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Sharing New Business Ideas, Trust and NDAs

Sharing new business ideas can be a scary proposition for the idea originator. Here are the kinds of worries people typically ask me about when it comes to sharing their 'baby' with someone else for feedback and possible implementation help.

Do you feel corporations are fair?

I have an idea that could be worth millions to a company. Should I drop it in their suggestion box and hope they pay me?

Should I build a business around it and help them indirectly?

How about getting legal agreements in place and then meeting with the company under an NDA?

How would you protect you business concept/idea? Non-competition agreement? Joint venture contract? Trademark or registration?

[Originally published March 1, 2016]

Ethics In Sharing New Business Ideas

My answer begins with the statement that business is business, and that is a different world than personal relationships. Loyalty stands for very little, unfortunately. If you find a business associate who values loyalty, try to stay in touch with them.

An NDA/non-compete and a licensing agreement should keep you protected, if you're going the road of giving the idea to someone else to execute.

Let's talk about execution.

This is how an idea's value can really be measured when you bring it to someone else.

How interested are they in executing it?

You have to know this before you meet and disclose the idea.

And then you still have another factor to consider: honestly (or morality). We can do this with a 2x2 grid demonstrating four possibilities in a sort of "Idea Sharing Risk Table":

sharing new business ideas

They are interested and honest.

They are interested and dishonest.

They are uninterested and honest.

They are uninterested and dishonest.

Four Quadrants of Sharing New Business Ideas

Are you starting to see why it's important to know how they rank on these two factors before you reveal your idea?

We're in negotiation now. Which, by the way, is selling. I am not a lawyer and this is not legal advice. What I am sharing is selling advice.

You had better have your BATNA (Best Alternative to a Negotiated Agreement) figured out for each of these four possibilities.

Copyrights, trademarks, patents are all helpful, but they are not bulletproof protection.

Especially patents.

Utility patents, for something like a zipper on an article of clothing being termed as a "device pocket", are the kind of thing Mark Cuban goes berserk about the silliness of. They're the veneer of protection.

Regular patents only protect execution (see how we're back to that word again?) specifically the way you have explained it.

So 3M has a patent on Post-It (tm) Notes.

The patent is for a lightweight strip of glue running across the top of a small piece of paper.

If you can come up with another way of temporarily securing the note to other objects without using lightweight glue, 3M's patent is meaningless. You can just go do that.

That's why when you disclose your idea, the NDA is not really protection. If they can figure out another way of executing your idea, they're home free.

If they are interested and honest, they will tell you so. They are ready to get started, will play by the rules, and you can expect to be paid properly. [SAFE]

If they are interested and dishonest, they will tell you it's an airy-fairy idea, they don't like it, it won't work. But they were quick to agree to the meeting. And they kept asking you questions about how you planned to execute the idea. [DANGER]

If they are uninterested and honest, they again will tell you so. It may be hard to book the meeting. They keep bumping the date. This may be a good opportunity for a reality check, and possibly getting execution ideas from someone who knows how to do the work but isn't going to get involved in it. [SAFE]

If they are uninterested and dishonest, you are going to get the run-around. The meeting will take forever to get, or get booked and run so fast it's like poop through a goose. They may ask a lot of questions to "hedge their bets"...but they'll never execute. [SAFE]

As you can see, most of the time, you are safe when sharing new business ideas.

Risk and Execution When Sharing New Business Ideas

Remember, execution is rare.

You can be sharing new business ideas all you like. People are already busy with their own ideas, which they believe to be valuable. They are unlikely to remove resources from those to execute your new idea.

So overall, you are relatively safe from being ripped off...especially if you are careful who you share your idea with.

How long it takes you to book the meeting, the process they want to follow, how they ask and answer questions...all these will show you their level of honesty. Easy come, easy go. There should be some rigor involved in setting up an agreement like this. Honest people will probably want to see you put some skin in the game, too.

2021 Update On Sharing New Business Ideas

In the five years since this post was first published, I've continued to see a great deal of nervousness in sharing ideas between new connections. Especially with technical concepts, the new business owner or founder tends to believe someone is going to "steal their baby". But this is a sign of the founder being a newbie. It immediately shows the other party that you are inexperienced and they will probably avoid working with you.

On the other hand if you are experienced and really feel you have reason to be nervous in sharing your ideas with another person, that's a sign you shouldn't be doing business with them. Should you have to "lock things down" and try to protect your intellectual property in a relationship as you go into it, would you truly be surprised later on if the other party found a way to wriggle out of those terms? How things begin is likely how they're going to continue.

Remember that most of the time you're safe to share. In those cases where it feels unsafe, trust your impressions.

