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BLACK ENTERPRISE President and CEO, Earl "Butch" Graves Jr. offers tips, insights and commentary on issues that affect executives and business owners. From the Corner Office also features insights and profiles of other prominent African Americans executives and entrepreneurs.
Creating a Foundation for Building Revenues
These strategies will help you stimulate top-line growth
If you review today's business headlines, you may feel like you're reading the obituary pages. Increasingly, companies large and small are being forced out of business. Oftentimes, these enterprises slash payrolls and shutter divisions as the core strategy to increase profitability. Mindful of the bottom line, other CEOs pare expenses to the bone, counting every nickel, dime, and paper clip.Don't get me wrong. I happen to be a strong proponent of sound financial management. Shrewd CEOs should always look for ways to add value without increasing costs, or discontinue services without compromising a firm’s viability. However, too often, cost-shaving entrepreneurs sacrifice R&D budgets that would create company-enhancing products, marketing campaigns that would boost sales, or incentives that would help retain top talent. I have always told my managers that you can’t save your way to profitability. Pure and simple, if your company doesn’t generate—and grow—revenues, it will be headed for extinction. Not having a plan to promote top-line growth is like building a house without a foundation. Eventually, the structure will collapse and all its inhabitants—including you—will become casualties.
Here are a few tips to help you transform your company into a revenue-producing machine:
Develop products that fill a void in the marketplace. During my tenure at BLACK ENTERPRISE, I have found that there's no substitute for creating products that provide solutions for clients. For instance, we offer information and services that enable black entrepreneurs and professionals to reach their wealth-building goals.
But in these competitive times, your company can't afford to be a one-trick pony. Develop brand extensions that allow for multiple streams of revenues to flow through your enterprise. Ten years ago, close to 90% of our revenue came from our magazine. Today, about 65% of our overall revenue comes from our publication. The remainder is generated by our Website, events division, and television shows. All of our products are linked to the BE brand and corporate mission.
Before you enter new markets or expand your product line, however, make sure you won’t compromise your organization’s core competency, financial integrity, and market credibility.
Create a growth budget. In developing content geared toward business owners, our editors spend countless hours interviewing business management mavens about revenue-generating measures. One such expert, Ram Charan, says solid growth is the byproduct of the effective application of corporate resources and interdepartmental cooperation, not the budget ax.
It starts with the budget process. Most companies develop cost-related budgets only. But forward-thinking CEOs need to create templates that include all actions and resources necessary to achieve revenue goals and increase sales. Such analysis should take into account rewards for success as well as penalties for underperformance. And by all means, involve all senior and mid-level managers in the process.
Know the value of your products and services. A common mistake entrepreneurs make, especially those running startups, is not sufficiently billing their clients. Pricing largely depends on your business model and marketing strategy. Do you run a low-cost, high-volume business or provide services for a more select clientele? If you sell your products at cut-rate prices, you may squander valuable financial and human resources for less-than-spectacular returns.
I've found that most business customers don't want special deals or money-back guarantees, they want products and services that will ultimately maximize their profitability. We don’t discount our prices for two distinct reasons: First, BE delivers premium products and an unduplicated audience to our clients. Secondly, cutting ad rates would devalue our brand. So while you’re improving your product mix, you may want to revamp your entire price structure and re-evaluate your intended audience. Remember—you shouldn’t even have a hint of a doubt that your pricing model will support the company’s cost structure.
Make sales part of your corporate DNA. Revenue growth should be a part of every employee's professional responsibility. From junior staff to the executive suite, I charge all my staff members to contribute to our companywide sales efforts. It can be subtle—having customers learn about new events, magazine features, and products through audio messages when our receptionist places them on hold, for example—or more deliberate and direct. More direct initiatives include joint client presentations of our sales, marketing, and research teams, or our management team’s development of moneymaking ideas at our annual corporate retreat.
To achieve this, you must have transparency and accountability. Your managers need to know, to some degree, how cash is being deployed to advance corporate objectives, and what revenue targets they need to meet on a monthly, quarterly, and annual basis.
Whether you're fortifying a startup or making sure that an established entity remains on solid footing, develop a comprehensive plan to expand your top-line. It’s the best way to ensure that you’re constructing an enduring institution.
- Butch Graves
