I don’t want your money.
“I sell a commodity,” she said.
She owns a recruiting company that matches IT professionals with companies that need them.
Her margins have been getting squeezed for the last 3 years as her clients, the companies that hire these IT professionals, have been reducing the fees they pay for the service she provides.
I asked her what she’s tried to do about that and she just shrugged her shoulders.
“What am I supposed to do? My competitors seem to be willing to work for less and less every year. They provide the same service I do. I’m kinda stuck.”
“So how much do you think that margin compression has cost you in the last 3 years,” i asked.
She rubbed her eyes and said, “at least a million bucks.”
I challenged her number. A million dollars seemed too high.
“I bet it’s closer to $1.5mm,” she said, sounding tired.
I asked her what happens if she doesn’t fix it.
“Nothing really. We're still doing ok. I’m probably going to sell the business in a couple of years anyway,” she said.
I told her that made sense and asked what impact those compacted margins might have on the value of her business, and she shrugged her shoulders again. “I don’t know, I got an offer to sell it for $5mm late last year.”
“Why didn’t you take it?” I asked.
“I’m just not ready. I’ve got a couple more years of work left in me,” she said.
“So really, the margin thing is just a nuisance. You wish it weren’t that way, but have resigned yourself to it being unfixable,” I challenged.
She took a deep breath and said, "Yeah. I guess so. Everyone else is in the same boat.”
“By the way,” she asked,”How much is your training? I’ve got a few people that are not hitting their numbers. I should probably send them to you.”
I told her it was going to be too expensive and that it didn’t make sense for her to spend the money.
She smiled and said, "I know that trick. You want me to want it more…”
I assured her it was no trick and unless I was missing something, I didn’t want her money.
“You told me that your business was a commodity,” I said, “and that there was nothing you could do about it. You said it didn’t matter to you because you were going to sell the business in a couple of years anyway. You said the lower valuation based on compressed margins was just something you were going to deal with like all of your competitors.
"Did I miss anything?” I asked, gently.
“Nope. That’s about right,” she said.
“So, fixing what may be a sales problem is not in your top 3 things to accomplish right now,” I pressed again.
“Now that you put it that way, you’re right. It’s not,” she said smiling.
I thanked her for meeting with me and apologized for wasting her time.
We both stood up to shake hands and she said, “This is the strangest sales call I have ever been on. You didn’t try to sell me anything. You talked me out of buying anything.”
“Why do you think I did that?” I asked.
“Well, clearly I’m not ready,” she said.
We both smiled and ended the meeting.
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