Fun fact: I speak with many business owners in the decorated apparel industry regularly. All different sizes, business models, and experience levels. Everyone has their different struggles.
For those with sales or revenue issues, the most common problem is a lack of a dedicated or refined sales effort. This is something I seem to be speaking with shops about more regularly lately. So I thought I would shed some clarity on this problem, which I think nobody is really seeing.
When you read industry group posts on Facebook or talk to shop owners at a trade show, you get the full spread of excuses as to why their business might be down. Many cite the economy, competition, pricing, or just plain ol’ bad luck.
In reality, many shop owners face what I’ve coined “Sales Debt.” This circumstance accumulates whenever today’s operational demands steal time away from tomorrow’s revenue generation. I’ve said many times that your shop owner's sales brain needs to live six to eight weeks out from today’s date on a constant basis. You have to feed your future sales with activity today.
Every day you are not prospecting, reaching out, and working leads, you are borrowing revenue from your future. This is why the danger of today’s inactivity in sales today, often doesn’t hurt until weeks or months later.
What is Sales Debt?
Let’s talk about examples to paint a clearer picture. Sales debt occurs when future revenue-generating activities are pushed aside because something in your business feels more urgent right now.
This is why you may not be:
- Ignoring lead generation activities
- Not following up on submitted estimates or quotes
- Skipping customer check-ins
- Not building relationships in person
- Neglecting dormant customers
- Failing to create marketing or sales opportunities
- Doing the work in hiring or training someone else to handle sales
This work doesn’t disappear. It accumulates. Eventually, like all debt, it comes due. For example, Sales is like pumping water into a holding tank. Production drains the tank every day. When you stop pumping water in, nothing happens immediately. The tank still looks full. Weeks later, the tank runs dry. Most shop owners panic when the tank is empty instead of noticing when they stopped filling it.
The ironic thing is that Sales Debt is not a sales problem. It is a habit problem.
The Law of Delayed Consequences
Let’s take yesterday, for example. Instead of working on sales, you spent time checking in goods in receiving, cleaning some screens in the screen room, and driving to a customer’s office an hour away to deliver an order that was running late. Feel free to insert your activity here.
All of those tasks are certainly necessary and also important. But, here are the facts you may be missing:
- The prospect you never contacted doesn’t hurt today
- The referral you never requested doesn’t hurt today
- The customer relationship you neglected doesn’t hurt today
Those consequences arrive later. Which is why there is the usual “feast or famine” cycle in this industry. You are busy for a few weeks, and then there is a cycle period for a few weeks after with remarkably less work. Busy-to-not-busy cycles, like waves, all year.
This is a common problem in the industry. If this sounds like your shop, believe me, you are not a unicorn. When I speak to shop owners about their sales and profit problems, I often ask them to describe their sales efforts from yesterday. Most are spending their day doing almost everything but actually doing anything to generate revenue.
The most dangerous business problems are the ones that develop silently. If your sales pipeline is empty, it isn’t bad luck, the economy, the competition, or any other excuse. It’s arithmetic.
The Visibility Problem
Production work feels urgent because it is visible. It’s in your face. You can see orders on the schedule, with ship dates, that need work to complete. Spending time working on them feels compelling because it’s work that has to be done. I get it.
On the other hand, sales activities often feel invisible. Does it REALLY matter if I call that potential client today or tomorrow? So, these activities get bounced down the line a little bit.
Because you can not immediately see the value of prospecting, follow-up calls, customer outreach, or any in-person relationship-building efforts.
Eventually, all of this critical effort dries up. Until, of course, you look to see what’s booked, and there isn’t much on the horizon for you. Then your lack of sales becomes immediately apparent. And now urgent.
What if you simply tracked your daily sales effort? The key takeaway here is that, like the production schedule, what gets measured and scheduled gets done.
What gets postponed becomes debt.
The Interest Rate on Sales Debt
There is something else that you probably haven’t ever considered, and that is the interest rate on this Sales Debt that silently accumulates. Like other forms of debt, this carries a cost too.
