When we look at costs and processes, we need to examine them in the context of Scaling. That means what is the best way to spend money to grow revenue. Is it to introduce new products and services? How about expanding your Marketing? Those are both organic ways of growing a business. Inorganic growth (buying another company) is another way to grow. In some ways, it is more efficient than organic. In some ways not as efficient.
In any case, this is where we need to look objectively about what causes revenue growth. There are pros and cons to almost any of the mechanisms. For example, I often have many people tell me that they close a very high percentage of people that they actually talk to about what they do. That says to me that the best way to grow is to get more people to become active prospects. In another case, I have had an owner talk to me about having to be at every job site. That means that they needed an operations person to run some or all sites. That way the owner could spend more time developing new business.
The right way to look at this is through the lens of Critical Constraints. What are the things that are holding back your growth? Is it skill, time, money, or something else? By honestly answering that question, you can begin to put a plan together to grow your business. The thing is that fixing almost any of those items will require resources, particularly money.
As you develop a plan for the next year, you need to create a baseline which is a business that has no change to it. Once you have the baseline you can "model in" the changes that you want. In the work that I do, we use Excel and variables that allow us to evaluate the changes and the new plan separately from the baseline. This can also help you define metrics for this new activity. If you decide you need to improve your advertising, how will you know if the money you are spending is worth it?
It is those what-if scenarios that make a business plan or an annual plan a living document. By looking at these plans, metrics for the business can be determined. By reviewing these metrics and adjusting the plan to improve them creates an action plan to improve the company.
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