As a Sales Leader within the new home building industry, your role is to direct the resources allotted to your division. Think of it in a way that each division is its own individual business unit. With that being said, it only makes sense that as sales leaders, we understand how businesses analyze their cash outflows. In this two-part series, we will seek to apply some basic business and cash flow management processes towards effective sales team management; it’s all about changing your mindset.
To view other parts of the article series, please click on the links below.
There has yet to be a business owner who gets excited about spending money on mundane things such as printer paper, pens, or the electric bill. If you happen to find one, please let me know. Although the palpable joy experienced office-wide is when someone receives a shipment of binder clips is little to none, the reason for lack of excitement is that these are merely the costs of doing business. Otherwise stated, these cash outflows do not serve any purpose except to keep certain operations within the company running at a normal capacity. Additionally, for every dollar spent, there is minimal value created for either the company or its clients, and there is no cash inflow that follows.
Investments, on the other hand, are the entire basis of starting a company, as they are required to produce some type of return, or net gain, for each dollar spent. With any investment, a cash flow analysis must first be performed to determine whether or not money should be spent. Since an investment must yield at least as much cash inflow as it does cash outflows, this cash flow analysis determines the worth of the investment, and if it should be undertaken. In fact, most companies typically have a minimum standard of returns to even consider a project. For example, a company with a 10% minimum return must make $110 for every $100 it spends to even consider a project ($110-$100) / ($100) = 10%.
So what do these terms mean in relation to leading a team of successful new home sales professionals? If the time spent with your sales team and leading them towards success is mentally an “expense,” then you see your team merely as a means to end; or as tools that serve the purpose of accomplishing a sales goal. This attitude is more than likely going to cause rapid mental drain, and it will be unlikely to see any advantage of spending extra time with a salesperson, no matter how marginally small.
On the other hand, the sales leader who sees time spent with their people furthering their success as professionals to be an investment will understand the asymmetric payoff associated with the incremental increase in quality training and mental dedication spent with each team member. An asymmetric payoff is an investment in which the potential net gain far outweighs the incremental cost associated with the investment.
As a leader, it is arguably more difficult to inspire a team than to manage them. A leader who sees their role as an opportunity to invest in their people understands that time spent in activities such as tactful role play, mentoring and coaching sessions, and ultimately inspiring each team member to invest in themselves knows that the reward of the results will far outweigh the incremental additional time spent.