Empty Capacity
Right now, how many machines are sitting idle on your production floor? Is that laser engraver or that DTF printer you recently acquired churning out work all day, every day?
Are your employees waiting for work or trying to find something to do? Maybe you have started giving folks Fridays off so they can have a three-day weekend because you don’t have enough sales to keep them churning.
Eventually, your best people may start to move on to other positions with other companies as they have financial needs for their own. Your shrinking or wildly fluctuating schedule is creating too much drama for these good folks to handle.
Pricing Pressure
A huge telltale sign that you have a reliable sales problem is when you start to increase discounts on your work to bring in jobs. When desperation enters the sales negotiations, this is your business screaming for help.
There is a big difference in margins and profitability between companies that have to operate with deep discounts to acquire customers and those that are consistently busy and operating at healthy net profit goals.
Your leadership goal should be to try to work half as hard and make twice as much. Not the other way around.
Stress
Of course, the real killer is your mental stress, as the sales uncertainty creates unreal levels of payroll anxiety.
This is caused not by a lack of sales, but by a lack of systems. Let’s fix that. Here are some steps you can take.
Sales As Inventory
Most people understand the concept of “inventory.” Usually, this is about a product, not a task or action. However, in understanding how to get out of Sales Debt, there are some sales actions that, if you think of them as inventory on the shelf, are much easier to track and comprehend your current situation.
Sales Inventory can be divided into a few general categories. Raw Material, Conversation, Quotes, Follow-Up, Referral, Dormant Customer, Customer Opportunity, and Pipeline.
Understanding and working daily is how you can get your shop out of Sales Debt.
Raw Material Inventory
This is the first step, and important to track. Raw Materials are people, companies, or organizations that fit your Ideal Customer Profile but haven’t bought from you. (Yet!)
Track:
- Total prospects identified
- New prospects added this week
- Prospects contacted
- Prospects not yet contacted
Questions:
- How many ideal customers are within five miles of you?
- Twenty miles?
- A one-day ground ship?
If you don’t know, this is why your “sales warehouse” may be empty. Every day you don't prospect, you're borrowing revenue from your future.
Conversation Inventory
Here, you will have created an inventory of prospects with actual conversations. This is something you can create a KPI (Key Performance Indicator) about and track. Remember, you can’t manage what you don’t measure, so it’s good to know how your Conversation Inventory looks at all times.
Track:
- Networking introductions
- Introductory conversations
- Discovery calls
- First meetings completed
Basic Starter KPI Goals:
- 20 active conversations at any given time
- KPI: What is the real number?
This is how you identify your first potential problem with sales. You have to have actual conversations with real people. Liking your Facebook post doesn’t count. How many conversations create a quote? How many quotes create an order?
Out of sight becomes out of business.
Quote Inventory
One of the most important things to track in your sales pipeline is your active quotes. This is a crystal ball that shows you the immediate future for your shop.
Track:
- Number of open quotes
- Dollar amount of open quotes
- Average quote age
- Number of quotes awaiting follow-up
KPI Examples:
- Number of open quotes
- Total quoted dollars
- Quotes older than 14 days
- Follow-up completion rate
- Quote closure %
- Reasons for quotes not closing
Many shops actually have this information, but don’t have a formal process to measure or review it.
You have to constantly review this information and use it to learn how to improve and what to improve. Go from reactive to proactive in how you manage your sales pipeline.
Note: Your “Follow-Up Backlog” predicts whether your Sales Debt is increasing or not.
Referral Inventory
Do you track referrals? You should. If you are doing a great job, you can turn your customers into your best salespeople or brand evangelists.
Track:
- Referrals requested
- Referrals received
- Referral conversations with new potential customers
- Referral closure rate with new potential customers
Basic KPI:
- Number of referrals per month
A healthy shop with a dedicated referral program should consistently generate referral customers. This is how you scale your sales without hiring more salespeople.
The easiest sale is the next sale from an existing customer.
Dormant Customer Inventory
This is money. What efforts have you made lately to activate your customer list?
Track customers who have not ordered in:
- 90 days
- 180 days
- 365 days
KPI:
Dormant Customer Recovery Rate
- Set goals for outreach - example: 50 dormant customers
- Track how many were reactivated this period.
