What is business growth?
Business growth is an increase in revenue and profit year over year. At least three years running. Growth that’s steady, and consistent with the company’s size, is growth that increases the value of the company.
What comes to mind when you hear names such as Blockbuster, Kodak, Saturn and Walkman? I immediately think about their demises. These were amazing companies or products at one time, often for decades, and then they went out of business.
To me, these four companies are poster children for the fact that if a company isn’t growing, it is going out of business. The going out of business part may be mercifully quick or agonizingly slow, but it is inevitable.
Companies must make growth happen
Let’s be really specific about what I mean by profitable revenue increases. I mean your company increases its revenue and its profits simultaneously each year.
- It indicates that you don’t make any sales without knowing the profit margin of the sale.
- It means not falling into the trap of loss leaders, or discounts (either your own or a coupon site’s).
- It means ensuring that you instill pride of ownership throughout the company.
While you may have increases in various other factors, only profitable revenue increases cause an increase the value of the company.
Growth is not indicated by increases in: market share; brand awareness; number of clicks or other measures of online activity; media presence; speaking engagements; size of mailing list; number of strategic partners or synergies with others; number of referral sources or advocates.
Growth is not indicated by increasing revenue without increasing profit. That’s a slow death, not growth.
Growth is not indicated by increasing profit without increasing revenue. This increase in profit is generally the result of cost cutting. Cutting doesn’t cause growth.
What does it take to increase profitable revenue?
1) Extreme focus on your current buyers, your current offerings and your current employees. This is organic growth—no additives or artificial flavorings! You use the strengths you already have inside the company as the starting point for new profitable revenue.
Consider this well-known failure: Saturn automobiles. GM spent tons of money and years building a brand that focused on cultivating and nurturing their current buyers. Once a Saturn buyer, always a Saturn buyer. They invested in making their particular kind of car the best in its class. Their employees were proud to represent the Saturn brand.
Then GM deviated from all of this: from their buyers, their offerings and their employees. And within the blink of an eye, Saturn became a relic of the past. A failed business. Why? Because Saturn wasn’t like the rest of GM, and when things got bad, GM retreated from it all. Buyers ditched them in droves. “Why should we stay” they thought, when Saturn destroyed itself?
2) Introducing new ideas into the mix, while strongly maintaining the essence of what your current buyers know and love you for. Every company must change, adapt and inject freshness. Do it in ways that tell buyers you hear them (you make the changes that you make because buyers have expressed interest). Don’t do it because other companies are doing it. Do new things to give the customer the experiences and value that they are hungry for.
Consider this well known failure: Blockbuster. Blockbuster customers loved watching movies at home on their own screens. That was the essence of Blockbuster. Missed the theater showings? Want to see it again? Having a party on a theme? Blockbuster made it possible for people to meet all those needs.
People didn’t like a few things: late fees, returning to the store where you rented it; the occasional poor quality tape; having access to only the inventory in a particular store.
Netflix recognized these problems. They began mailing movies to viewers homes. While you might have to wait, you always knew where you were in the queue. The copy you received could have been from anywhere. While Netflix expanded these services, Blockbuster clung to their old ways. They failed to see that these were technical or operational details that they had to get right, or people would flee in droves. Which they did.
Netflix sustained and then grew the essence of movie rentals, adjusting the operations as needed. Blockbuster lost the essence and focused on the operations.
Another shocking failure for a similar reason is Kodak. They stuck to their technology, film, instead of their essence, images.
3) Continuously developing creative ideas. Growth is not limited to one time per year, or even per quarter or month. Growth is an ongoing mindset that needs to be in the works every single day.
I worked with my client Jerry, a CPA, to start his profitable revenue growth journey with one limited effort. He invited 23 of his long time clients to switch from a tax-focused, hourly-billing model to a relationship model that meets their annual and long term growth goals. They pay an annual fee in monthly installments. Tax returns are included but tax planning is just one of a number of professional services Jerry offers.
Once this was underway, we worked together to roll out a couple of other packages to different client groups. The longer Jerry works with his clients and the more he learns about their businesses and their lives, the more he can tailor his offerings to their needs.
When he started this new model, cloud accounting software was in its infancy. Once the cloud was expected, Jerry moved everyone into it. He is well positioned to take advantage of all new technologies that may come along. He and his clients are focused on continuous development and the essence of delivering and receiving value, not the operations.
How is Your Company Growing?
Have you had an idea lately…and then put it aside? Maybe you’re too busy, or you’re unsure if you know how to get started, or no one in your industry does it that way?
While you’re hesitating, just ask yourself if you want to end up like Blockbuster or Kodak? No? Then make time to pursue your idea. This is the essential point of my consulting work and my book Tinker: Trust your hunches, try them out with a short, simple experiment, and then either go forward or stop. Very little is lost and there’s the potential to gain a lot.
There is no potential gain if you never try anything new. The future starts today. Will yours be open or closed?
Need a boost of confidence? An avid supporter of your idea? Someone outside your close circle who will bring creative genius to your company? You might be a great fit for Trivers Consulting Group.
We have been advising and supporting privately held companies like yours for twenty years and generated billions of dollars of profitable growth. It all starts with a phone call. If you’re ready to explore working with us, I would love to hear from you. 703-801-0345