Funders Want To Know That You Are Growing Sales
One of the first business data points that an investor, banker, donor or prospective new team member/advisors will consider when making a decision to invest time or money into your business is "traction". Traction is usually determined by sales and sales growth of your products or services, but may also include proof of significant money making opportunities. To demonstrate proof of traction in your pitch or presentation you may want to provide some of the following:
- Proof of the existence of an underserved market that is not having its needs fully met....i.e. Fenty Savage's inclusive lingerie line
- Survey data from 100+ prospective customers that demonstrate there is an unfilled market need that respondents are willing to pay for
- Significant website traffic and time spent on the product and service pages
- Sign-ups from a landing page or social media site from prospective customers expressing an interest in learning more about your business
- Paid pre-orders..think crowdfunding campagigns, but you can use any tool that works for collecting customer information and money
- Letters of intent from prospective business customers expressing an interest to purchase
- POS statements, financial statements or tax returns that show a track record of robust AND consistently growing sales over time
- A strong team, a relevant advisory board and/or influential customers
It gives an investor or lender comfort when they feel that there are minimal risks to keeping the money flowing. Sometimes a business owner can have a great sales track record, but most of the revenue is coming from one or two customers or one or two distribution/marketing channels. That's okay in the early stages of the business, but not over time. Let's dig into some examples of what the industry calls customer and channel concentration:
- Company A sells 90% of its unique products to automobile manufacturers or worse, but experiences a serious drop in revenue and cash when there are industry disruptions such as supply chain issues, strikes, transitions to overseas manufacturing or suppliers
- Company B is experiencing robust sales growth, but 75% of its business is from three customers. One customer files for bankruptcy, leaving Company B with a drop in revenue and maybe excessive inventory
- Company C is crushing it with sales generated from Facebook Ads. Apple changes the algorithm rules, disrupting Facebooks' ability to target customers, thereby significantly reducing effectiveness.
- Company D generates most of its sales from tradeshows...Covid...no further explanation needed
Position Your Business for Sales Growth
- Know your customer, the problem you are solving for them and speak to that problem in your marketing materials and know how to find these customers. This takes time to get right, so it may take some trial and error and that's okay.
- Keep talking to and learning from your customer through surveys, social media interactions and your customer service channels. Needs and preferences change and you want to be adaptable over the course of your product lifecycle. Also, no one business is perfect, you want to identif vulnerabilities in your product or service offerings before your competition does.
- Encourage referrals from existing customers, they may know better than you someone who may be a perfect fit for your business.
- Always explore alternative and/or additional channels for getting your product or services to customers. New distribution channels offer opportunities for you to meet your clients at different places and capture new customers. Having multiple distribution channels can also reduce risks if one channel is disrupted due to industry regulations, supply chain issues or pricing changes.
- Don't put all of your marketing eggs in one basket and invest in building your own community. New marketing platforms are being introduced with much more frequency and algorithms are subject to change, making what may have worked last year no longer as effective. Experiment with one or two new platforms or new to you platforms to identify prospective new traction channels. A good book to explore is "Traction: ....." by......
- Keep solid records of your business revenue, distribution channels and marketing channels. Observe trends and what is and isn't working for your business and your industry peers. This will enable you to be informed and clearly speak about your customer traction when in discussions with prospective funders.
- Alternative distribution vending machines, curated third-party marketplaces, subscription and business giftboxes, international markets, partnership collabs, retail, wholesale
- Alternative marketing channels include podcasts, metaverse platforms, email marketing, billboards, content marketing, ads, affiliate marketing, trade shows, speaking, public relations
Partner with Get The Bag
As hard as we work, Black women business owners still have an average revenue of $24,000*, in part due to the high percentage of part-time businesses, but also lack of capital to pay for marketing expertise and lack of access to business connections that ease the process of getting contracts. Get The Bag's goal is to provide financial, social and customer capital. Customer capital is generated when we purchase products from Black women owned brands and then feature them in our curated collections of subscription and business gift boxes. Our giftbox customers are entrepreneurs, non-profits and corporations that have an interest in supporting diverse business owners, while building relationships with their team members, clients, prospects and/or event attendees. This distribution increases the visibility and market presence of Black women-owned brands, while also contributing to greater revenue, cashflow and future business opportunties with the box recipients. Interested in having your product featured in our Get The Bag boxes? Complete our Partner Request Form and we will explore adding your to our vendor database.