Part I Growing Revenue
By Philip Elworth
This is the first in a series of white papers on the topic of getting your business ready for a transition. This could mean a sale, a recapitalization or a gift. There are many things a business owner should do, long before the time to transition to maximize the value of the business. Every business owner should be in business to create value.
Growing your revenue is the first theme we will discuss to create value. Nothing creates value more than a dependable revenue stream. Therefore to increase the value of your company you should be growing your revenue. So how does one grow their businesses revenue?
There are four basis ways to grow revenue:
- Add new customers
- Add new products or services for your existing customers
- Target new markets with either exiting products or services or devising new offerings to new markets
- Strategic partnering to provide access to new markets or customer groups
To accomplish any of these targets you need to be efficient in your processes. You need to own your intellectual property, which drives your offering, and control the space you operate in. Start by asking the question from your customer’s perspective; What Is in It for Me (WIIFM)? If you understand why your customer buys from you, then you can expand on the offering, thus controlling your space. You will then strive to own the unique capabilities that make your offering the answer to the WIIFM question.
Next you need to create a strategic plan to accomplish the growth areas you wish to pursue. If your goal is to add customers start with a plan defining just what this means. If your average customer order is $1million, then how many can you add before additional capacity needs to be added? If your average customer sale is $10, you have a different strategy to cost effectively bring in the required number of customers needed to reach your goal. Marketing is a strategic approach to growth, sales is an execution strategy to achieve this growth. Develop the key metrics around the plan, then a separate set of metrics around the execution of the plan.
If your strategy for growth is a partnership to move into or learn a new venue, then again start with a strategic plan of what you wish to accomplish. I once worked for a real estate company who specialized in office space. We chose to grow and diversify by moving into the industrial building market. We had no experience in this market so we chose a strategic partner who did. We succeeded in learning about a new market and mitigated the risk of ignorance, while creating a successful revenue stream. Our partner obtained a reasonable return for their effort, but also learned how to put funds together for future expansion of the concept we pioneered together. We both won- we both grew our businesses. This process can be accomplished with new products or new markets.
Once again, growth needs to be planned for and executed with a specific strategy in mind. You cannot decide to “grow your business” and just go out and do what you have always done or by just working harder. You must have a plan. If you need help developing a plan for growth of your business or for to begin to plan for an exit, I as a partner in B2BCFO® in Chicago am ready to lend assistance. Contact me at firstname.lastname@example.org.