Just read an interesting article in relation to small business and sales. There is a common belief that if sales grow, so will the business. Therefore revenue growth tends to be on the top of the list of priorities for a lot of small businesses.
Whilst I do agree that revenue growth is very important, it is not the only thing a business should concentrate on. There is an old saying, ‘you can go broke being busy’. By simply concentrating on sales and the top line, you may forget about the bottom line (profit and how is it made), and how to increase the money in the bank (cashflow).
So as you are looking forward with your business, look at ways to not only improve your sales but also profit and cashflow.
Think about how to improve your gross profit margin. If you are not generating enough gross profit on your sales to cover the expenses of the business, selling more will not help the bottom line; in fact you will sink quicker.
Look at the effectiveness and efficiencies of the processes in your business. Is there a better way of doing it?
Is the business generating enough cash to service the outgoings of the business? How can this be improved, is there a structured debtor collection process, are the loan repayments on debt manageable – can they be reduced with different terms?
When looking to increase sales, don’t limit your thinking to getting new customers. Rather, are there ways you can better assist your current customers with other services or products? Often the person most ready to buy from you is the person who just has!
As you can see above, sales are important, but not the only important factor in a business.
