Blog: Business and Entrepreneurship
Top line revenue

Focus on Top-Line Revenue, Not Cutting Costs

Avatar for John Locke

John Locke is a SEO consultant from Sacramento, CA. He helps manufacturing businesses rank higher through his web agency, Lockedown Design & SEO.

Cash flow is like oxygen for businesses.

Without cash flow, a business will asphyxiate.

The ability to consistently turn a profit means survival.

Businesses that are in the danger zone — right on the line between financial comfort and anxiety, often turn to cutting costs.

I agree that cutting costs is a good idea, but by itself, isn’t enough. Over-reliance on cost-cutting may be a sign of a scarcity mindset. This is an irrational fear that states “This is all we are going to ever have, so we better make it stretch.”

Like I said, saving money is important, but your main focus should always be on growing sales and pushing the top-line revenue up.

The Definition Of Insanity‚

If you don’t try anything different, you’ll continue to get same results. Expecting anything different is just a set-up for disappointment.

I Want to Be Where The People Are

Investing in growth means marketing to people where they are, not where they used to be ten years ago. It means studying your target customer base, and finding out where they spend their time and attention. Then, you show up there.

Another way to impact revenue growth is to focus on delivering higher value to your customers.

You can always lower a price if it’s simply too high, but it’s nearly impossible to raise a price without raising the value multiple times over. Focus on value.

Tales From The Trenches

I can back this stance up with my own real-world experiences. I’ve been in management level in traditional brick-and-mortar companies. I’ve seen first-hand what happens when companies are aggressively growing market share by innovating and what happens when they abandon innovation and go into cost-cutting mode.

When companies are trying new things, and 100% committed to providing superior value, that’s when they experience consistent growth in revenue and market share.

But what happens in a world that only looks at the stock price from this quarter, and there is no commitment to long term strategy?

Those same companies that were committed to providing value and differentiating themselves from their competitors get cold feet. They go back to what they know, which means cost-cutting.

The most self-destructive saying I’ve ever heard in the business world is “The only controllable cost is labor.”

When a company starts saying this, it means that growth is flat, and they are no longer committed to the programs that were previously enabling their growth.

Without a steadfast commitment to providing superior value and differentiating yourself from the rest of the market, the only thing left to compete on is price.

This is when the foundation begins to crumble.

You cut costs on labor. This means you can no longer provide world-class service. It means the programs you had in place that were increasing your revenue no longer exist. Marketing is cut to a bare minimum. Innovation dies, along with internal morale.

The scarcity mindset is a killer at every level — whether you’re a sole proprietorship, small business, or large corporation.

Cash Is Like Oxygen

Cash flow solves a lot of problems, and if you’re losing market share and top-line revenue compared to your competitors, you need to take a long hard look and figure out why.

Customers are generally loyal, as long as you are providing superior value compared to your rivals.

Every business in existence can benefit from focusing their energy on two things: growing top-line revenue; and providing superior value and service to their customers, so they remain customers for life.

Avatar for John Locke

John Locke is a SEO consultant from Sacramento, CA. He helps manufacturing businesses rank higher through his web agency, Lockedown Design & SEO.

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