>>Jason Kanigan is a business strategist concentrating on operations improvement, entering new markets, and sales training. Book a consultation with Jason here to discuss your specific situation.<<

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Tell Me Your Price: How To Stop People from Asking and Disappearing

Tell me your price! Perhaps the most common question salespeople get from prospects. And why? The answer is simple: the prospect does not know what else to ask.

What often happens in the real world is this: people ask, "So, what's your price?" If you tell them, the conversation is frequently over, isn't it. They disappear. They got what they thought they were looking for, and went away with your information. You never hear from them again.

Afraid to raise prices tell me your price

What were they doing? Every buyer, whether they consciously, deliberately do this or not, is making a spreadsheet. This spreadsheet is to compare the various options and see what the buyer can get for the lowest price.

Sounds okay, doesn't it? Where's the problem?

Tell Me Your Price and the Vanishing Prospect

In this video, I explain what the critical problem is with the all-too-common "Tell me your price" buying method:

 

Especially in RFP (Request for Proposal) situations, where there's zero dialogue between buyer and seller, and the seller has to respond to RFP documents with bid documents of their own, there's a lot of guessing going on.

Early in my career I worked for a firm in the power generation field that made control panels. RFPs would arrive and I, in my sales engineer role, would respond by preparing a bid document. The RFP would say something like, "The panel shall measure voltage." Okay. I can do that in several ways, each with its own plusses and minuses. An analog dial will do the job: it's cheap, but it is not incredibly accurate. A digital readout on a PLC unit (kind of a precursor to the computers we're familiar with today) could also do the job: more expensive, but more accurate. Those are just two of the options, and it's up to me as the salesperson to figure out which is best for that client. And maybe best for my bid! Maybe I want to position us as the lowest cost provider, and to accomplish that I pick all the cheapest ways to meet the feature requirements.

Sounds good, right up to the point where the buyer engineer reads my bid documents and says to themselves, "Aww what a bunch of junk! I don't want analog gauges! I want a high level of accuracy in our readouts."

But that is something I will never hear.

The RFP process is the same thing as a caller asking, "So, what's your price?" and then vanishing.

Without dialogue between buyer and seller you never get a clear idea of what everyone wants out of the transaction. You never hear preferences. You never get the chance to discover how you as the seller could really delight the buyer, with some feature they didn't know you had and you didn't think was important enough to mention.

2021 Update:

Thanks to the global situation over the past year or so, buyers are more willing to invest time and energy getting on a phone or video call to share their requirements. This is your opportunity to learn directly from the customer what their actual needs are...instead of guessing. Take advantage of it.

Go out of your way to make use of this renewed interest in personal contact, and use the opportunity to not only develop trust but also discover what your potential customer really wants and means. Ask them, "Would you like to get on a quick call to discuss, so I can be clear and make sure I'm offering you on the right things?" Respect their time. Keep the discussion to 20-30 minutes maximum—you can always have another call later when they find they enjoy speaking with you.

Don't let these easy opportunities slip by, and don't quote based on guesswork.

>> To book a call with Jason Kanigan and change your sales process to give you the edge in price-sensitive situations, click here. <<

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Commission for Appointment Setters?

Commission for Appointment SettersCommission for appointment setters is a common question when setting up the sales processes for new organizations.

"What is the best commission model when hiring a sales person to sell digital marketing services to small businesses?" was asked on an expert platform I'm a member of.

The asker went on to explain that the owners of the business will handle the consultation and closing. So it wasn't a "sales" role...it was phone prospecting...appointment setting.

I've set up agencies for commission sales teams in the management consulting field.

Issues with Commission for Appointment Setters

[I wrote the following in 2015] Finding people to work entirely on commission was possible pre-2008, but nearly impossible after 2011. The level of skepticism, coupled with people holding PhDs and psychiatry degrees realizing they shouldn't be trying to duck into being telemarketers until their practices pick back up, lead to a huge drop-off in the number of candidates.

I also hired firms specializing in finding commission sales candidates, and they were unable to provide me more than a couple of resumes of people who did not stick. To be fair, this was in 2012-13 and their situation may have changed by now.

However--with the minimal buy-in, loyalty and typically abysmal investment in training the hiring company provides, it is in my opinion not worth traveling down that path.

The candidate doesn't really have a reason to stick around. Any time a regular wage job is put in front of them, they'll jump. And most never wanted to be making calls in the first place.

I know several business owners who run "boiler room" type operations and they are constantly juggling and struggling with staffing. Callers go to lunch and don't return. They don't show up. And this is when paying the callers a wage! From my perspective, it wasn't worth the hassle.

