Business in distress? Why you don’t need to slash OpEx and how to find savings elsewhere
by Rob Ackers
When a business is in financial distress, it’s commonly assumed that reducing operational expenditure (OpEx) is the easiest way to rectify the problem.
Put it this way: If you’re stood watching a burning building, do you run and grab buckets of water, or do you step back and try to figure out the root cause of the fire?
You’re probably going to pick up a bucket!
Luckily, your business isn’t on fire. So you have time to think deeper about the best solution.
Slashing OpEx won’t fix the problem
If you have 100 people working inefficiently, and you get rid of 50% of them, you’re still left with 50 people working inefficiently.
Unfortunately, it’s far easier to convince the board that making redundancies will save on costs rather than evidencing certain inefficiencies that are stopping you from selling more.
The reason it’s difficult is because to evidence this, you need to be able to quantify both how productive your team currently is and how productive your team could be.
Do you really know how productive your sales team is?
An average sales person’s week can be broken down into the following activities:
| Sales activities | Ancillary/ Inefficiency | Core/ Selling prime time |
| – Researching client’s companies, contacts and insights – Finding content – Creating/ Repurposing content – Responding to RFP’s / Creating Proposals | – Demand Generation – Client Calls – Client Visits – Negotiating – Presenting | |
| Non-sales activities | Detractors | Supporting/ Customer service |
| – Pricing – Compensation – Internal meetings – Reporting – Compliance | – Billing enquiries – Product challenges – Renewals – Legal – Customer training |
In the table above we can see that a salesperson’s time is usually split across four main activity streams.
By figuring out how much time is spent on each stream, you can begin to understand how productive your sales reps really are.
For example, in an average 40 hour week, a rep’s time might by split up in the following way:
| Sales activities | Ancillary/ Inefficiency | Core/ Selling prime time |
| 25% = 10 hours | 25% = 10 hours | |
| Non-sales activities | Detractors | Supporting/ Customer service |
| 20% = 8 hours | 30% = 12 hours |
If 50% of their time is being spent on non-sales related activities, half of their week is being dedicated to fruitless tasks – tasks that could be either delegated, or achieved more efficiently.
How to help your reps spend their time more productively
The time your reps are spending on each activity stream must be modified according to their value as a sales activity. You can achieve this by:
| Sales activities | Ancillary/ Inefficiency | Core/ Selling prime time |
| Improving efficiency | Developing competence | |
| Non-sales activities | Detractors | Supporting/ Customer service |
| Minimizing | Delegating/leveraging |
Resulting in a far more efficient use of their time:
| Sales activities | Ancillary/ Inefficiency | Core/ Selling prime time |
| 10 hours x 0.75 = 7.5 hours | 10 hours x 1 = 10 hours | |
| Non-sales activities | Detractors | Supporting/ Customer service |
| 8 hours x 0 = 0 hours | 12 hours x 0.5 = 6 hours |
This totals in 23.5 hours: an almost 50% increase in their productivity.
How to convince your board that solving productivity is the best route
By applying the maths as we’ve demonstrated above, you can evidence that your sales team is spending too little of their time on the thing they were actually hired to do, and explain how you aim to fix this.
Key takeaways
When faced with a choice between reducing opex or selling more, it makes more sense to sell more. Reducing operational costs won’t neccesarily translate into a more profitable business.
You should focus on increasing your team’s productivity rather than making redundancies. Otherwise, the remaining sales reps, through no fault of their own, will continue to sell at an unsustainable rate.
Author: CROAdmin
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