You’re well into the third quarter of the year and behind on your sales target. It’s keeping you up at night and taking most of your attention and energy. You know you have other priorities that need your attention, especially your strategic planning for next year. But you feel the pressure to sell now.
Though focusing on selling more is typically the go-to strategy for closing a profitability gap, there are risks with putting too much focus on sales. And there are other things you can do to increase profitability in the short-term and the long-term.
Like me, a lot of small business owners and CEOs have a significant responsibility for developing additional business. They don’t have a large team of sales managers and representatives sharing the weight. So, in addition to the weight of leadership, they carry the weight of hitting the revenue target, as well. I get it.
Falling short of your profitability target has real-life implications for small business owners, and for their teams. So, it can be tempting to do whatever it takes, like bring on the wrong clients, take on the wrong projects, or offer heavy discounts out of desperation. Sacrifices like these have long-term impacts. So, instead:
1.Narrow your focus. Who are your ideal customers? What projects are a good fit for the capacity you have available? Don’t give in to the temptation to take on any client or any project just to hit the sales target. It’s a short-term fix, and you’ll regret it later. Focus on selling your most profitable products or services to customers who are the right fit. And if you’re unsure how to determine which ones those are, check out this earlier blog post, Do You Know Where Your Company Really Makes Money?
2. Wow your existing customers. It’s not uncommon to let customer satisfaction or retention go on the back burner while you’re out there focusing on bringing in new ones. Don’t take your existing customers for granted. Instead, look for opportunities to grow the average revenue per customer by helping your existing customers even more. It’s easier to expand products or services to existing customers than it is to bring on new ones. And, if you consistently wow your customers, they’ll become raving fans helping to drive in new customers, as well.
3. Look for other opportunities to increase profitability. Increasing top-line revenue isn’t the only way to grow profitability. When sales are high, and the sailing is smooth, we often overlook inefficiencies or excess costs that are stealing some of our profits. It can be tedious to scrutinize expenses, but aimlessly cutting expenses across the board is not advised. Get a better handle on where your money is going and cut back on costs that aren’t providing an adequate return on your investment. Gaining efficiencies through process optimization can also create new capacity without added labor costs.
So, next time you find yourself falling short on your revenue target, keep a long-term perspective. Refrain from flooding your business with the wrong customers or projects or letting your existing customers walk out the back door. We’ve often found opportunities in our own business, and for our clients, to increase net profits even when they’ve fallen short of their revenue target.
And don’t skip your annual strategic planning for 2024. Instead, fast-track it with Forge’s Strategic Planning Workshop. In just three days, you’ll walk away with a well-designed strategic plan tailored specifically for your organization. That’s right, learn more and register now to supercharge your growth!