Perhaps you'll find someone who has the commitment, the drive, the energy and the talent to be a good commission appointment setter. As far as I'm concerned, that would be like winning the lottery.

Two more thoughts.

First, to attract someone into a role like this, you really have to be paying an hourly rate. I'd skip commission entirely. Your retention will be much better, depending on how well you screen candidates.

Second, if you're going the commission route, the rate has to be big enough to be worthwhile. Yes, maybe 5% IS an appropriate *percentage* of the sale to give an appointment setter--but is it a significant-enough amount of *money* to be worth the person's time?

You'll have to figure this out with your own numbers and see if a person can really make a livable wage out of your numbers.

After all, they don't get paid unless the owners do their job, too. If they don't sell, the setter doesn't make anything. Personally, I would not want to hand my financial fortunes over to someone else like that.

Is Your "Game" Rigged for the Setter to Fail?

Can the setter really make the number of dials necessary to succeed?

Let's say your service is priced at $5000. 5% of that is $250.

I don't know what the livable wage is in your area--in NY and LA it's going to be much higher than, say, Portland, OR or where I am in Wilmington, NC--but let's say the setter needs a good $2500 a month to scrape by.

That's $2500/250 = 10 sales.

10 SALES.

Not 10 appointments set.

We still have to back into that number.

Now if you're the owner, or the person doing the selling, how good are you?

Most people overestimate their competency level. They believe they're going to close almost all of the prospects who come their way. Not so!

Not even half.

Let's say, generously, 1 in 3.

Maybe your setter does a bang-up qualification job (Secret: that's what you're really paying them for) and you really can close 1 in 2. But let's go 1 in 3 and I still think that's generous.

So now your setter has to bring you 3 X 10 = 30 leads every month.

An Overlooked Factor in Commission for Appointment Setters

How long's your sales cycle?

Hadn't thought of that, had you!

Will Your Setter Survive Month One?

That means you're going to have to back out the final of these 30 leads to the date that leaves enough time to finish that cycle before the month expires and our poor setter runs out of time to make their revenue target.

See what I'm saying?

What this translates to, in English, is your setter's probably going to have a pretty bad first month.

Why?

Because they're filling the funnel.

Unless they go nuts, like aiming for 60 or 90 or 100 leads to cram into that funnel, the odds of enough getting through the sales cycle and closed and paid so they can be paid is low.

So let me ask you this:

If you work hard for a month and at the end things look terrible and you didn't make the money you expected--despite your effort being "on target"--

how do you feel?

Like you want to quit, right?

Unless you want a rotating door of setters, I strongly suggest you set up the equation to it supports your hire and gives them the time and financial reward they need to succeed. Which means they HAVE to survive through to that second month...keep putting in the effort, and seeing the good results appear.

Number of Dials Needed to Earn Commission for Appointment Setters

Back to the math...

To get those 30 leads (and remember, that is when the sales funnel is FULL, and your setter is continuing to load more leads into it to keep it full, and you have many prospects at various stages of the pipeline--not just at the beginning), how many people does your setter have to call?

We know, on average, that only 1 in 4 prospects dialed will be ready and available to talk today.

So 30 X 4 = 120 is your setter's ultra-basic, bare minimum number of dials. And really, I bet it will end up being double or triple that.

Does your setup, and your setter's situation, support them being able to make those dials?

And remember, this is with a decently mid-ticket offer of $5000. If your price is actually lower, the number of leads and dials are going to be much higher.

These calculations will of course vary depending on your situation. My intention here is to give you a sense of what's involved and where the perils are.

Just remember: Dials >>> Leads >>> Sales

2021 Update:

The original post was written in 2015. The current update for commission for appointment setters as of 2021 is this... the same rules apply. An organization I did some work for recently hired a returning-to-work mother to do what I would call luke warm calling—the calls were not cold, but they were not quite warm, either. Lead reactivation was the focus. She was highly skilled and "overqualified" for the role. Also, she had little phone experience.

The Outcome of This 2021 Appointment Setting Hiring Decision

I was not much involved in this decision and provided some scripting assistance. The fact is that she did not last one day in the role. No better example of the principle, "Perception Is Reality" than this has come up in the past while: to her, these were cold calls. She was not prepared for what she perceived as the loneliness of the role. The takeaway for you in 2021 is: filter for people who understand what they're getting into here, and like it. Do not take people who come along, even if they look good from a skills point of view. "They'll grow into the role I imagine at a step above this one" is not something to bank on. And the simple math we discussed above continues to apply.

>> Jason Kanigan is a worldwide authority on cold calling. Want his help? Visit the corporate services site here. <<