What Is Always Be Closing—ABC?

Always Be Closing (ABC) is a motivational phrase used to describe a sales strategy. It implies that a salesperson following the regimen should continuously look for new prospects, pitch products or services to those prospects, and ultimately complete a sale.

As a strategy, ABC requires that the salesperson be persistent, but also that they know when to cut their losses and move on to another prospect.

The Basics of ABC

The phrase Always Be Closing was popularized in the 1992 film, “Glengarry Glen Ross” starring Alec Baldwin, Al Pacino, and Jack Lemmon. The movie was written by David Mamet and was based on his Pulitzer Prize-winning play. It emphasized the darker, cutthroat side of the sales industry.

In the film, an aggressive representative from the corporate office is brought in to motivate a group of real estate agents, telling them to sell more property or be fired if they fail. He delivers a profanity-laced tirade, accusing the salespeople of being timid and unmotivated. He flaunts his wealth and success.

During his speech, he flips over a blackboard on which the words “Always Be Closing” are written, and he repeats the phrase several times. The speech backfires, however, because the salespeople resort to a host of unethical tactics to achieve their sales numbers.

Later, in the 2000 film “Boiler Room,” a sales trainer mentoring a young stockbroker asks the trainee if he’s seen “Glengarry Glen Ross.” He then proceeds to quiz him on the meaning of Always Be Closing.

The Effectiveness of Always Be Closing

The term has become a catchall example of a few of the pithy quotations that sales managers often use to motivate their sales staffs and to drive home the importance of being tenacious with prospects. It serves as a reminder that every action a salesperson takes with a client prospect should be done with the intention of moving the sale toward a close.

From the initial rapport-building stage of the sales process to uncovering customer needs and product positioning, the representative should be “closing” the entire time, setting the customer up to to a point where the only logical thing to do is pull out his checkbook.

Real World Example

While it might be entertaining on the big screen, ABC is seldom successful in real life situations for a variety of reasons.

A 2018 study by CSO Insights, an independent research and data provider, indicated that successful salespeople spent, at most, 35% of their time actually selling or “closing” deals. The research found that lead generation, customer follow-up, strategy and planning sessions, and administrative tasks comprised the lion’s share of their time.

As InvestementNews.com reports, research suggests that the ABC mentality is losing its effectiveness. The average 21st-century customer comes armed with significantly more information than a consumer did in 1984, when the David Mamet story was a Pulitzer Prize-winning stage presentation, and even since 1992, when the film was released. Modern customers prefer to shop around and research before making purchases. They’re much less susceptible to slick sales pitches than people once were.

What Is an Acceleration Clause?

An acceleration clause is a contract provision that allows a lender to require a borrower to repay all of an outstanding loan if certain requirements are not met. An acceleration clause outlines the reasons that the lender can demand loan repayment and the repayment required.

It is also known as an “acceleration covenant.”

Acceleration Clause Explained

An acceleration clause allows the lender to require payment before the standard terms of the loan expire. Acceleration clauses are typically contingent on on-time payments.

Acceleration clauses are most common in mortgage loans and help to mitigate the risk of default for the lender. They are usually based on payment delinquencies but they can be structured for other occurrences as well. In most cases, an acceleration clause will require the borrower to immediately pay the full balance owed on the loan if terms have been breached. With full payment of the loan the borrower is relieved of any further interest payments and essentially pays off the loan early at the time the acceleration clause is invoked.

An acceleration clause is usually based on payment delinquency, however the number of delinquent payments can vary. Some acceleration clauses may invoke immediate payoff after one payment is missed while others may allow for two or three missed payments before demanding that the loan be paid in full. Selling or transferring the property to another party can also potentially be a factor associated with an acceleration clause.

For example, assume a borrower with a five year mortgage loan fails to make a payment in the third year. The terms of the loan include an acceleration clause which states the borrower must repay the remaining balance if one payment is missed. The borrower would immediately be contacted by the lender to pay the remaining balance in full. If the borrower pays then they receive the title to the home and takes full ownership of the property. If the borrower cannot pay then they are considered in breach of contract and the lender can foreclose and seize the property for resale.