These people already know you, so you don’t have to start from zero in the sales process. Build a process to reactivate dormant customers and standardize sales efforts for this purpose.
Customer Upsell Inventory
Existing customers represent other sales inventory that you are missing. What other ideas, products, programs, or opportunities are available to customers that you are not taking advantage of right now?
Track:
- Expansion opportunities
- Upsell opportunities
- Affiliate sales opportunities
- Subscription-based sales opportunities
- Fulfillment sales opportunities
- Online store opportunities
KPI:
What are you leaving on the table?
Examples:
- Customer buys decorated apparel, but not promo products
- Customer buys shirts, but not hats
- Customer buys embroidery, but not online stores
- Customer buys spring apparel, but not fall apparel
Pipeline Inventory
This is your master sales inventory number. Remember, the goal here is not to have Sales Debt, but to be proactive in developing better work habits that will positively influence how your sales engine performs.
Pipeline Stages
Propect → Conversation → Quote → Follow-Up → Order → Referral
Track the count and dollar value in each stage
Example:
Here’s how you can see your future sales inventory developing
Relationship Inventory
It is a fact. People buy from those they like, know, and trust. What effort are you making to keep top of mind with your customers, so when they are ready to buy you become their first call?
Track:
- Customer outreaches completed
- Customer reviews conducted
- Drip marketing subscribers
- Testimonials received this month
- Social DM engagement with marketing posts this month
KPI:
- Meaningful Customer Touches. (Actual human interactions)
- Not social media likes or marketing impressions
Sales Debt accumulates when relationships go dormant.
Revenue Inventory
This is looking at real numbers, all the time. For many shops, this could be a scary situation.
Track:
- Total Pipeline Value
- Pipeline Average Closure %
- Actual Forecasted Revenue
Examples:
- Monthly Revenue Target Goal = $100,000
- Pipeline Value = $432,779
- Average Close Rate = 21.7%
- Expected Revenue = $93,913
Using this would show that the shop is just under the monthly sales goal. This could be the perfect bit of information to increase effort, action, or ideas to help close the gap to meet or exceed the goal.
Top 5 KPI’s
Plenty of people have asked me to rethink and strategize on how to improve their sales. Honestly, a lot of what these shops need is more consistent effort in actually doing the work of selling instead of waiting for orders to magically arrive.
But tracking everything is really hard. So, if you only had time to track five ideas in your shop, these are the ones I would pick:
- Active Conversations - how many real, actual conversations are you having with people right now that could turn into a sale? The more you understand your customer’s problem, the better you can help them… and that starts with solid conversations.
- Pipeline Value - how much money is currently being quoted for orders that you might land? As you can see in the example above, a shop with $432,779 in active quotes and an average closure rate of 21.7% will probably only land $93,913 in sales. What are the figures for your shop?
- Follow-Ups - Currently, how many opportunities need attention? You can’t have a repeat order until you get the original one. Don’t wait. Reach out. Track how many follow-ups you are making daily, and how many follow-ups it takes to close the deal.
- Dormant Customer Count - How many customers have disappeared? By the way, they aren’t going to call you to say they have moved on; you just won’t hear from them again. Of your entire customer list, how many have placed an order this year?
- Pipeline Coverage Ratio - How many days of future production work is visible? You know how long things take to produce in every department. In your sales pipeline, how many days out do your quotes represent for your production schedule?
Conclusion: Sales Debt is a Choice
Like credit card debt, it is your choice how you manage the debt load. There are people who are very mindful of their debt and work to resolve it, and others who seem to ignore the situation until it is out of control. Where does your shop fit in with this?
So, when you are looking at how you spend your time each day, you have two choices. You can work on today’s production output. Or you can work on tomorrow’s revenue pipeline.
By the way, this isn’t a trick question. You can work on both ideas at the same time. Struggling shops have somehow convinced themselves that you can only have time for one. The goal isn’t more sales. The goal is to become so valuable and relevant to your customers that people would miss you if you disappeared. You want to be indispensable to your customer’s success.