How a Balance Sheet Can Help in the Sales Process?

Posted by:  Tony Kevin

Some people on my team think I’m a freak because I like to read Profit and Loss (P&L) statements and Balance Sheets.  So that begs the question, why would a sales person spend any time looking at a customer’s balance sheet?

In B2B sales we are taught to understand the needs of our customers.  To truly accomplish this, sales people need to do their homework.  So discovering what’s important to your customer should be done through asking great questions, broadening your reach and doing research on what’s going on with the customer.

The Balance Sheet is an excellent source of information to shape your discovery process.  Based on what you see in the Balance Sheet can define the types of questions you ask and the areas you dig into in order to ensure your solution can help your customer reach their goals and objectives.  And most importantly, help you in developing your own value story to get your deal funded.

Let’s start by looking at the key reasons sales people don’t typically want to delve into the financial statements of their customers: 

Intimidated – I’ve found that the primary reason sales people don’t consider this as part of their discovery process is because they are intimidated with the concept.  It’s a mental block. 

Not Sure What They Are Looking At – I will admit there are several things on a balance sheet that aren’t self explanatory like Intangible Assets or Goodwill.  But most of the categories are simply to understand.  Assets, Liabilities, Accounts Payable and Accounts Receivable are all things that the average B2B sales person can relate to.

Do They Have to Meet with the CFO? – Some sales people think if they are using financial statements as a part of their discovery that means they will have to meet with the CFO.  That’s absolutely not true.  We’re just looking for clues to what’s going on with the customer not preparing for a meeting with a seasoned financial executive.

Best Practices in Reading a Balance Sheet

The best way to coach a sales person on this point is to keep the effort simple and high level.  The goal is to understand the information at a high level to get a sense for how the company is doing.  Here are some guidelines to use when reading a Balance Sheet:

Use Yahoo Finance – Yahoo Finance makes it really easy to look at Balance Sheets (and Profit & Loss Statements too.)  Simply look up your customer’s stock symbol and on the lower left you will see a link to see their Balance Sheet.  It will display the last three years data for their Balance Sheet. 

Look at the “Big 3” – Don’t worry about each individual line item on the Balance Sheet.  Just focus on the “Big 3.” Assets, Liabilities and Shareholder Equity. 

·      Assets are the property, cash, accounts receivable and investments the company owns

·      Liabilities are the debts (short and long term), accounts payable and obligations they have

·      Shareholder Equity is the value of the company

Look for Trends – Really what you’re looking for is to see if these numbers are trending up, staying the same or declining.  Their trend line will begin to give you the clues you’re looking for.  Typically, if these numbers are trending up the company is doing well and growing.  If they are staying the same the company is maintaining a status quo.  If they are declining they are probably struggling.

Building Your Value Story Based on What You Find

Doing this research should culminate in crafting your value story to position your solution for budgeting and funding.  Your value story should be based on what you discover in the process.  Here are some simple suggestions for your value story based on your customer’s financial performance:

Growing – If your customer is in growth mode, build your value story around how your solution will help in enabling more growth. 

Status Quo – If your customer’s financial performance has been stagnating for the last three years focus your value story around Total Cost of Ownership (TCO) or efficiency.  They are likely looking for ways to optimize their costs with flat or declining budgets. 

Declining – If your customer’s performance is declining focus your value story on cost savings and how you help them do more with less investment.  Sometimes Return on Investment (ROI) would be a good strategy to show them a quick return on their investment.

As a Sales Leader, help your sales teams with this exercise by pulling up the balance sheet of one of you customers and walk through it together.  Show them that the information is easier to figure out than they thought.