colleague, we talked about the growth challenges of his business and the need
for growth over the next few years.
While our focus was on the â€œnet incomeâ€ line of his companyâ€™s p&l, I
blurted out (as I am known to do) that â€œnet revenue growth is the lifeblood of
a thriving business.â€ Not only is that
true related to my friends company / industry, it happens to be deeply true in
EVERY business I have had the chance to work on over the past 30+ years! Whether on Kleenex tissue, Breyers Ice Cream,
Coca-Cola, Bolthouse Farms or across the varied businesses that I am consulting
on today, the importance of healthy top-line growth has been a central and
common theme across my career.
business and culture. A great quote from
our history sums it up well:
and progress, such words as improvement, achievement, and success have no
corporate reality, this truth that there is no â€œsuccessâ€ or â€œachievementâ€
without â€œgrowth and progressâ€ is deeply true from my experience and important
to remember. If the ultimate indicator
of a businessâ€™s health is â€œdemandâ€ as I have written in a previous essay
(â€œDemand Drives Priceâ€), then to have a thriving enterprise one needs to have a
thriving revenue line on your p&l.
no small feat across business realities.
I have worked in businesses without a thriving topline and you end up
looking to cost reduction plans, â€œdoing more with lessâ€ and organization
restructurings to achieve quarterly and annual profit targets. While effective in the short run, a business
runs out of â€œcost centricâ€ actions over time and ultimately does not thrive and
succeed without solid revenue growth.
growth business environment, which also had its challenges. In that situation, we have a tough time
â€œkeeping upâ€ with the growth opportunities and more importantly â€œfulfillingâ€
the growing demand of the business. It
was an eye-opener a few years ago to realize that our business had â€œoutgrownâ€
the actual number of warehouse doors of our primary production facility and
that during the peak demand weeks between Thanksgiving and Superbowl, we didn’t
have enough â€œdoorsâ€ to handle all the trucks picking up customerâ€™s orders. Yes, our demand growth was strong but if we
couldn’t â€œhandleâ€ the growth, then it would have been nothing more that temporary
phenomenon! (We did work our way to
â€œhandle the growthâ€, fodder for a future essay!!)
environment (where youâ€™re trying to â€œsave your way to successâ€), and a high
growth environment (where you canâ€™t keep-up with the demand that you have
created) is key to a business â€œthrivingâ€ over time. Work hard to find that right balance year
after year but never lose sight of the â€œGâ€ word. Itâ€™s all about â€œgrowthâ€ and in my experience
a healthy balanced growth of the revenue (demand) over time!
title: Recently I have worked with a
number of consulting clients who are driving the heck out of their â€œGross
Revenueâ€ line of their p&l with very little translating to the â€œNet Revenueâ€
line. They use discounts and allowances
(â€œD&Aâ€) to drive short-term growth which is OK if it translates to â€œNet
Revenue Growthâ€ over time. I like to
focus on the â€œNet Revenueâ€ line of a businessâ€™s p&l and track it as THE key
variable over time.