If you take a look at the goals you’ve set for your company, have you fallen into the trap of revenue obsession? We’re in business, so of course we all want to increase our revenue (well profit is better, but we’ll leave that for another time) and yes revenue is crucial for short term survival, but revenue is not the whole story and to truly achieve sustainable growth you need to stop solely focusing on it.
Let’s look at what sustainable growth really is.
Sustainable growth is repeatable, it excludes all one time activities that generate a burst of customers but has zero long term impact. And it’s the key to long term success.
Short term revenue gains from activities are not how you achieve sustainable growth. Activities such as:
- Flash sales – they attract new customers looking for a deal, they don’t necessarily build customer loyalty.
- Giveaways and competitions – be honest, most people that enter are solely interested in the prize and not your brand or product itself.
- Free samples (without a strategy) – they might create awareness for your product, but they don’t guarantee those people will become paying customers. If you don’t have a clear strategy on how to convert them, then it’s short lived.
What’s the problem with focusing on revenue?
You’re being reactive and letting the business run you. Constantly chasing your tail, desperate for every dollar to come in and the constant pressure from that can quickly lead to burnout.
That then leads to customer churn. You’re so focused on revenue that you run the risk of neglecting the customers you do have and next thing you’re taking the reactive approach to your customer needs. We all know it’s a lot more cost effective to retain existing customers than it is to acquire new ones.
It leads to unsustainable business practices. Chances are there is no strategic plan in place or if there is, it’s not being implemented, which makes the ability to maintain consistent revenues streams over the long term challenging.
Not all revenue is created equal. If you’re a product based business then different products are likely to have different profit margins. Throw in a change in overhead costs and indirect costs from increasing your revenue and well your profit margins will decline. But hey at least your revenue has increased right! Nope.
Strategic planning is essential for sustainable growth in business
Strategic planning goes beyond just revenue and lays the groundwork for sustainable business growth.
Without out one you’ll end up with:
Lack Direction: Without clear direction or a roadmap it makes it difficult to set and track meaningful goals, measure success and identify areas for improvement.
Missed Opportunities: You become blind to emerging trends, competitor actions and changes in customer behaviour. This hinders long term success as you miss opportunities to capitalise on new markets, products or services.
Inefficient Resource Allocation: Wasted time, money and effort, that’s the result of allocating resources inefficiently. Resources become scattered and you end up focusing on activities that don’t drive long-term growth.
Poor Decision Making: Decision making becomes reactive rather than proactive. Day to day operations and unexpected challenges dictate your actions which has a domino effect of negative outcomes.
Ineffective Marketing: Without defined marketing strategies in place, you generally fail to resonate with your target audience and any efforts to do so fall flat. This leads to ineffective customer acquisition and retention.
A strategic plan isn’t a rigid document. To ensure it’s effective you need to review it on a regular basis and adapt it accordingly.
Set the stage for sustainable business growth
As a business you should strike a balance between generating revenue now and implementing strategic initiatives that set the stage for your business to achieve sustainable growth and profitability in the future.
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