Much of business success is about using the power of “AND.” I have found most business owners excel in either revenue creation “OR” operations. In order to be successful, you must grow the top line AND control operating costs. Business owners naturally move towards their area of strength. My background is in marketing. Our business continues to double its top line revenues each year as it has now for four straight years. However, I’ve taken years to figure out how to leverage my team to improve our results when it comes to controlling costs.
A great example of this dynamic is a business I started from scratch in the Chicago land area about ten years ago. I ran this business for three years and tripled our top line revenue every year. I struggled to generate a steady profit because my focus was 100% on growth. I sold the business to my brother-in-law who had been running operations. He quickly got the cost structure fixed and started turning a profit. However, for the next three years he experienced virtually no growth in the top line, so his profits suffered as well. This last year, he and his wife invested some time improving their marketing plan by getting advice from myself and other marketing experts. The result? Growth in the top line and the bottom line.
#1 – Recognize your strength. Keep in mind that a strength is as much about execution as it is about knowledge. I have been a business book worm since I was in high school. I understand all the finer points of a business cost structure. The issue is that I am not a detail person; I am big picture. I like the marketing side better. As a result, the cost control side of the business is a weakness for me.
I have found that most small business owners have a strength in cost control and not in marketing. Again, this doesn’t necessarily mean you don’t understand marketing or how to grow your business. You could probably write a great marketing plan for your business. However, when you get to work every day, you find yourself diving into the details and controlling costs rather than implementing your grand growth strategy. Either way, the first step is identifying your area of focus.
#2 – Force yourself to make an action plan in the area where you are naturally unfocused. For me, this means sitting down with my accountant and making a detailed operating expense budget by week for our company. If your weakness is marketing, force yourself to sit down with a mentor who focuses on this area. If you don’t already have someone, go to score.org and find a mentor in your local area who has a background in marketing.
The important part about this step is not to focus on big plans. Rather, focus on the specific action steps which will need to be taken in order to accomplish the key objectives. For instance, your objective may be to get your expenses down to a level where your gross margin would increase to a certain point. In this case you will need to lay out which specific expenses to reduce and over what period of time. Use a spreadsheet to show the projected progress by month in each category.
#3 – Create the necessary milestones and accountability to ensure that you are taking the actions you need to take, as well as confront the realities and trade offs in your plan. For instance, perhaps your marketing plan includes an increase in revenues of $1,000 per month from a new product line. If after one month you see only a $500 increase, you will have to make some decisions. Are you going to be able to make up that revenue? If not, what expenses will you cut? What are the odds you will get back on track or was this plan not realistic?
#4 – Once you follow these three steps and get your weak area back on track, you are ready to focus on your area of strength and really take your business to the next level. If you are a marketing person like me, get your cost structure in line. Then focus on growing revenues. If you are all about operations, get a good marketing plan on auto-pilot that is providing a 20%+ top line growth each year. Then focus on creating the best possible cost structure to increase efficiency and drive bottom line profit growth each year.
I hope these four steps will lead you to new-found success and fulfillment in your business!