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Invest in Improving your Revenue Function...Before it Flatlines!

Don't Neglect the Heart of Your Business


When is the Right Time to Invest in Improving your Revenue Function?

If you think it is a good idea to visit a doctor for the first time when you are experiencing severe chest pain, you may not find this article overly helpful because, odds are, you may treat your business the same way as your health.  As a small to mid-sized business owner or executive, it is easy, and somewhat natural, to focus only on those business issues that seem acute and need immediate attention.  It could be that there is a production constraint that keeps you from fulfilling orders, or a cash flow situation that could be improved, or a need to invest in more service delivery people because sales are strong.  Since the pipeline appears to be healthy and your company continues to grow, those functions probably need less of your attention and investment, right?  While that is a logical assumption, you may be well served to take a look at the revenue generation functions while things are good, as opposed to finding out how things could have been improved when it is too late. This would ensure you are well positioned the next time the market softens with respect to your:

  • team
  • structure
  • client composition
  • client loyalty
  • value of your business

It was easy to look like a genius if you were in real estate or investments in 2006.  Everything you touched turned to gold.  Then December of 2008 happened.  Once the financial crisis struck, it became clear who had been operating with a level of discipline, rigor, consistency and differentiation in client relationships.  Those who hadn’t generally didn’t live to see 2010. 

The issue oftentimes overlooked is the underlying natural growth and momentum created by the tailwind of such a strong economy, which has propelled many businesses in spite of their fragile underlying structure, focus and processes.                                                                         

Because of the robust economy we have experienced for nearly the past decade, many sales and marketing functions appear to be strong when there may actually be fundamental flaws in the sales strategy, client segmentation, strength of the channel program, compensation alignment or even talent on the team.  This false sense of security has caused many to believe that these key functions are being fully optimized.  The fact is, when the next down-turn occurs – and it will happen, it is just a matter of time – many companies will be particularly vulnerable because of the lack of attention given to the optimization and maturity of their key revenue generating functions.

You see the doctor on a regular basis to avoid worst case scenarios and keep your key functions healthy. Don’t you think you should do the same for the heart of the business?

Additionally, many business owners have focused heavily on top-line growth through this unusually strong economy, as opposed to focusing on the drivers of organizational value.  One of those main drivers of value is profitability, specifically when compared to industry peers.  Now is the time to maximize those revenue-based aspects of your business that can drive profitability, such as improving your opportunity close rate, exiting or renegotiating unprofitable relationships, focusing on adding net new clients, more effectively negotiating new contracts, broadening the products or services sold to existing clients, and creating true market differentiation and a solid value proposition.  This will not only help you weather the next market slow-down, it will lead to greater ability to invest back in the business, give you higher borrowing potential, and allow you to sell for a higher multiple, should you elect to exit your business. If you are not currently laser focused on maximizing profitability not only through the expense side of the balance sheet, but through the revenue side of the equation, you need to be!  

Several clients have approached me about helping them only after revenue goals were missed for a few months, the pipeline was weak for future business, and cash flow had become problematic.  While it may seem natural to only address those issues that have become acute, the revenue function is the lifeblood of your business.  When it isn’t working, nothing else does, either.  Thus, the question of “When to invest to improve your revenue function?” becomes much like asking yourself the question, “When is the best time to visit a doctor?”  If your first trip to the doctor is only after things have taken a turn for the worst, the road to recovery becomes difficult, if recovery is an option at all. You hopefully visit the doctor regular basis to avoid worst case scenarios and keep your key functions healthy.  Don’t you think the same should be done  for the heart of your business?

Find out how to improve your revenue generation engine

This article was authored by Greg Stanley, founder and owner of Accelerant Consultants, a consulting firm dedicated to helping small and mid-sized businesses maximize growth and valuation through effective execution within their sales and marketing functions.  Greg has spent a career of over 25 years helping large and small companies build sales and marketing teams from the ground up and managing existing teams in a way that leads to intentional growth, maximized profitability and enhanced valuation.  To learn more about how Accelerant Consultants helps clients build and execute growth strategies that significantly increase organizational value, or to have a discussion on how to address your organization’s specific challenges, visit www.accelerantconsultants.com

Greg Stanley