Business Law Number One: every commercial business has to grow its top line revenues over time unless it has found the paradise of declining costs year on year. This is the only way to maintain a profit margin. Therefore, it should follow that every business has a very clear idea how to grow its top line, surprisingly many don’t. Many think rising demand for their offer (rising, why?), and putting up prices every year will do the trick (in our supply-led, low-inflation economy this is very difficult to do). Just putting a budget up every year doesn’t bring in extra sales.
This type of organisation is easy to identify. Sales growth in the doldrums; characterised by flat year-on-year comparisons, or miniscule growth increases, or a good year followed by a bad one. Profits have been supported (as well as possible) by changes to the business model, reductions in the cost base or other remedial activities. In worse cases, the business relies on its (dwindling) cash pile or other balance sheet ‘tweaks’ to prolong the torture, waiting for the market to pick up.
What Does a Business Growth Competence Look Like?
A summary checklist:
|1.||The first thing is to be clear what your customer values proposition is. What are you selling, and why is it a more compelling offer than competitors? You can then think about……|
|2.||How you choose to compete? On price, value, quality, novelty, service etc.
Important note: The more of these variables you say yes to, and give equal weighting, the less distinctive your offer will be.
|3.||Make sure your resources are in balance. Can you effectively supply what you are selling? If demand increased by 20%, could the business support it? Don’t ignore working capital requirements as part of this analysis.|
|4.||Have you locked in your current customer base? If new business is simply replacing what’s being lost, you have a very expensive way of operating. You need firstly to retain your customers (define retention parameters) and then penetrate their potential for additional sales (again define the parameters).|
|5.||Next, how to increase demand for your offer? It maybe distinctive, but do enough people know about it? Set targets for new/new business, i.e. new business from new customers.|
|6.||To cover points 4 and 5 build a business pipeline methodology that captures the key ‘trigger points’ that move a potential sale from one phase to the next. Focus sales management activity on optimising the processes within the business pipeline, both for speed and quality of conversion.|
|7.||Makes sure your sales organisation knows how to take business from competitors, deepen customer relationships and identify new opportunities.|
|8.||Focus on the people. It’s a chicken and egg question. Does a well motivated, high morale workforce drive revenue growth or is it the other way round? One thing’s for sure, if you don’t quickly get your people motivated behind the growth strategy it won’t last very long. Look at the organisations bringing services back from India, or heavily reinvesting in their service provision because their growth plans are running out of steam.|
|9.||Makes sure the big stuff is aligned. Your organisational and brand values inform a well understood vision, supported by a clear strategy.|