Profitability: The Top Line; The Bottom Line

» Posted by on Aug 17, 2011 in Business Financial Planning, Business Growth, Growth Strategies, Management, Sales & Marketing, Sales Training | 0 comments

Before a business has a bottom line (profit), it must have a top line (revenue).

Sales and marketing generate revenue; cost controls and performance measurements (metrics) determine the profit.

In tough economic times, business owners discover that the first thing to suffer is the top line – sales.  They can cut costs and measure results until the cows come home, but they will not have a good bottom line without a strong top line.

Integration of marketing, sales, cost controls, and performance measurements are necessary to foster profitability for any business.

To make sure profitability is a rising graph and not a declining one, you need to develop systems to achieve profitability.

Marketing

Marketing, simply stated, is any contact you have with your target customers.  It is influencing the people you serve to consider or contact you instead of your competition.  This is crucial for the health of your business.

This is what you need to do:

  • Evaluate the effectiveness of your current strategy (web, direct mail, etc),
  • Make your product or service stands out from your competition,
  • Start testing and measuring the results from the dollars spent on what works most effectively for you.

In most cases, you should be able to reduce marketing costs, increase leads generated, and generate more dollars and more customers!

Sales

Nothing happens until you sell something.  That is the next step in the business cycle, and it is essential.  Once you have pulled more people with your marketing, you must now convert those leads into customers.

You need strategies to improve the sales process and a sales system that is effective.

Cost Controls

Effective cost controls are an essential part of any profitable business. It may be budgeting, paying attention of critical line items, or something else, but cost controls don’t have to be complicated.  They just need to be effective.  Make sure you’re concentrating on doing the right things, not just doing things right.  Effective managers do the right things.

Performance Metrics

To find out the score, you need to keep score.  Performance metrics keep you focused on what is important.  They keep your company on track by making sure you hit important mileposts and stay on track as you progress toward your long term goals.

The effective manager is the manager doing the right things, not just doing things right.

 

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