There's only one metric that really matters! Net Profit or EBIDTA is the magic formula for growth. Profit allows you to reinvest in your sales, marketing, and people to add rocket fuel to your business. On this episode, Wayne Johnson, joins us in the studio to talk about some practical steps you can take to begin managing for the bottom line.
Papa Wayne's Tips for Focusing on the Bottom Line
I always cherish the time I get to sit down with my globe-trotting, entrepreneur father. He's done such a great job of growing not only the top-line of Accuform, but especially in recent years, the bottom-line. What can we learn from multiple years of double-digit EBIDTA growth? In this episode, Wayne shares some great advice about how to manage your business by focusing on the bottom line, empowering your team, and shifting your own mindset as an industrial entrepreneur.
1. Sales Are Sexy, But They Don't Pay The Bills
Are you all about top-line growth? Celebrating record sales months? Closing the deal even if it means sacrificing margin? Wayne says, "stop it"! If he could change anything, he would go back in time and focus on the bottom-line.
If I can double the bottom-line and achieve moderate top-line growth, then I'm WAY further ahead.
2. Have Pricing Courage and Walk Away From Bad Business
When it comes to pricing, winning the battle may mean losing the war. It's important for industrial suppliers and distributors to have pricing integrity and demonstrate courage when faced with increased pressures to pinch pennies. Not all business is desirable. Using data and analytics, you should identify your least profitable accounts and take action to either make them profitable or walk away..
My encouragement to distributors is to work with your supplier partners to find that profitable piece of business.
2. Create Team Budgets and Empower Your Leadership
Wayne started by communicating a clear vision to his leadership team about their focus on the bottom line and the goals needed to realize that vision. From there, he worked with department heads to negotiate a team budget that aligned with the overall company goals while allowing complete autonomy for the department heads top use it as they see fit. The leadership team then held each other accountable throughout the year to these team budgets. This is every owner's dream -- a team that operates and thinks like owners!
We set an overall company goal and gave department heads control over how they spent their budget. That created a tremendous sense of relief and joy.
One of the ways you could impact both the top and bottom-line is by implementing an eCommerce Website for your customers that will automate the ordering process, create cross-sell opportunities, and make you more attractive to prospective customers.
Spinstak eCommerce for Industrial Distributors is the most-affordable turn-key solution available today. Save time and thousands on costly implementations. Your CFO will love that!
How are growing your business with the bottom-line at the forefront? What tools and tactics have helped you achieve your goals? Share in the comments below.
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