August, 2012 Newsletter
TAKE IT TO
THE NEXT LEVEL
One of the questions we often receive from our clients is how to really grow their businesses, take it to the next level.
Our first response is always "what drives your business?" The most common answer back is "Sales". Correct, but what constitutes sales?
Companies often overlook the several metrics behind their revenue. It's important to look at all the puzzle pieces: product mix, product margin, pricing, unit volume, customer segmentation, etc. Depending on your industry and the complexity of your price list, you may have many more components to evaluate.
Your evaluation needs to consider the good, bad, and ugly of each component, and what influences changes in that metric. What do you control and what do you not control?
Taking your business apart and reassembling it on paper allows you to evaluate your objectives, strategies, tactics, and the potential impact of any changes you want to make.
IMPORTANTLY,MODELING HELPS YOU DETERMINE WHETHER A CHANGE IN SALES DROPS TO THE BOTTOM LINE.
Consider that you wish to use up more of your capacity. And consider that some of your products demand more infrastructure, sales, or manufacturing resource. Or that some of your products give you a marked point of differentiation from the competition? The only way to really get a handle on all of this is to model your business; find out what makes it tick and to what it is most sensitive, positive or negative.
For example, beware of cannibalization, when the development of product extensions can do more harm than good. Or, when pursuing a certain class of business eats away at your margins. Again, it is in the modeling of your business, that you will begin to find your answers and perhaps understand your business more robustly than you had ever thought possible.
Where do you go for modeling? Most Companies use their Finance organization, or you can consider a consultant. Holos House excels at modeling, and has significant experience in media, retailing, manufacturing, consumer goods, and construction. We help you leverage all your assets, and generate synergies that make 2+2=5!