Zenith Finance Blog

RBA Finance

Internal organic growth does not always work

Growing revenues and the bottom line are always top of mind for the business owner, but what are they actually doing about it?

Many quality private businesses are currently finding growth of their top line and more so their bottom line, extremely difficult. There is no doubt that most business owners spend hours developing new ideas to increase sales and decrease costs to assist the performance of the business. These activities should always be undertaken, however, they rarely get strong support from staff and hence rarely get the sustained outcomes that the business owner requires or believed was possible. When Plans are Made, There is Very Little Follow-Up, So Things Just Don’t Get Done.

In some cases there is not follow-up because the business has not developed adequate systems to monitor progress against goals. Ask yourself:

  • Are cost cutting measures affecting customer service or new customer acquisition?
  • What accountable steps are planned that will increase revenue:
  • a. New sales staff?
  • b. More marketing dollars?
  • c. Geographic or product expansion?

If none are on the agenda, why would revenue improve?

At other times these well-meaning and necessary ideas / tactics either underperform significantly compared the original expectations or their results if positive do not make a significant enough positive impact on the businesses profit or cash flow to satisfy the business.

If internal efficiencies have been achieved and internal growth or initiatives have failed to realise significant traction and for businesses that are near the end of their growth phase and in or entering the maturing phase, an acquisition strategy ought to be considered as a means to give significant growth to top and bottom line of the business. An acquisition (or series or acquisitions) at this stage of the business lifecycle would provide a platform for growth and a re-booting of the business cycle. As would a new product or business idea.

Mapping things out

When you have an idea for a business or new product, you map out the idea using a Vision and Objectives statement. You simply set out in bullet point fashion the steps to achieve the vision. You need to have a clear vision statement of where you are going, a map of the steps to show how you are going to get ther

When the vision statement is made a plan with the action steps need to be written. The key element is appointing a ‘champion’ to be the driver of the initiatives and ultimately be accountable. If that champion is you, then you need to ensure you have someone else to whom you are accountable, like a mentor, a business partner or a wife or husband. They are sure to remind you of your vision.