Buying Decisions-Rational?

After decades of personal selling and observing others sell, I am convinced most buying decisions are based on emotions rather than on a rational basis. The ratio of the two motivators varies with the individual buyer and the circumstances at the time, but clearly the seller must always be aware of the emotional component of the decision process. Having the best product, service, price, warranty, etc. does not ensure a sale.

Here’s a sampling of some of the non-rational reasons I have observed buyers employ in their buying decisions.

  • They like salesperson personally.
  • They have something in common with salesperson, like attending the same school.
  • Seller is friendly with their boss, or boss told them to buy.
  • The previous buyer bought from current vendor.
  • They perceive seller is friendly with someone in top management.
  • Something in your offer positively impacts their bonus. (This may be rational from their personal viewpoint, but their job is to find the best deal for their employer.)
  • They receive some personal gain from the seller.
  • The seller is great looking.
  • The seller is a stylish dresser.


There are an infinite number of emotional decisions involved in buying decisions. The buyer may be unaware of them.

So, if you are a seller and you know that your product or service is clearly superior to the one being currently bought by the buyer, do not assume he will switch to you. Do your homework and try to determine everything you can about your buyer to understand his/her emotional buttons so you can put them in play in addition to your rational approach. Your persistency can eventually overcome a buyer’s emotional bias.

If your many attempts fail, you might approach the buyer’s boss with your strong rational arguments that can trump the buyer’s emotional decision-making.





The Mission Statement – For Small Business?

The mission statement is something very different from the business plan. Mission statements set the moral and human goals to which your company is supposed to aspire. In many cases, they also state higher order business goals, such as a corporate commitment to maintaining an annual compounded rate of growth of a certain percentage.

Mission statements are most often associated with large corporations—an effort to get thousands of people to pull in the same direction across a far-flung corporate empire. But I think a mission statement is a good thing for a small business as well, and it’s something that should be developed at the outset.

The mission statement clearly tells employees what behaviors are expected of them and describes the kind of treatment they can expect from their employer. Most people have a strong desire to know the rules of the game. In addition, they want to be proud of the company for which they work. The mission statement gives them at least one piece of the puzzle.

This is also the best reason not to have a mission statement if you don’t intend to follow it. There’s nothing more poisonous than to have the management thumping away on some ethical tub, and at the same time acting in ways that directly contradict the espoused values. If you can’t walk it, don’t talk it!

The mission statement, like the business plan, is a useful tool for triangulation and mid-course correction. Take it off the shelf every once in a while, and see if you’re living by it. (Better yet: look at the framed version on your office wall.) And when you face a tough choice, look at that statement again for guidance. To the extent that your mission statement contains concrete business goals, make sure that you either (1) achieve those goals, or (2) acknowledge that you aren’t achieving them and take steps to bring the company’s performance into line with its aspirations.

You may not spend a lot of time on your mission statement, but you should clearly set the tone for the kind of company you’re trying to create and sustain. Culture comes from the top—that is, from you. How accessible will you be to your employees? Will you truly listen to their input, or will you just pay lip service to their ideas? What are your expectations from everyone, especially in the realm of building trust? How will your company treat its customers? What are its attitudes toward quality?

Part of the point of the mission statement is the process as well as the product. If you involve other people in the development of the mission statement, you’re already sending a signal about your culture.


Factors: How They Can Help Small Business

Factors finance $120 billion in receivables, yet most start-up and small businesses are not aware of them. Business schools rarely acknowledge them. However, they can alleviate your cash flow problems.

They can loan you or advance you money against your receivables and in some cases against your inventory.

In other words, your receivables are an asset that the lender (Factor) purchases.


The Advantages of Using Factors:

  • You get payment for your invoices within days. This allows you to pay your suppliers on time, to build trust  with them, and to take advantage of their cash discounts. It is a financial tool that speeds your business’ cash flow. Factors do not lend money on purchase orders.
  • All your costs are variable.
  • Factors check the credit of all your customers and would-be ones. Thus, you get more accurate and current information than if you performed this function on your own. More money is saved by eliminating the need to hire a credit checker.
  • Factors collect al your receivables. In today’s world, the majority of customers like to stall the payment of their bills. Some will not pay until someone calls them for payment. The Factors have more leverage than you as an individual have. They may represent 50 suppliers of one customer.
  • Factors act as insurers of the receivable. If after you ship a customer and the customer goes bankrupt, the Factor may be stuck, depending on your contract, not  you. This feature can help you sleep better as well as eliminate your bad debts.
  • The Factor can take over some of your administrative functions and save you the resultant labor costs. On one of our game companies that was created around a licensed product, the Factor supplied us with data on monthly shipments which acted as our Royalty statement. They also provided us with total shipments by territory or account which we used as our Sales Rep commission statements.
  • You can get money even though you don’t have a good credit rating. The Factor is only interested in your customers’ credit ratings.


The disadvantages of using Factors are the costs, which can be high in some cases, and they may alienate some of your customers with their collection techniques. You need to read and understand their contract carefully.

You can locate an appropriate factor by going to the website of the International Factoring Association,, or ask your local banker, SCORE, or SBDC office.


(This post is excerpted from Chapter 11 of Bootstrapping 101.)



%d bloggers like this: