Helping Clients Grow #3: Clients REALLY Care about Growing Revenues

Posted by George Sandmann on Jan 16, 2020 2:56:25 PM

Savvy consultants know that creating sustainable growth is a two-step: the first strategic goal is creating predictable revenues. This is the predicate to generating predictable growth.

To check out the first two Helping Clients Grow articles, click here:

 

grow client revenues

 

Helping Clients Grow Part 1: What do you mean you want to grow?

 

Helping Clients Grow, Part 2: Growing Private Company Equity Value Blog 010920 Helping Clients Grow Part 3 Growing Revenues-1

 

Every CEO wants to grow. Chances are you're reading this article in part because, as chief exec of your practice, want to grow as well. And when executives say “grow,” they mean revenues.

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The formula for creating growth may be well understood, but this doesn’t mean it’s easy. And it’s expensive. The seminal question then for your client is not simply “do you want to grow?” Rather, it’s “You want to grow… now how committed are you?”

In The 4 Disciplines of Execution the authors describe “The “whirlwind” of urgent activity required to keep things running day-to-day [that] devours all the time and energy you needed to invest in executing your strategy for tomorrow.”[1] Great description -it’s been said a thousand times, CEOS are so busy working in their business that they don't have time to work on their business.

Bottom line, running a business is likely consuming all of your client’s time and budget. You are not competing against other consultants or advisors, you are competing against the whirlwind. If your client is committed to growing, they’ll need to take time out from the whirlwind, and allocate budget to growth --and growth is expensive. Is your client committed to investing the time and treasure it takes to create sustainable growth? Ask yourself, will they answer “yes” to these questions?

  • Do you want a team and operational processes to drive growth?
  • Do you want to generate predictable revenue and profitability by increasing the effectiveness of your business including human resources, your senior team, marketing, sales and operations?
  • Are you willing to invest time and capital to reach these goals?
  • Do you understand that work on maximizing equity value is on the back burner... relevant only to the extent you plan on supplementing the value growth that may be organically created by higher revenues? (Becomes front burner if growth demands outside capital.)

Savvy consultants know that creating sustainable growth is a two-step: the first strategic goal is creating predictable revenues. This is the predicate to generating predictable growth.

Where do you start? Simply put, there are business owners who want to invest time and treasure growing their companies, owners who want to improve their lifestyle by making their company easier to run, and owners who are planning on selling their business --and the individual business owner may want some of all three.

With a high commitment to growth you need to set clear, ambitious yet attainable goals; your client must be willing to invest time and capital to reach these goals. Generally speaking, owners with a high commitment to growth want to grow the business to increase cash flow. This is without consideration to any increase in the value of the business or their ability to sell the company in the future. They need a strategy for growth which considers these high priority Growth and Equity Value Drivers©:

  • effective sales people and process
  • a marketing program
  • better controls over operations to handle more business
  • better financial systems and reporting so they can control their numbers, and in case capital is needed

The general idea is that with a high commitment to growth, your client understands that growth requires hard work and capital.

With a clearly understood goal, your next job is analyzing the Growth and Equity Value Drivers (‘Growth Drivers’) inside their business. This information allows planning with efficient resource use, increased rates of success and a high return on investment in internal and external services.

Imagine making these recommendations for the actions needed by your growth-focused client:

  • Clearly defining the business’ strategic goal, then creating and implementing a comprehensive plan to successfully reach this goal.
  • Updating your organization chart with defined roles and responsibilities generating accountability to the business’ goals. Roles, responsibilities and accountability must be communicated to all employees, and integrated into the management process.
  • Having a business analysis completed that identifies the strength or weakness of the drivers of growth and value across the business. Based on this analysis, identify the specific actions needed to creating predictable, profitable growth and efficient operation.
  • Focusing on maximizing the effectiveness of the marketing and sales staffing and processes. Growth requires the ability to scale sales to generate predictable revenues. Start by identifying your target buyers, engaging them with marketing, and converting this engagement into revenues --using documented, replicable processes.
  • Improving operations ensuring efficient and profitable delivery to customers, with processes that are designed to grow smoothly to meet increased demand.
  • Ensuring that internal financial reporting is accurate, timely, and is delivering the data required to manage robust growth. Growth can consume significant capital, it’s therefore critical to monitor cash flow and plan for capital requirements.

Here are the high priority Growth and Equity Value Drivers (what we call Growth Drivers), using the patented CoreValue methodology:

  1. Strategy: driver #10:6 ‘Strategic Direction’ --set a goal and a plan to get there, which includes strengthening key growth drivers
  2. People: driver #16 ‘Human Resources’ --senior team and all employees must buy into the goal and strategy, and be accountable to progress
  3. Marketing: driver #12:1-3 ‘Sales & Marketing Process’ --generate leads in quality and quantity sufficient to reach goals
  4. Sales: driver #12:1 and 4 ‘Sales & Marketing Process’ --process to predictably convert leads into customers
  5. Operations: driver #13:1-2 ‘Operations: Delivery Objectives and Process’ --scalable, documented processes to deliver on the promises made to the market by sales
  6. Financial: driver #11:2-3 ‘Financial: Financial Statements and Operating Reports’ --operating report tracking lead and lag indicators which allow proactive control of financial results

The CoreValue methodology sets out the best practices across these growth drivers, which are a subset of the eighteen  value drivers making up the totality of a client’s operations. Your job is to analyze the strength of these growth drivers in the context of their complete operation, identifying growth drivers with a score below 7 of 10. You'll then use the CoreValue Executable Growth Plan to increase the strength of these weak drivers. Our software, education and community is here to help you at every step of the process.

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[1] McChesney, Chris et al. The 4 Disciplines of Execution: Achieving Your Wildly Important Goals. Free Press, 2016

'Growth and Equity Value Drivers' ©2020 Consulting Software System LLC

Topics: Growth Advisor, Growth Planning

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