will you do about it? If you do nothing or keep trodding along the same tired and unproductive path,  you might find yourself being  one of the grim statistics quotes earlier.

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