Last week, my good friend Scott Sorrell, "Mr. Charge Higher Prices", and I had the opportunity to discussed a problem we often find in companies who fail to meet their growth goals. By growth goal, I am not referring to sales goals. I mean something more far reaching than that. I am referring to company growth goals. I am referring to the company that has been stuck at $10MM a year and unable to reach the level leadership had envisioned.
I wrote about this last year and since then have come across more examples with the same root cause. The problem is a revenue focus and not a profit focus. As I told the audience last week, "Revenue is a survival goal. Profit is a growth goal."
Profit is the fuel for company growth.
For a company to grow beyond the "mom & pop" phase, leadership needs to adjust their focus. Their problem is twofold. First, it is easy to sell a product or service if profit margin is not a concern. This is a sales training issue.
Selling without profit is not selling, it is giving something away.
The second problem is, once a sales team falls into this mindset, it becomes the inertia the sales organization needs to overcome. This is a leadership issue. Leaders must set out with a plan to change the company culture. Sales people need to believe what they are selling is worth more and they need the sales training to enable them to get it. Both must exist, it profit growth will not happen.
Without exception, every stagnate company I have seen has struggled with this. It isn't a sales rep problem it is a leadership problem.
Moreover, these companies didn't arrive here overnight and it is foolish to think the situation can be remedied quickly. The problem lies in the lack of effective and efficient systems.
Leadership needs to not only look at the companies needs, but also at theirs. We all need coaching. We all need advice. Look for solutions that include opportunities for personal growth.
Good leaders can demonstrate how to sell at a profit.
As my friend Scott says, "Revenue is for children. Profit is for grown-ups."