Friday, August 01, 2014

Businesses should target growth on areas of profitability

12/31/2013

This area wants to achieve growth but, more specifically, the question to many might be, “How do I grow my business, my organization, my audience or even my bottom line revenue?”

The question and its answer are more nuanced than simple growth. Smart growth requires focus with a strategy emphasizing growth in areas that pay the biggest dividends. Why does that matter? Because growth just for the sake of growth isn’t much good if it costs more to make it happen. Instead, achieving growth with existing resources can lead to greater profit and efficiency too.

This area wants to achieve growth but, more specifically, the question to many might be, “How do I grow my business, my organization, my audience or even my bottom line revenue?”

The question and its answer are more nuanced than simple growth. Smart growth requires focus with a strategy emphasizing growth in areas that pay the biggest dividends. Why does that matter? Because growth just for the sake of growth isn’t much good if it costs more to make it happen. Instead, achieving growth with existing resources can lead to greater profit and efficiency too.

It’s tough to think about turning away business, but in the end, that might prove to be a worthwhile strategy if the new business consumes more resources than it pays back. It isn’t difficult to understand this concept if considering two identical customers that generate an equal amount of income but one consumes four-to-five times more resources to satisfy and still might end up being an unsatisfied customer compared to the customer that is happy with your service and isn’t burdensome on resources to take care of.

Figuring out what services are worth based on their return on investment, ranking customers by their value and prioritizing potential clients lead the list of ways to develop a focused strategy, according to Nat Wasserstein in Fortune magazine. It is easy to have aspirations that are bigger than a company’s or organization’s ability to deliver, which in the end can drive customers away from poor execution and delivery of goods and services.

One way to cultivate focus is to say “no” to requests falling outside the realm of those core competency areas. If an entrepreneur can profitably make a widget in certain sizes, but unprofitably in other sizes, then just say no when the special request comes in and don’t deliver in any size other than those that already are perfected. Imagine the chaos a car company would have if it allowed consumers to change every aspect of the design of its vehicle rather than only those items, such as color, seats, tires, etc., that are more easily customized.

It is wiser to focus on what can be done well and delivered profitably so happy customers are a company’s trademark. Most consumers can recall a regret or two because of business consummated with a business or organization that was poorly suited to deliver on its promises. In the end, the income earned wasn’t worth the resulting bad reputation from the customer and low morale from staff who were equally unsatisfied with their ability to deliver a sound product or service on time and on budget.

Smart growth is the goal. Focus is the way to achieve that goal.

— Jeanny Sharp,

editor and publisher

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