A recent post on LinkedIn asked “What would you look at first if you wanted to make more profit – sales, product, marketing, staff, overheads, purchasing or something else?”
The answers contained many good suggestions, but all focused on cutting overheads or purchasing costs. To us it seems highly likely that anyone that has been in business during the past four years has done all the cutting they can. Cutting fat is of course a good thing, regardless of the economic circumstances, but there is a limit to how far this can go before it damages the business’ ability to grow and it is certainly not a strategy for long-term sustainable growth.
So, after all the cost cutting, what is the second thing to look at? The answer; strategies to grow the top line.
So, our answer to the question was; cut everything you can, deploy good cost control processes so the fat does not grow back then pay attention to the systematic growth of the top line. You cannot cost cut your way to success, it is a tactic for surviving not thriving.
If you have not already started, now is the time to look to your strategy for growing the top line. We suggest the following multi-facetted approach:
- Expand your efforts to hunt for new customers in your existing markets with your established offerings
- Look for new customers in new markets for your established offerings
- Continually farm existing customers for add-on and new business
- Devise new products and services to sell to existing markets
- Once your new offerings are established take them to new markets
There is a danger that during a period of relative inactivity, as is common during a cycle of cost cutting, the organisation loses its “hunting” edge. So, it is important to devise and deploy different and proactive go-to-market strategies that will drive a program of hunting.
Finally, back to cost control. Always keep a focus on the costs and if you find you have activities that are no longer core either divest them or outsource them.