10 Signs Your Growth Plan Is Secret
While you know how your company creates profitable growth, do others?
In spite of all your meetings, strategic planning efforts and company mission statements, are you sure your constituents get how your firm makes money?
Are all your internal departments making, spending and saving money towards the same goal? If not, many inside and outside your company may be squandering your resources or working at cross purposes.
Here are the 10 ways to tell if your company’s plan profitable growth is a secret.
Is your growth plan a secret? Asks small business growth expert Andy Birol
- Few of your management team and none of your employees understand your company’s business model or know how your business makes money.
When asked, they revert to talking about how long you’ve been in business as proof that legacy means current success. - Your customers do not know why you cost more than the competition.
After you explain all the disadvantages of buying competitors don’t provide, your customers still don’t acknowledge your added value. - Even you’re not sure what it costs you to find, keep or grow customers.
In response to such questions, you find yourself dieseling, much like a jalopy that continues to sputter after the key is out of the ignition. - When asked by a reporter which market segments offer your firm the best opportunities for future growth, you don’t answer them, not because it’s a secret but because you aren’t sure.
- Your sales force blames your high prices for not hitting their sales quotas while they brag about the excellent service they provide.
- Your compensation plan doesn’t reward your executives for achieving your company’s profitable growth.
Instead of planning to spend their bonus on a trip to Hawaii, you find out they’re booking a weekend in Topeka and not taking their kids. - One of your vendors suggests that if you dropped your prices you could sell a lot more of your products and thus buy more from her.
Clearly they don’t see the value your firm is adding to what they are supplying you. - Your closest friends give you bad or unprofitable referrals.
At a recent get-together, your friend tells you about meeting three of your most desirable prospects. But he didn’t think you would want to pursue selling them. - Your spouse cannot explain why your company is the premium provider.
When asked by her or his friends to describe why your firm is so expensive, she or he turns to you to explain it correctly. And when you encourage her to do it alone, you constantly interrupt her to correct his or her mistakes. - The reasons your customers say they buy from you do not match the reasons your sales force says sells your customers.
As the old saying goes, people don’t buy shovels, they buy holes. Sadly, you worry your customers are asking for premium swimming pools and your sales reps are selling low-cost excavations.
While stories of disconnected companies can be hilarious, they are not funny when they are about yours. When your plan for profitable growth is clear to your team, their actions are more likely to contribute to your objectives.
Convey how your company will achieve profitable growth and make sure everyone around you understands.
Companies Either Grow Or They Are Sold
Filed under: Business Growth, Profitable Growth, Top Line Growth
While financial gamers, schemes and scams have enabled many companies to avoid either profitable growth or a sale for years…
… ultimately one of these options is inevitable.
- A company that is profitably growing is controlled by passionately committed owners and investors.
Their firm is financially and operationally self-sufficient. There is no need to merge or look for investors. Its leaders can reduce its credit line and pay down outstanding loans. The company has customers who are happy to pay for its valuable products or services. Over time, the company will build up retained earnings and become a creator of wealth. As long as its owners are confident and passionate they should never think of giving up their independence in running it or cashing out. Life is good!
Your company either profitably grows or is sold says small business growth consultant Andy Birol.
- A company that is not growing profitably has flat or declining sales.
Its costs and expenses are fixed or rising and it starts to lose money. The company begins to consume more cash than it generates. Owner, banks or investors have to subsidize the company through credit or by tapping any retained earnings. These leaders lose passion for their business as it is no longer self-sufficient. Clearly, its customers cannot or will not pay enough for the firm to delivery its products and services. First, the company runs out of cash, then out of credit and finally must be sold.
There are only two buyers for a company that is not profitably growing:
- New owners and investors with ideas, cash and passion to return the company to profitable growth.
- Bankruptcy trustees who sell the company for whatever they can to pay creditors pennies on the dollar.
So companies either profitably grow or they are sold.
What’s it going to be for your company? Do you agree or disagree?
Why Profitable Growth Now?
Filed under: Business Growth, Profitable Growth, Top Line Growth
Before the financial crisis, most businesses could coast along and rely on their credit lines to make up for shortfalls in sales.
“Good” customers could be subsidized and customers who didn’t pay or went under could be ignored by just borrowing more cash. For the firm, slumping quarterly revenues and rising expenses could be carried forward by financial wizardry and leveraging a balance sheet.
While the lessons of doing business without credit and cutting expenses to the bone have been learned, how can one grow a business back to where it was and forward after the financial crisis? Without fads like buyouts, rollups and ESOPs, an owner, financier or organization should return to the oldest source of creating growth in the book. Sell more products and services and do so at a profit.
Why Profitable Growth Now? by Andy Birol
Profitable sales means focusing on:
- Higher gross margins from differentiating your value and de-commoditizing your products and services profitably
- Knowing that every sale you make is profitable by customer, order item or services
- Managing your balance sheet for liquidity instead of credit where the biggest assets are customers’ predictable purchases.
- Creating a wealthy company that can be sold for cash and secure the lifestyle of its owners now and later.
Profitable Growth is not a fad, or just a program to get by in the short term, but a way thinking about your business, investment or organization. It starts with knowing who is paying you for what value and continuously working to repeat this. It is a pay-as-you-go approach to growing your business that reduces dependence on borrowing money, and increases the wealth of a company and the security of its owners and all who rely on it.
Whether your business has major growth or returning to growth in its plans, this blog will focus on the tools, techniques and real-world examples for creating Profitable Growth!
