In these times of uncertain economics, cash is king. A recent survey from Quickbooks revealed the top goal for small business owners in 2024 is to increase revenue. But there are lots of ways for companies to go about it.
We wanted to get some expert advice on this subject, so we reached out to Indiana banks, credit unions, accounting firms, and financial advisors to learn more. We asked them: “What would your recommendations be for owners that want to grow their revenue this year?”
Mitch Gaffigan, Account VP of Member Business Services Business Development
Growing revenue is vital for all businesses, especially considering the inflationary environment we have all experienced over the past two years. Scaling up is an important aspect to growing revenues, which means having a strong foundation built to support the growth. Do you have a team in place to support the growth without a decline in service level?
Define growth goals and measure them. By setting shorter-term quarterly lead goals, this will help you reach your year-end targets (lag goals). The lead goals should be built around an action plan that is measurable. To grow x%, do you need additional investment in people or capital that could change your cost structure impacting margin levels, fixed overhead, or profitability?
Revenue is great, but make sure it has been strategically planned for so it does not result in reputational risks or decreased profitability. Make sure processes and procedures are documented so new employees can get up to speed quickly. This also helps when you have staff turnover or need to cross-train.
Tony Gillisse, CPA, Partner
Know where you are right now: A business owner’s highest priority is to have a solid understanding of your company’s current position before trying to scale up the business.
Ensure the business has great support structures in place: Businesses are positioned to thrive when they are supported in the right ways. For some business owners, that may mean they need to build a relationship with a CPA, an attorney, or an insurance agency. For others, they may need to invest in scaling up their team before being able to grow their services or products.
Know where you want to go: If the goal is to increase revenue, business owners will need to set specific, assessable goals on how they want to achieve increased sales and revenue.
Focus on your current customers and their experience: Not only is it more cost-effective and efficient to retain current customers, it’s also a great way to discover where your current customers could be taking advantage of other products or services that the business can offer.
Streamline internal operations: Instead of looking outwardly, it may make sense to evaluate inwardly where the company could gain efficiencies, reduce costs, or increase automation. Optimizing internal operations by implementing cost-saving measures could create opportunities to increase revenue without having to scale up or modify product or service offerings.
Matthew Stoops, Senior Lending Officer, Business Banking
If you're aiming to grow your bottom line in 2024, there are two areas to plan for, increasing sales and reduce expenses. Pretty simple right? Simple concepts but without a plan you will most likely do more of the same from years past. Depending on your industry, strategies may differ, but the focus remains, boosting sales and reducing costs, these may be some areas of opportunity for you to make plans around in 2024.
To increase top line sales, consider stepping into the social media realm or exploring digital marketing avenues. If you've been relying on referrals and legacy marketing models in the past, it might be time to step out of your comfort zone. Embrace social media as a tool for marketing strategies and avoid complacency in this ever-changing business landscape. It's time to adapt and explore new possibilities for your business growth.
In terms of expense control, it may be time review your vendors and suppliers. Headlines about inflation have driven us all to accept higher prices for the last several years. The question now is, should those prices remain high? It's essential to understand your industry's dynamics and the impact that supply chain backlogs had. Some suppliers increased prices because of their cost increases, however others opportunistically raised their prices. I would recommend that you review your vendor and suppler agreements and look for opportunities. It might be the right time to renegotiate based on the evolving economic landscape or find new options.
Kim Modigell, VP, Sr. Commercial Loan Officer
The simple answer to this question is there are no secret or magic words. Very simply, it is persistence, passion, and innovation.
This means staying focused on your gross revenues and your bottom line and keeping a close eye on what drives both of those by looking at efficiency and the tools available for marketing and operations.
Do your research and stay on top of trends, staying modern in your approach and the projection of your business’s identity with your branding. Track what works and doesn’t work and streamline as appropriate. Efficiency is typically more of a bottom line concern but it can effect revenues if customers notice inefficiencies.
There are so many tools accessible to any size business these days, such as social media, AI for marketing and operations, and a wealth of Treasury Management products to keep things running smoothly.
Finally, don’t try to grow too fast which can create too much overhead and debt before revenues can catch up. Relying on your financial advisors to help you know when the timing is right is critical. Build a team that includes a CPA, an attorney, and a business banker to help guide you.
Thomas A. Smith, Managing Vice President of Business Services
There are many ways to grow your business, even amidst the dynamic economic landscape we are all enduring. Be creative, adapt to the market and your customers’ needs and assess what your business can reasonably implement. Here are few ideas to consider in the coming year.
Expand Your Offerings
Seek out complementary offerings to attract new customers or capture additional business from existing or past customers. Ensure they align with your current products and that you have expertise to offer them.
Promotion
In this age of business, social media is a must to promote your business, increase e-commerce, and expand your geographical market. Social media allows instant access to your business by existing and prospective customers, bolsters other marketing efforts, and supports valuable feedback from your customer base.
Financing
A business loan isn’t always the solution, but when used properly, it can be a tool to provide the capital to recruit and retain employees, increase your marketing budget, institute technology to increase productivity, and take advantage of supplier discounts allowing your business to be price competitive.
