In a recent conversation with a prospective client ( I won’t name names as they will identify themselves very quickly reading this), the conversation was focused on their need to raise six-figure debt for an upcoming acquisition.
The client expressed concerns about their incumbent bank, which due to recent interest rate increases, found their EBITDA light for servicing the debt. As the conversation progressed, (we were talking about growing sales to increase the EBITA to give a comfort level to the bank to service the debt) it became clear that the client’s current sales team was primarily focused on maintaining existing clients rather than prospecting. Additionally, the client felt that their sales story needed sharpening, as their unique selling points and secret sauce were not effectively articulated.
I am now on holiday with the family, and my first audio book by the pool was Mike Weinberg’s Sales Management. Simplified. Within 10 mins, I had the solution to address these challenges and assist the client in achieving their debt-raising goals!
Re-Evaluate the Sales Team’s Focus
The client’s observation that their sales team is primarily focused on maintaining existing clients rather than prospecting is a critical issue. To assist the client in raising debt, it is essential to realign the sales team’s priorities and allocate dedicated resources to prospecting efforts. This may involve reevaluating the sales team’s workload, establishing specific prospecting targets, and providing training and considerable coaching on effective prospecting techniques. By dedicating time and effort to new business development, the client can expand their customer base and generate the revenue needed to service the debt. In essence we need to help the sales teams sell. Not nursemaid longstanding clients. In my opinion, if you are looking after a book of business, then at least 1 day per week (20%) of your time should be given to actively prospecting and bringing new clients to the business.
Sharpening the Sales Story
The client’s realisation that their sales story needs sharpening presents an opportunity to strengthen their value proposition. This involves clearly articulating their unique selling points, secret sauce, and the advantages they bring to potential lenders. To achieve this, the client can work with some of our (or indeed others) sales and marketing professionals to refine their messaging, conduct market research to understand the competition, and develop a compelling narrative that resonates with their ideal clients! By effectively communicating their strengths and differentiators, the company can enhance their credibility and increase their appeal to prospects, which indeed will increase revenue and that vital EBITDA target for the debt.
This action should move the dial on new sales, and therefore give the company the required uplift in EBIDA to complete the debt raise to carry out the transaction. The only thing left to do once this is achieved is to input the new forecast into the three stage finance model, and update your IM and business plan.
Out of good practice I would also look to shop the market for alternative quotes, incumbent banks are not always the cheapest!
Conclusion
In the recent conversation with the prospect client, the challenges of raising debt for an acquisition were discussed. By broadening the lender landscape, enhancing financial projections and presentations, reevaluating the sales team’s focus, sharpening the sales story, the client can significantly improve their chances of securing the necessary debt. Addressing these areas will enable the client to present a compelling case to potential lenders, increase their prospecting efforts, and differentiate themselves in a very competitive market place!
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