Are Your Sales Reps Bleeding Leads Dry?

  x You have successfully emailed the post. Scott Maxwell is the senior managing director and founder of OpenView Venture Partners.

As a sales manager, how many times have you provided your reps with leads on Monday, and at the end of the week they come to you and say — “I’m done! I’ve got no more leads to call – now what? I need more!”? If you are hearing this, you need to give your…

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From zero to $2M in sales, one sip at a time

CHICAGO — During a tough financial period, Brook Eddy recalls having her mailman on speed dial because she was desperate to get her hands on any outstanding cheques from clients. This year, her business is set to reach nearly US$2-million in sales and is pushing toward national distribution for its spicy tea drinks.

"I had his cell number, I would call him," said Ms. Eddy, founder and chief executive of Boulder, Colo.-based beverage company Bhakti Chai. "I'd drive and find him and he would give me a stack of cheques. I would be ripping them open on the way to the bank."

Things have changed a lot since those touch-and-go times in 2008. Bhakti Chai has moved to a dedicated production facility outside Boulder and employs a staff of 11. Devotees of its fresh, organic tea drinks include Whole Foods customers throughout the Rocky Mountain region, as well as those of local coffeehouses and retailers.

It's surprising growth for a venture that began by chance with virtually no startup capital. During an extensive family tour of India in 2002, Ms. Eddy fell in love with chai, a sweetened tea drink infused with ginger, cardamom and other spices that is combined with milk. She came home, got on with her life - including marriage and the birth of twins - and began experimenting with a homebrew version, handing it out as gifts in mason jars.

"I would create a concentrate, mix it half and half with milk or plain soy milk," she said. "It really wasn't a business idea at all. It was just something I did. I liked it."

By 2006, encouraged by the chai's popularity within her circle, she began selling it to local cafés, where it was a hit. Production moved out of the house to a rented space in a shared commercial kitchen.

"It was just grassroots word of mouth," said Ms. Eddy, who uses only fresh, fair-trade ingredients, including about 800 pounds of organic ginger every week. "Sometimes I'd brew all night, deliver at six in the morning and go to work, to my day job."

Two years later, with more than 40 regular customers, Ms. Eddy had had enough of the exhausting schedule. She was juggling multiple roles as part-time brewer, development officer for the Boulder Valley Women's Health Center and mother. Despite an impending divorce and the offer of a raise at her job, she quit and threw herself into the tea business full time.

Bhakti Chai was experiencing growing pains in the form of cash-flow shortages as increasingly larger accounts put in ever-larger orders, sometimes taking more than a month to pay. After failing to secure bank loans, Ms. Eddy drew on her development skills to drum up support from local investors, eventually raising a total of about $250,000. She also tapped Boulder's enthusiastic network of food entrepreneurs, who were eager to help fill her void in business experience by giving freely of their time.

The homework paid off: Whole Foods moved her chai beyond the cafés in its Boulder stores to the refrigerated section of its markets. Bhakti Chai was also picked up by United Natural Foods, a large distributor that moved the tea to other states, including Texas, Wyoming and Arizona. The concentrate, available in several sizes and flavours, is also sold online (bhaktichai.com).

"The space we gave to it is well deserved. It just took off," said Tom Rich, grocery coordinator for Whole Foods' Rocky Mountain region. "When you get a high quality product, you've got to give it some attention."

Call it karma, but Bhakti Chai, which takes its first name from the Hindu word for devotion through social action, also manages to make substantial contributions to charity. Last year, it donated 20% of net income to groups such as the Global Fund for Women. "It's just built into the fabric of what we're doing," Ms. Eddy said.

© Thomson Reuters 2011

U.S. June auto sales sluggish for second month in row

Nelson Ching/Bloomberg

Daniel Akerson, chairman of General Motors Co.

General Motors Co and Ford Motor Co both reported weaker-than-expected U.S. sales gains in June as they again dialed back deals for car buyers despite the shaky economy.

GM also tempered its full-year forecast for the industry as some consumers were still holding back on buying cars.

Tightening supplies of vehicles after the March 11 Japan earthquake have emboldened some automakers to raise prices, a strategy that analysts and investors said has backfired in May and June.

“The consumer’s still struggling out there,” said Gary Bradshaw, a portfolio manager with Hodges Capital Management, which owns Ford shares. “Car buyers have paused a little.

“These car prices have really gone up an awful lot,” he added. “They probably need to tone that back a little bit if they can. I know their commodity costs are rising, but there’s a fine line in there.”

GM and Ford trimmed the incentives they offered buyers in June to buy new cars by 2% and 2.4%, respectively, from May, according to TruCar.com.

Monthly car sales figures are among the first snapshots of consumer demand. Investors hope the industry can reverse May’s disappointing results, which raised fears the U.S. recovery was running out of steam.

Investors received good news more broadly as the pace of growth in the U.S. manufacturing sector picked up for the first time in four months in June, a sign of optimism for the sputtering economy.