Execution
Small business owners aiming to increase revenue in 2024 should adopt a holistic approach, combining operational efficiency, technological integration, customer-centric practices, and strategic diversification. By navigating these avenues with foresight and adaptability, entrepreneurs can position their businesses for sustained financial success.
Brian Heichelbech, Regional Sales Leader for Indiana
For a small business owner looking to grow revenue, the key is to engage in ongoing conversations throughout the year with partners and advisors. This can help define your businesses goals and develop a plan. In fact, ask just about any small business owner about what problems they face, and generating revenue and managing cash flow will likely be at the top.
A new year is a great time to outline business goals that are attainable. Consider these questions as you build out your plan:
Ryan Bell, Small Business Banking Manager
There are many considerations a small business owner may make when looking to increase revenue in a new year. One could be to create new products or services to their existing list of offerings. This can create not only additional revenues from current customers but attract new ones as well.
Another strategy is to review the pricing of your current offerings. This is prudent not only to ensure you are competitive, but that you are charging a fee that ensures your business is maintaining its margins and remaining profitable.
Increasing capacity can also lead to revenue growth. This can be done through several ways including investments in people, machinery and equipment, automation, or a combination of the aforementioned items.
Regardless of what methodology you choose, you will want to ensure you are growing in a controlled manner. Growing too fast can adversely affect a business. Make sure you have a plan in place, benchmarks you want to achieve, and that you are reviewing the plan throughout the year. Also, remember that it’s okay to make changes to the original plan. Being agile in today’s economic environment is key to sustained success.
Dustin Gorelick, Vice President, Business Banker
The quick answer is “manage their expenses”. However, to expand on that, it is vital for owners to truly understand their income statement and balance sheets. For many owners, that means learning simply HOW to account for all of these expenses. Once an owner has a process for “how” they will track these expenses, the next step is learning to properly analyze and understand the information they have tracked. This is where working with a solid Certified Public Accountant (CPA) can be so invaluable. The CPA can assist with much more than the preparation of taxes, but can assist the client with learning how to read these financial statements in order to see the benefit on their bottom line.
Brian D. Specht, Senior Vice President, Lending and Credit Manager
American Community Bank of Indiana
While it is widely expected that interest rates are going to see some decline in 2024, the borrowing costs for companies will still be higher since well before the pandemic. It may make it difficult to obtain financing to make projects cash flow and new businesses the operating cash flow they need to be successful.
Over the past several generations, purchasing a home has been one of the best ways to build personal wealth. I still believe that this will be true going forward, but if an individual can build a successful business, that can generate personal wealth in a much quicker timeframe than owning your home with a 30-year mortgage.
One of the items I found interesting in the survey was that 42% of small business owners say their #1 goal is to increase revenue for 2024. That is a great goal, but I would hope that within that plan to increase revenue, that they should have noted that the plan was to increase net profit. Often a company increases revenues but does not increase their net profit. A company should not look to increase revenues if it is not going to incrementally increase profits.
Josh Neff, Vice President, Commercial Lending
Businesses looking to grow revenues need to answer three questions. First, what is the value that I bring to the marketplace, or as Warren Buffet would ask, “What is your reason to exist?” The answer to that question will narrow your focus. The second question is, can you scale that competitive advantage without losing it. This leads to the third question, do I have the human and investment capital, or balance sheet, to use your competitive advantage to increase sales. Being able to answer these questions will make sales growth more strategic, not just growth for growth’s sake.
These three questions lead to the following considerations: do I truly understand my business? Am I pricing my product or service appropriately? Balance sheet management determines how much of your investment is going into making the product. Alternatively, utilizing partners and vendors can be a strategy to grow revenues without using your scarce investment dollars.
Today’s business owner needs to have an expert grasp of accounting. There is an abundance of technology regarding visual accounting that can help an owner better allocate resources. The goal should be to manage in real time, versus managing from books that closed months ago.
Dale S. Clapp, Regional President
My response to any business owner indicating that revenue growth is their first priority would be, “Why, and are you sure?” Growing revenue is essential for any company, and it is exciting to see the top line of the income statement ballooning because the market loves your product or service. Growth in revenue alone does not ensure success! Revenue growth does not guarantee profitability or positive cash flow! Focusing solely on growth could cause problems if you are not simultaneously focusing on the other components of your business, like the bottom line!
I recognize that a lack of sales and/or revenue growth over long periods will be problematic for any company. If sales decline, there may be bigger concerns; however, focusing solely on revenue growth can also be problematic. Revenue declines can certainly cause failure, but most companies aren’t failing due to a lack of demand for their product or service; they struggle because they aren’t profitable. Management must monitor how sales impact their cash flow and operations, including understanding how the revenue growth will impact costs and expenses. These components go hand in hand, and growth for growth's sake will likely not be a sustainable model.
My advice, consistent for the 40 years I’ve been in banking, is to plan with your advisors (bankers, accountants, CFO, etc.) to regularly forecast the impacts of multiple scenarios. Forecasting is more an art than science, based on the information we have today and what we might expect in the near future. If we expect growth, understanding the full impact should be something owners do for themselves, which ultimately helps bankers and other advisors understand how to assist business owners best.
