Don’t know if my team can close the amount of additional sales that we need over the next several months. At least I’m worrying about it now. But the real question is, what should I do about it.
Thoughts of the Day: Figure out if you have the right goal in mind. Decide if your team can respond fast enough. Look at your marketplace. Make alternate plans.
Lay out a set of key questions, then figure out the answers:
What kind of growth rate am I trying to achieve?
If your goal is between 10% and 25% year over year growth, you’re probably okay. Stay below 30%, because high growth rates have long lasting problems. Lower profit accounts, high demand clients, peak and valley growth, and significantly higher error rates are the price you pay if you try to grow too fast.
As the company gets more profitable, slow down the overall growth rate. But don’t drop below 10%. Slow growth can jeopardize overall profitability as inflation heats up.
Think 10% growth is hard to achieve year after year? You’re right. Not many companies can do it. Think about the rewards that will come to you and your company when you do figure it out.
Will my company be profitable at the goal I’ve set?
Run the numbers, top to bottom: revenue, cost of goods sold, gross profit, overhead expenses, net income, principal payments. Allocate money left over for reserves, to invest in the business, and shareholder distributions. Is there money for all the buckets? If so, keep going. If not, go back and figure out what expenses can be cut, what you can do to produce and deliver at a higher gross profit, and if that’s enough to close the gap. Stay within the 10% – 25% revenue growth bandwidth, as jumping outside this range will only cause more unanticipated problems.
Can my team deliver what’s needed?
Look at the amount of sales delivered by your best producer over a 2 – 3 year period. If you had a couple more top producers, would that close the gap? If necessary, shake things up and invest in recruiting. Weed out poor performers and recruit top producers in their place. Use sales training to boost performance and instill discipline in the middle ranks.
Has anything changed in the marketplace to disrupt growth or profits?
Figure out if your market is expanding, peaking or declining. If it’s expanding, you want your company to be growing at least as fast as your market. If it’s declining, stop forecasting growth and look for new markets to enter. Move on before the bottom falls out. It’s risky and usually unprofitable competing for a declining share of sales.
What about my company’s percent of market share?
If the market offers room for growth and you have unused capacity to produce, play with pricing to get more throughput. If you have a strong competitor, invest in marketing to differentiate your offer. Stay under the radar by keeping sales niched and at a low enough ratio that you’re not considered a threat. Build sales by expanding geographically or by starting another niche.
What if, no matter what I do, the team I have isn’t enough?
Buy a team. Think about what other businesses you want to get into. Instead of bootstrapping growth, which can cost tons of time and money to get off the ground, find someone who’s already doing it, who wants to get out. Figure out what you want to add to your team, in terms of skills, customers, market segments, then look for companies that fit the bill. If this is your first acquisition get someone to help you pull off the deal.
Looking for a good book? Try The Moonshot Effect: Disrupting Business as Usual, by Lisa Goldman & Kate Purmal