Inorganic Growth: Applying Leverage


So we are at the point we are going to try to redeploy the capital that we have saved in the transaction by our Cost Replacement strategy.  I am going to talk about the ways to deploy this money in a Revenue Enhancement mode.  The challenge with Cost Reduction is that all companies are different in their ability to save cost.  This makes it difficult to come up with a plan that will work for most if not all businesses.

On the other hand, Sales and Marketing are functions of every business.  These are areas that can have capital applied to them effectively and so make a great Leverage model to talk about.

Now, you can hire additional Sales People or increase the value of the partnership to Sales Channels.  These are both viable, given that you are really hiring them to increase the number and quality of the prospects that you get.  What this means you are using these resources primarily for Lead Generation which is a Marketing function in any case.

So, we are back to the ways to increase Lead Generation so that the business will expand.  Choosing to increase the Sales budget, but this should be compared to other increases in the Marketing Budget.  One thing to think about when you do think about it is Scaling as it relates to Lead Generation.  Many Marketing activities (Cold Calling, Networking, Referrals as examples) require an investment of time as a resource.  This means that the ability to scale these depends on people and time.  One of those examples, Cold Calling, can be outsourced for scaling purposes.  But Networking and Referral Marketing are both tough to scale because of this.

What this means is that you should look at any Marketing Strategy (SEO, PPC, Radio, TV, Print) that uses money and generates leads first.  There will be an ongoing expense for a campaign, but these time frames can be limited.  This allows an owner to measure the results and reallocate the money to other areas that are working better. 

So, there you have it.  A first step in growing a business that you have acquired is to take the savings and apply it to Marketing and Advertising.  You may have come up with some better ideas on the cost side, but Marketing should be in consideration in any case.

Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

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