Travel and eating blog

Seasoned entrepreneurs and executives constantly push to maximize or maintain profitable growth in value, in any economy. These strategies help you take advantage of up cycles, weather recessions, and achieve your growth and value goals.

The economy is relatively healthy, but history has taught us that profitable growth cycles don’t last forever. Knowing that there is a cyclical pattern in many markets, seasoned owners and executives discover how to take advantage of business cycles to create a path of continuous growth and increase profitability.

Here are five critical action items for mid-market companies that will help you maintain profitable growth in any economy:

1- Develop a strategic plan.
Businesses that endure the ups and downs of the economy share several qualities that consistently create value. These companies offer attractive products and services, both from a strategic and customer perspective.

They have strong equity positions and strong balance sheets. They maintain a flexible cost structure. And they plan ahead to identify new opportunities and can quickly deploy resources to take advantage of those opportunities.

2- Grow the customer base.
Take a financial stress test
A key planning tool is an integrated, assumption-based financial model that includes an expected income statement, a balance sheet, cash flows and, where appropriate, the calculation of the debt base.

This model can be used to stress test your business performance if a future recession has the same impact on total revenue and profit margins as past recessions.

Run different scenarios on the model to see the effects of changes on fixed and variable costs, revenues, prices, margins, and other parameters. Ask yourself this: How would the company fare if history repeated itself? Use the answers to prepare now for the next recession.

Unfortunately, we don’t see that many middle-market companies doing these types of financial modeling, especially considering that it doesn’t require a large investment or time. Remember, you can keep it at a high level and still get useful information.

Dig deep for growth opportunities
If your stress test results are positive, it will be one less problem to think about. Still, look for less obvious problems below the surface. Examine the ecosystem around you.

Who are your key suppliers and customers? What are your most profitable products? How does this compare to your competitors? How will the health of certain customers, suppliers and competitors affect your business in a recession? Most importantly, what threats and opportunities can you discern?

Smart companies continue to innovate while others duck defensively. On the talent side, smart people working for struggling companies often worry and look for alternatives. Again, instead of cutting down on talent, go on the offensive to invest. At the same time, involve your talent in discussions about the future of the company and your future with the company, so as not to lose trained personnel.

The main challenge of every director or manager, responsible for a business or a business line, is to guarantee sustained and sustainable growth. The great challenge is to achieve this, understanding that there are no magic formulas but more than one route to follow. We must always remember that the client must be the center of our profitable growth strategy, and that for this to be not just a cliché, there must be concrete actions that demonstrate it.

The art of innovation

Innovating, materializing new ideas or projects, and doing it successfully, depends on multiple factors. The most important are a unique, well-differentiated proposal, a shared business vision, a clear strategy, a dynamic marketing of the commercial activity, motivated and committed human talent and having the technology that allows the vision to become reality, so that everything converges in achieving that novel effect. If we can get there before the competition, it will be very costly for our competitors to catch up.

The vision and the strategy must be able to be broken down into clearly defined initiatives and objectives that meet the philosophy called SMART (which lives up to its meaning in English: smart), to achieve that they make a difference. If we review its acronyms, we can refine its attributes: Specific, Measurable, Achievable, Realistic and On time to be achieved. As one thought says: “Every objective without a date to achieve it is just a dream.”

Powering profitable growth

The available technologies, applied correctly, depend on the alignment to the defined objectives. To innovate it is necessary to make sense of each investment, because it is tied to an expected result, hence if we decompose the goal-objective, profitable growth, we can have clues of what we should invest in.

To ensure the growth of the business, it is necessary to define what type it is (retail, wholesale, B2B, services) and what are the sales channels used (direct sales, e-commerce, tele sales) and, especially, focus on the customer through a good level of service and operational excellence.

Profitability is associated with productivity, that is, the efficient and effective use of resources in the different business processes (purchase, production and employee productivity).

Profitable growth is possible through the combination of integrated information from sales marketing (CRM) and business management or back office (ERP) processes and the subsequent transformation of these data into information to measure whether they are being achieved. the expected objectives and simulate scenarios. In short, it is necessary to have the tools to measure the performance of the business.

Businesses, administrations and projects have changed and it is no longer just the fact of conditioning the garages of the houses, putting a curtain and raising it so that all the neighbors, friends and passers-by enter your business. Today the behavior of people has changed and they are looking for comfort, many people do not want to go to the City Center because they charge for parking or there is no parking, many people have changed going to the corner stores to reach the self-service ones , Now there is not only Netflix, but also Uber Eats, so we must be very focused on taking advantage of the resources we have and making business more effective.

In order to build a profitable growth strategy, you cannot just be thinking about reducing costs, since these will directly affect promotion, marketing and collection, making companies less profitable. It is important to highlight that Charan (2004) indicates that more time and reflection has been devoted to tools such as “Six Sigma”, among others. Charan affirms that another very common mistake of directors in companies has been focused on looking for “home runs” instead of “singles” or “doubles”, referring to looking for simple activities that add value and not substantial changes to the business model. At the same time, he reproaches the fact of seeking only to increase productivity and not doing it in a coordinated manner with sales, which will only have an impact on 50% of profitability, since both effects cannot be separated.

Many defects that we have, is to think that each element of my business is a seller seemed little credible, but it is a reality. We are in an age where people do not wear the shirt of organizations, where there is no attachment to companies and, consequently, we have to invest in brand positioning and take care of our organic relationships.

When we bring in salespeople, these in general, are thinking more about the commission than about the product, so they neglect the small clients and only look for those that are large, when all the clients contribute to disperse the fixed costs.

We have been limited more by the sale of impact products that make paradigm changes than in differentiating those that already exist. In fact, everyone buys books about Steve Jobs, as if this were the solution and we found the product that revolutionized the market in his books and videos, when what we need is to sell things that make a difference on new or unmet needs.

In addition to the above, we find ourselves in a situation where people have a feeling of guilt or blame them on situations outside the product or the business they are in.

We are very focused on saturating our warehouses with product and pursuing production warehouses to do their job well, that we do not realize that there is a warehouse maintenance cost and that this affects the finances of the company.

We are still involved in the dynamic of selling only when it is easy, without having a compass of where to go, how much I have to do and how I should achieve it.

We limit marketing to promotion and advertising, being blind with eyes, which in the end the heart does not feel.

The sale is made only for one occasion, not trying to solve the customer’s life so that he returns by himself.

At the end of the day, we act as individuals, as if society had not changed, as if the recommendation of my compadre, colleague, neighbor or friend was the one that got me out of poverty.