Is the major focus of owners wanting to increase profitability.
The vast majority of MSBs that wish to grow look for growth in sales to achieve this. Of these, the vast majority focus on winning new customers from their competitors.
Many businesses that fall into this category are constantly looking for quick fixes and silver bullets and this makes them vulnerable to slick consultants, sales gimmicks and manipulative tactics. When the desired outcomes do not materialise, business owners become frustrated and sceptical that they can achieve their objectives efficiently and cost effectively.
It is no surprise then that the M Institute’s research shows that owners of MSBs see the achievement of sales growth as a major barrier to achieving the objectives they have for their businesses.
There are of course a number of other methods to achieve increased sales, like acquiring competitors, launching into new markets or selling new products or services to existing customers.
These methods usually require additional funds to finance them, as costs are usually required to be incurred before sales, and this is particularly relevant with acquisitions or the launching of new products or services.
The most efficient, cost effective and most rapid way of achieving sales growth is to focus on the existing products and services that are sold to existing customers in existing markets. The key is to know what products are more competitive and within which markets should growth be pursued!
This approach requires an intimate knowledge of every aspect of the sales cycle. Making small, incremental improvements to a number of aspects of the entire sales cycle can have a major impact on revenue, and more importantly, profitability.
The following example illustrates the effect of a 5% increase in the four key elements of the sales cycle for a business turning over $6.4 million with the following sales cycle statistics:
With no gross margin improvements and no changes to expenses, the business featured could achieve a $690,000 improvement in profitability by increasing these four elements only by 5.0%.