What matters most to a business owner – Revenue, Expenses and Risk

10
Aug

Revenue, Expenses and Risk is What Matters Most

If you are a business owner, at the end of the day, you measure your success in 3 ways in terms of affecting profits and business continuity: 1) Did you increase or protect revenue? 2) Did you reduce or control expenses? or 3) Did you reduce or control risk? Those three areas are what is most important to a business owner. All sales conversations should take those three core business drivers into consideration.

Sales reps need to spend more time understanding what a business owner thinks about and how he or she measures ultimate success long before they learn what their product or service does. Business acumen is more important than product knowledge.

In this blog I will go over the revenue issues and in the next blogs cover the expenses and risk issues from the owner’s perspective.

sales_growth.jpg

Increasing Revenue

Most people know that a key business goal is to increase revenue. Duh, that is why there are sales people. But, do you as the sales rep, know “Why?” the owner wants to increase revenue? Do they have a personal goal they are trying to achieve? Typically, I get brought in to do training when a business owner wants to increase revenue for three reasons: 1) there is a new product launch and he/she wants to insure that the launch goes successfully and that revenue targets are achieved 2) the owner is not happy with the growth – it has stagnated and they want to grow versus just having a lifestyle business (there is typically a personal goal behind that growth such as lake house, big boat, a piece of property or beating a competitor) and 3) the owner wants to get his company to a certain level to sell the company.

Look at scenario 1 a new product launch; there are actually 2 issues here – protecting the existing investment of the new product (reduction of risk) and to hit target goals (a desire for gain). Each point here can have its own conversation and should have such a conversation.  The second reason is typically tied to a personal goal. You should find out that personal goal and how long have they wanted to achieve that goal. Get them to tell you about their dream and why it is important to them. By doing that, they are selling themselves on hiring you. Selling the company is a personal goal that has longer, broader implications. Get the owner to discuss the specific sales goals and why they are important to the valuation of the company.

In all situations, go deeper with the root cause of the desire to increase revenue. All business reasons will have a personal reason behind it. As listed in the 7 Rules of the Customer blog, understanding their business is a key issue to be successful sales rep. To have such deep conversations, you must be a good listener and effectively ask questions.

Protecting Revenue

Most sales reps don’t think about strategies that owners take to protect revenue. Microsoft often buys an upcoming competitor and never uses the technology just to protect their revenue. Other companies have added new sales reps to open new territories that have marginal potential just to protect market share. New products have been launched before they should (think Microsoft again) to keep competitors out of the space. Many companies have announced new products before they are ready to ship to keep competition at bay. In my business, i hear owners say that if they are not constantly working to improve their sales force’s selling skills, they feel that reps will get complacent and they will lose market share.

Owners will spend money to increase or protect revenue. Are you having those discussions with your sales team?  As a business owner, are you training your sales reps to have such discussions?

 

Yes, profit is the main driver, but being able to have a discusssion on the three areas that are the determinants of profit is a great skill to have. As a sales rep, can you read a balance sheet or cash flow statement? If not, you should learn.
As a business owner, is the emphasis of sales meetings on product and service knowledge or on sales activity? One topic that should be regularly discussed is how your offerings impact revenue, expenses and risk.

Share

Leave A Reply

Your email address will not be published. Required fields are marked *

Switch User: