FUNNEL THEM IN
In the last few months I've come to appreciate the power of the funnel for sales and other activities, though I find it interesting that few people cook and even fewer use a funnel these days. Funnels are mostly used for putting liquids from one bottle into another. Though, they do exist in manufacturing. Mostly, however, they come in the area of qualifying leads and companies.
I've used the funnel to discuss how the money that goes into a deal for the buyer, gets lost in a leaky funnel. Money gets lost to lawyers, accountants, and, of course, the government. Deals need to be structured to the tax advantage of the seller. That may not be in the best interest of the buyer or the searcher.
Over the holidays I had to decide on a customer relationship management tool to use for my own business. Whether your business is consulting, or raising money for non-profits, selling car seats, or looking for a business as a searcher, the CRM software is useful. After looking at various free levels of investment with Hubspot, Bitrix24 and others, I ended up deciding on Salesforce.com's Lightning Experience Professional Edition. I would easily see this as a great tool for a searcher as well. It starts with the whole idea of automating followup and qualifying leads under the assumption of a lot of things going into the top of the funnel and only a few coming out. For a searcher, I hear they might contact more than 10,000 companies in 2 years as they search for the right deal. A Salesforce.com account could easily help them with the process and it might prove of benefit to the next person looking. For instance, a business might not be ready to sell today, but maybe in a year or two. The original searcher is probably off building a business now and could care less about that account. However, a classmate just graduating may find that prequalifying information very useful.
Another place a ran into the funnel is yesterday, and relates directly to what Searchfunder does. I attended an M&A seminar with a client of mine. It's a small company of just about $2 million in sales with a baby boomer owner looking for an exit. A large M&A company puts on free seminars and packs it with prequalified companies. They have a cadre or database of, maybe, 34,000 investors and private equity groups. They put together the information on the company and then start their own funnel. They put it out to the 34,000 accounts. Some number respond and ask for the offering memorandum. Some fewer then go the next step to an LOI. The idea here is to get multiple buyers in an auction atmosphere to increase the sale price for the seller, or get better terms for taxes and transition timing. In the seminar they specifically talk in terms of this as a funnel.
Even while talking with the Salesforce people over the holidays, I could tell they had been trained in the Sandler Sales Technique and used their own software to qualify leads and develop opportunities.
In my own search for a company to buy in the last 18 months, my son and I hired a buy-side broker. In our funnel, we started with a small list of about 1300 companies in a specific geographic area. We narrowed it down to about 360 companies that received multiple requests to talk with us. About[redacted]responded and maybe 20 provided the financials we needed. Less than 10 did we actually meet with. Unfortunately, nothing came out the bottom of our funnel. It all leaked out along the way. So, we are going back to the top and re-filling the funnel.
Another place for the funnel is in a position I have as the President of a non-profit organization. Now that I understand the process and the tool much better, I'll be using the Salesforce.com software to track and followup on potential and qualified donors. At least one "qualified" donor is a multi-billionairre. That will be a fun one to follow.
As a side note, anyone that has ever worked with a computer has suffered a loss of data that did not get saved. I'd say it is a good idea to always save your work before leaving a computer to go do something else. I've now learned from researching customer relationship management software, that you never leave a lead, opportunity, account, or contact without setting up a specific followup. Salesforce.com makes that easy to do and then provides the popup reminders in the future.
So, my recommendation to both searchers and funders is to use a CRM software to keep track of potentials, opportunities, and next steps. Whether you use Salesforce.com as I am or choose another package, it will be well worth the money spent. If someone like Searchfunder can find a way to make that database available to more searchers, there might be another revenue stream. Why have ten searchers all calling the same company and all finding out they won't be ready until 2020? Let's make the searches faster and more efficient.
Let's Funnel Them In.