However, GM’s U.S. sales chief, Don Johnson, pointed to the impact of the Japan crisis as the main driver of June’s disappointing auto sales results. .

“Some consumers have decided to sit on their hands and delay their purchasing,” he told reporters on a conference call. “We view this as temporary.

“It is much less to do with the economy than it is simply with the levels of inventory that some of our competitors, particularly our Japanese competitors, have. They’re reaching the low point of their inventory during this crisis,” Johnson added.

MAY AND JUNE SUFFER

May and June were the months analysts said the industry, especially Japanese automakers, would suffer most on sales due to the earthquake and tsunami which caused parts shortages and tighter availability of cars.

“We think the recovery will get back on track despite the slow housing market and the stubborn levels of unemployment,” Johnson said.

However, he said the U.S. auto industry was likely to finish at “the lower end” of the company’s forecast for 2011 sales of 13 million to 13.5 million.

GM reported sales last month, excluding four brands it dropped, of 215,358 cars and trucks, up 10.5% from last year. GM sold or discontinued Pontiac, Saturn, Saab and Hummer.

Several analysts had expected GM to report a gain in the range of 11% to almost 20%. The U.S. automaker also came in below expectations in May.

Ford’s sales rose 13.6% to 194,114 vehicles, an outcome that also fell short of several analysts’ estimates. Chrysler sales rose 30%.

Nissan Motor Co reported an 11.4%  jump in sales, falling short of some analysts’ estimates of a rise of more than 24%. Al Castignetti, head of the Nissan brand in the North America, said he was “disappointed” by the results.

U.S. auto sales in June were expected to rise only 2% from May — but by a healthier 8% on a year-over-year basis. The May figures reflected tighter inventory caused by Japan’s earthquake, which caused vehicle prices to spike and led more consumers than expected to hold off on buying cars.

For June, the average forecast of 41 economists surveyed by Reuters was for a sales rate on a seasonally adjusted annualized basis of 12 million vehicles, up from 11.1 million last year and 11.8 million in May.

That is below an average of 13.1 million new light vehicles sold on an annualized basis in the first four months of the year, before the Japan earthquake significantly affected sales.

In Japan, new vehicle sales in June slumped by more than a fifth, while in South Korea Hyundai and Kia Motors extended their strong run with double-digit growth. French car sales fell for the third straight month, while Brazil car sales rose 15.9%.

GM shares were up 1.2% at $30.73 Friday afternoon, while Ford shares were up 1.8% at $14.04. The broad S&P 500 Index was up 1.1%.

New jobless claims increase, new-home sales decline

Job seekers, right, get feedback on their résumés at a job fair in Southfield, Mich., this month. Applications for jobless benefits last week had their biggest jump in a month.

WASHINGTON — Sour reports Thursday on the number of people who sought unemployment benefits and buyers of new homes illustrate what Federal Reserve Chairman Ben Bernanke acknowledged Wednesday: Many factors weighing on the economy are proving to be more chronic than first imagined.

Applications for unemployment benefits rose to a seasonally adjusted 429,000 last week, the Labor Department said Thursday. It was the biggest jump in a month and marked the 11th straight week that applications have been above 400,000. Elevated jobless benefit claims signal a worsening job market.

New-home sales fell in May to a seasonally adjusted annual rate of 319,000, the Commerce Department said. That's far below the 700,000 homes a year that economists say must be sold to sustain a healthy housing market.

Sales of new homes have fallen 18 percent in the two years since the recession ended. Last year was the worst for new-home sales on records dating back half a century.

Some stocks fell after the weaker data on housing and layoffs were released. It came one day after the Fed lowered its outlook for growth and unemployment. The Dow Jones industrial average dropped nearly 60 points.

A renewed warning from the European Central Bank chief about Europe's debt crisis contributed to the day's bleak economic news. European Central Bank President Jean-Claude Trichet said the debt crisis threatens to infect banks. And an agreement by 28 countries to boost global oil supplies forced energy stocks lower.

"We have had a worrisome string of soft numbers, which is painting a fairly bleak picture of the recovery," said Sal Guatieri, senior economist at BMO Capital Markets. "The labor market is weakening, according to the jobless claims numbers, confidence appears to be slipping among households, and small businesses and home sales are still very depressed."

The Fed cut its growth forecast to between 2.7 percent and 2.9 percent this year, down from its range of 3.1 percent to 3.3 percent in April. The Fed also raised its unemployment rate estimate, saying it would not fall below 8.6 percent this year.

Home sales and construction would normally contribute up to 1.5 percent to the U.S. economy during post-recession recoveries. In the two years since the recession officially ended, falling prices and dismal sales have subtracted an average of 0.4 percent per year from the gross domestic product.

Each new home creates an average of three jobs and $90,000 in taxes, according to the National Association of Home Builders.