Profitable Top Line Growth

Andy Birol, Birol Growth Consulting

10 Keys To Profitable Top Line Growth

Are you interested in profitable top line growth for your small business?

If yes, where can you focus first? What can you do now?

Try these ten keys to profitable top line growth.

10 Keys To Profitable Top Line Growth by small business growth consultant Andy Birol.

10 Keys To Profitable Top Line Growth by small business growth consultant Andy Birol.

  1. Your customers’ growth is key to your business profitability.
    The more you increase the average spending of your customers, the quicker your business will be more profitable.
  2. Your growth is related to your profitability.
    Assessing your customers by how profitable and by how much they are growing gives you the tools to grow the right ones for the most return.
  3. Accurately balance your resources between your existing and new customers.
    Knowing how much to spend on your existing customers vs. how much to invest in your new ones maximizes your efforts and your rewards.
  4. Identify and accelerate your revenue from your most profitable customers.
    Give your customers great reasons to pay you sooner is the most logical way to generate the best revenue now.
  5. Study your customers’ buying habits to reset your selling methods.
    If your customers have changed any aspect of how they buy, then you must change how you sell to them.
  6. Brand and differentiate your business to grow your margins.
    There is just no way to profitably grow your small business as the low cost provider so you must be unique and known to be such by your customers.
  7. Repackage your products and services to grow your customers.
    If your customers won’t buy beer by the glass and if they still like beer, serve it to them over dinner or offer them a keg.
  8. Use existing sales and marketing channels differently to reach more customers.
    Too often a sales force only calls on their familiar customers and advertising only speaks to those who hear the same old message. Refocus both and attract more customers.
  9. Embrace new sales and marketing channels to reach existing customers more profitably.
    If you have younger, indifferent or detached customers serve them on-line and less personally and grow your margins quickly.
  10. Introduce value without introducing cost.
    Profitability is greatest when you can deliver the perception of “new” and “more” at the same price.

Each of these ten keys can unlock your door to profitable top line growth.


Filed under: Business Growth, Profitable Top Line Growth

How to Profitably Grow Your Top Line (Part I)

Simply put, a business has a profitable top line when its revenues cover both its variable costs of producing its products or services as well as its fixed costs of overhead.

Revenues are the sales price charged times quantity sold.

Overhead consists mainly of SGA, Sales, General and Administrative expenses.

A company becomes profitable when its sales exceed its breakeven point. The breakeven point is where a company’s sales cover both the inescapable fixed costs of running the firm as well as the escapable variable costs of producing a given quantity at a given unit cost.

Why is it so difficult for a business to consistently keep its top line profitable?

How To Profitably Grow your

How To Profitably Grow Your Top Line by Andy Birol

The four main reasons are seen in how it reacts to marketplace demand for its wares or increases in its costs when:

  1. It cuts price to sell more quantity.
  2. It cuts quantity to maintain a higher price.
  3. Its direct costs of producing its product or service (direct labor and direct materials) grow so high that its selling price must be raised beyond what its market will pay.
  4. Its overhead grows so high that no achievable level of sales can cover its expenses.

To profitably grow its top line, a company must raise prices and sell more. Its costs and expenses must be managed but nothing ensures a company’s profitable growth more than being able to price higher and still sell more. Pricing higher than the competition means its products are seen as differentiated and selling more means its products are in high demand.

Most companies successfully do so when:

  • Their products and services can be produced and delivered at high profit margins
  • Their customers believe what they buy is valuable and scarce and they need to do so in order to succeed in their lives, jobs or business
  • The company can choose when, where and how it sells and markets its products and services

Profitably growing ones’ top line gives a small business the power, control and flexibility to do business as it chooses. Over time, it provides the company with security and predictability, and its owner with discretion and wealth. No wonder it is so hard to achieve and difficult to maintain!

Coming in future posts, I’ll further define profitable top line growth, dissect it and discuss how to diagnose it.

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10 Winning Ways To Win Back Wayward Customers

As George Costanza said in Seinfeld, “It’s not you it’s me!”

Well if it is your fault you lost a customer you really need back, what can you do?

Rather than simply grovel or cut your prices which will kill your margins, here are ten steps you can take.

