Blog written by Managing Attorney, Michelle Bomberger
Growth in business is always good, right? No matter what, when you see the revenues increasing, it’s a good thing. Well, no. As we learned last month, there’s “good” revenue and “bad” revenue which means that just because top line revenue is growing doesn’t mean the company is growing. Truly beneficial growth looks more at growth of profits or other key metrics than growth of revenue alone – but most of us are focused on revenue. Why?
We focus on revenue because it’s something we know we can grow. We have levers such as price and advertising that can affect revenue. Truly affecting cost, on the other hand, requires some hard decisions that we don’t really want to make. There is also a limit to how we can affect cost. So how do we know when the business is actually growing? Well, that’s what Ron will share in his blog next week and our Focus Event on the 22nd. To prep you for his thought-provoking ideas, though, I’m going to share some key insights I’ve had over the years as Equinox has grown:
1. Have a Clear Vision. When I started Equinox 8 years ago, my vision was to provide a more business-friendly law firm – a firm that was approachable and cost effective and that offered transparency and responsiveness that a business owner expected. When talking with other lawyers about the vision, someone asked: “If you’re serving small businesses, you may not have a lot of repeat work. How many new clients do you have to bring in each month to make money?” This seems an obvious and straightforward mathematical question but only because, at the time, my vision wasn’t big enough to really comprehend what growing a firm entailed. Over the years, I’ve worked with coaches who have talked about “vision,” but only now, 8 years later, are we really focused on vision and how vision can truly impact the growth of a company. (If you haven’t read Simon Sinek’s “Start With Why,” I highly recommend it to help with this concept.)
2. Focus on Sales. Once the firm had critical mass of clients and then employees, my coaches guided me to create a sales funnel and plan, stating that you should know where your company’s next sales are coming from. In concept this makes sense – know who your target customers are and how you’re going to reach them; know how much of your sales will come from current clients compared with future clients. I put together my plan – but the projected results didn’t magically come to fruition. I’ve learned a few key things about sales in the past few years. First, creating a sales plan and executing on it takes lots of discipline. It’s not just creating a CRM system but having a mechanism that allows you to communicate with your clients and targets in a way that’s meaningful to them. Second, you must have key metrics and reporting that you use to determine what you’re measuring and what success looks like. Third, I’ve learned that every person in the company has a role to play in selling but each role is unique. Most importantly, though, know who you are and how your customers buy your products and services. Without this knowledge, top line sales will not grow as rapidly.
3. Focus on Growth. Company growth does not solely correlate with sales growth. Just because sales increase, doesn’t mean the company is growing. Growth requires stabilization of costs as revenue grows. We tend to hire when we feel we are at or near capacity with our current staff or there’s a gap to fill. That’s when our instincts tell us we can “afford” to bring that person on. But it’s not always about whether we can “afford” it but rather whether we make the decision at the right time. Knowing where your business is in its growth cycle (again something Ron will share) and what metrics or indicators affect its growth will allow you to make better decisions about investing in people and other resources at the right time to maximize growth while not jeopardizing the business’s health.
When revenues are up, we assume business growth and often don’t look deeply enough at what we should be doing to drive company growth. When revenues are down, however, we also don’t focus on growth but rather on sustainability. Having the discipline and metrics to stay true to your vision and focus on the right things helps to support what your intuition tells you is the right path to take.