Invoking the Acceleration Clause

Acceleration clauses are most commonly found in mortgage and real estate loans. Since these loans tend to be so large, the clause helps protect the lender from the risk of borrower default. A lender may choose to include an acceleration clause to mitigate potential losses and have greater control over the real estate property tied to a mortgage loan. With an acceleration clause, a lender has greater ability to foreclose on the property and take possession of the home. This may be advantageous to the lender if the borrower defaults and the lender believes they can obtain value through a resale.

What Is Analysis of Variance (ANOVA)?

Analysis of variance (ANOVA) is an analysis tool used in statistics that splits an observed aggregate variability found inside a data set into two parts: systematic factors and random factors. The systematic factors have a statistical influence on the given data set, while the random factors do not. Analysts use the ANOVA test to determine the influence that independent variables have on the dependent variable in a regression study.

The t- and z-test methods developed in the 20th century were used for statistical analysis until 1918, when Ronald Fisher created the analysis of variance method. ANOVA is also called the Fisher analysis of variance, and it is the extension of the t- and z-tests. The term became well-known in 1925, after appearing in Fisher’s book, “Statistical Methods for Research Workers.” It was employed in experimental psychology and later expanded to subjects that were more complex.

The Formula for ANOVA is:


$\begin{aligned} &\text{F} = \frac{ \text{MST} }{ \text{MSE} } \\ &\textbf{where:} \\ &\text{F} = \text{ANOVA coefficient} \\ &\text{MST} = \text{Mean sum of squares due to treatment} \\ &\text{MSE} = \text{Mean sum of squares due to error} \\ \end{aligned}$​F=MSEMST​where:F=ANOVA coefficientMST=Mean sum of squares due to treatmentMSE=Mean sum of squares due to error​

What Does the Analysis of Variance Reveal?

The ANOVA test is the initial step in analyzing factors that affect a given data set. Once the test is finished, an analyst performs additional testing on the methodical factors that measurably contribute to the data set’s inconsistency. The analyst utilizes the ANOVA test results in an f-test to generate additional data that aligns with the proposed regression models.

The ANOVA test allows a comparison of more than two groups at the same time to determine whether a relationship exists between them. The result of the ANOVA formula, the F statistic (also called the F-ratio), allows for the analysis of multiple groups of data to determine the variability between samples and within samples.

If no real difference exists between the tested groups, which is called the null hypothesis, the result of the ANOVA’s F-ratio statistic will be close to 1. The distribution of all possible values of the F statistic is the F-distribution. This is actually a group of distribution functions, with two characteristic numbers, called the numerator degrees of freedom and the denominator degrees of freedom.

Example of How to Use ANOVA

A researcher might, for example, test students from multiple colleges to see if students from one of the colleges consistently outperform students from the other colleges. In a business application, an R&D researcher might test two different processes of creating a product to see if one process is better than the other in terms of cost efficiency.

The type of ANOVA test used depends on a number of factors. It is applied when data needs to be experimental. Analysis of variance is employed if there is no access to statistical software resulting in computing ANOVA by hand. It is simple to use and best suited for small samples. With many experimental designs, the sample sizes have to be the same for the various factor level combinations.

ANOVA is helpful for testing three or more variables. It is similar to multiple two-sample t-tests. However, it results in fewer type I errors and is appropriate for a range of issues. ANOVA groups differences by comparing the means of each group and includes spreading out the variance into diverse sources. It is employed with subjects, test groups, between groups and within groups.

One-Way ANOVA Versus Two-Way ANOVA

There are two main types of ANOVA: one-way (or unidirectional) and two-way. There also variations of ANOVA. For example, MANOVA (multivariate ANOVA) differs from ANOVA as the former tests for multiple dependent variables simultaneously while the latter assesses only one dependent variable at a time. One-way or two-way refers to the number of independent variables in your analysis of variance test. A one-way ANOVA evaluates the impact of a sole factor on a sole response variable. It determines whether all the samples are the same. The one-way ANOVA is used to determine whether there are any statistically significant differences between the means of three or more independent (unrelated) groups.