10 Win Back Tactics by Andy Birol

10 Win Back Tactics by Andy Birol

  1. Provide a warranty if your product was faulty.
    If your product or service was deficient, offer some kind of insurance to assure your customer it won’t be their problem next time.
  2. Find another buyer within your customer if it’s bad blood.
    Often there is someone else in a bigger company who you can start over with, especially if what you offered had a good track record before your relationship turned sour. Go over the buyer’s head if you have nothing to lose.
  3. Sell to another department if they start buying for different reasons.
    Why customers buy your services or products can change over time. A purchasing department can make decisions until their company has legal or customer problems at which time their finance or marketing departments may now have the final say.
  4. For a while, give away your products or services for free if you broke your promise.
    Sometimes a customer just needs to see that you are punishing yourself for your own transgressions. Take one for your team if you screwed up in this way. They may regain their respect for you for doing so.
  5. Change your value into a service if they won’t buy your product (or vice versa.)
    Sometimes buyers are no longer allowed to outsource what they used to buy and must make it themselves. For example, if they cannot pay for your maintenance services, you could sell them the training or the components they need to do their own maintenance.
  6. If you have been serving this customer for a long time, reexamine what it really costs you to do so.
    You can cut your price if it’s become cheaper to serve them. Or you should do so if there are now better alternatives on the market. Yours may just not be worth what they once did.
  7. Change what you sell into an expense if your customer’s CFO won’t approve your product as a capital cost.
    Often, capital spending is prohibited but monthly expenses continue to be budgeted. If this is the case, change what you offer so it can be paid for by a different budget category. For example, if they cannot buy new vacuum cleaners, sell them cleaning contracts.
  8. Sell your wares through a distributor if customers start to need smaller quantities or more service.
    Perhaps your service has declined as you pursued larger customers. If so, get a third party to sell and service your customer properly. You sure don’t need to make as much if you are doing less.
  9. If they won’t buy it by the unit sell it by the hour or the result.
    So many times buyers are told to cut costs by cutting out inventory. So sell them all they need by the hour.  Make sure you can profit by providing them with coverage if they need the result of your product.
  10. If you didn’t ask for permission, you can legitimately beg for forgiveness.
    Sometime, you just have to fall on your sword and admit you should have been more deferent, collaborative or considerate. Unless you made a mistake that was evil and premeditative, humility is a winning virtue!

Having witnessed and made so many mistakes over the years, I have seen all of these ways work wonders to win back a client. And once repaired, a formerly damaged customer relationship is always better than it ever was before the problem occurred. Here’s to your winning ways!

Filed under: Business Growth, , ,

Why Focus on Your Customers First?

In our post-crisis, unstable economy, we have learned first to survive.

We have cut expenses, chosen needs over wants and take few chances.

What is more important than focusing on your existing customers in a cash-and confidence-starved world? Nothing.

Nothing more important than focusing on your customer says Andy Birol.

Nothing more important than focusing on your customer says Andy Birol.

Your profitable, paying clients are your quickest path to achieving Profitable Top Line Growth. They are already paying you and trust you to deliver.

Would you rather keep your customers or invest risky money to poach prospects from your competitors? The answer is clear, especially if your customers are at-risk being poached in return. Your loyal buyers need your focus because they already respect your value and provide you with cash.But have they changed along with the world in general?

Unless your current customers are going bankrupt, focus on them by learning know if and how they are:

  • Staying profitable?
  • Behaving differently?
  • Pursuing new goals?

Chances are your customers have changed and will not buy just like they did. What new behaviors, needs and wants do they have? Now, who is your new real buyer? How has their approval process changed? What are their new expectations? Even before the economy improves and confidence grows, why would your customers keep buying as they did?

Instead, they are probably looking for new products, services, expertise, conditions and warranties when spending to meet their new goals. Knowing how they have changed is your first step to Profitable Top Line Growth, because if you do, you can change what you sell to profitably keep, grow or win-back your customers.

Refocusing on customers means changing your previous sales, relationships, margins and practices, often by reinvesting and retooling what you have been doing for years, just when cash is tight. Try to see your buyers’ changing behavior as an opportunity to meet their new needs and you will profit with them. But treat your historic relationship as a blueprint for a future you feel entitled to, and you will likely fail.

This blog will regularly bring you tools, techniques, resources and real-world examples on how you can leverage your customers first.

Filed under: Business Growth, Profitable Top Line Growth, , ,

Why Profitable Top Line Growth Now?

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 Top Line Growth Is Important, by Andy Birol

Why Profitable Top Line 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 Top Line 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 Top Line Growth!

Filed under: Business Growth, Profitable Top Line Growth, , , ,

Five Tips For Growing Your Business Profitably During A Recession

Consider the following scenario:

You run a successful business with a lot of good opportunities for growth. You have developed the products and services, and the people and skills to sell them and deliver on what you promised. In addition, just when you are ready to really roll, here comes a recession that threatens to derail your plans and worse yet, even your dreams. Why?

  • Your sales people tell you that customers and prospects are pulling back on purchases
  • Your banker is overly interested in your receivables and loan covenants
  • Your suppliers are over eager to load your supply chain up with “too-good-to-be-true” offers

You don’t want to catch or spread their negativism. However, your finance manager says you should be cutting back your expenses and inventories, and your spouse is beginning to ask whether the slowdown is going to affect that vacation you have been planning. What can you do when you do have faith in your business’ opportunities, especially during a recession?

  • De-commoditize Your Offer: Find ways to make what you sell more valuable through its features including packaging, pricing and its added functionality.
  • Seize Your High Ground: If everyone is competing on price, then become the premium brand and make your offering less abundant and scarcer.
  • Sharpen Your Value Proposition: If you know your customers need what you sell but have trouble justifying what you charge, you must make it more compelling. Narrow and sharpen how you define what you sell and what it does for your customer.
  • Market Like You Mean It: Reinvest in and increase your spending. If you believe in your products and services, telling your market so is imperative. Just as tax cuts stimulate spending in the economy, by advertising your service you will increase overall demand for what you sell.
  • Seek Out Winners: There are other companies in the economy whose owners think just like you do. Find the owners and companies that are and plan to stay winners. Do business with them and share in your success. There is nothing like contagious enthusiasm to encourage everyone within earshot!

Filed under: Business Growth, , , ,

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