A two-way ANOVA is an extension of the one-way ANOVA. With a one-way, you have one independent variable affecting a dependent variable. With a two-way ANOVA, there are two independents. For example, a two-way ANOVA allows a company to compare worker productivity based on two independent variables, such as salary and skill set. It is utilized to observe the interaction between the two factors and tests the effect of two factors at the same time.

What Is an Auditor’s Report?

An auditor’s report is a written letter from the auditor containing their opinion on whether a company’s financial statements comply with generally accepted accounting principles (GAAP) and are free from material misstatement.

The independent and external audit report is typically published with the company’s annual report. The auditor’s report is important because banks and creditors require an audit of a company’s financial statements before lending to them.

How an Auditor’s Report Works

An auditor’s report is a written letter attached to a company’s financial statements that expresses its opinion on a company’s compliance with standard accounting practices. The auditor’s report is required to be filed with a public company’s financial statements when reporting earnings to the Securities and Exchange Commission (SEC).

However, an auditor’s report is not an evaluation of whether a company is a good investment. Also, the audit report is not an analysis of the company’s earnings performance for the period. Instead, the report is merely a measure of the reliability of the financial statements.

The Components of an Auditor’s Report

The auditor’s letter follows a standard format, as established by generally accepted auditing standards (GAAS). A report usually consists of three paragraphs.

• The first paragraph states the responsibilities of the auditor and directors.
• The second paragraph contains the scope, stating that a set of standard accounting practices was the guide.
• The third paragraph contains the auditor’s opinion.

An additional paragraph may inform the investor of the results of a separate audit on another function of the entity. The investor will key in on the third paragraph, where the opinion is stated.

The type of report issued will be dependent on the findings by the auditor. Below are the most common types of reports issued for companies.

Clean or Unqualified Report

A clean report means that the company’s financial records are free from material misstatement and conform to the guidelines set by GAAP. A majority of audits end in unqualified, or clean, opinions.

Qualified Opinion

A qualified opinion may be issued in one of two situations: first, if the financial statements contain material misstatements that are not pervasive; or second, if the auditor is unable to obtain sufficient appropriate audit evidence on which to base an opinion, but the possible effects of any material misstatements are not pervasive. For example, a mistake might have been made in calculating operating expenses or profit. Auditors typically state the specific reasons and areas where the issues are present so that the company can fix them.

Adverse Opinion

An adverse opinion means that the auditor has obtained sufficient audit evidence and concludes that misstatements in the financial statements are both material and pervasive. An adverse opinion is the worst possible outcome for a company and can have a lasting impact and legal ramifications if not corrected.

Disclaimer of Opinion

A disclaimer of opinion means that, for some reason, the auditor is unable to obtain sufficient audit evidence on which to base the opinion, and the possible effects on the financial statements of undetected misstatements, if any, could be both material and pervasive. Examples can include when an auditor can’t be impartial or wasn’t allowed access to certain financial information.

Example of an Auditor’s Report

Excerpts from the audit report by Deloitte & Touche LLP for Starbucks Corporation, dated Nov. 15, 2019, follow.

Paragraph 1: Opinion on the Financial Statements

“We have audited the accompanying consolidated balance sheets of Starbucks Corporation and subsidiaries (the ‘Company’) as of September 29, 2019, and September 30, 2018, the related consolidated statements of earnings, comprehensive income, equity, and cash flows, for each of the three years in the period ended September 29, 2019, and the related notes (collectively referred to as the ‘financial statements’).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 29, 2019, and September 30, 2018, and the results of its operations and its cash flows for each of the three years in the period ended September 29, 2019, in conformity with accounting principles generally accepted in the United States of America.”

Paragraph 2: Basis for Opinion

“We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.”