Different Paths, Part 1
The quest to improve the bottom line is an ongoing challenge for businesses of all sizes. Many business owners are undoubtedly thinking about the bottom line in some fashion on a 24/7 schedule.
The first documented reference to the bottom line can be traced to around 1830 in profit-and-loss accounting explanations. Fast forwarding to today, the concept is still primarily based on financial statements — the bottom line documents net income after expenses are deducted from the top line (gross revenues before expenses).
Reduce Expenses and Increase Income — Consider Different Paths
A concise strategy for improving the bottom line involves only two elements: increase income and reduce expenses. How you choose to do that involves evaluation of different alternatives — and selecting more than one path can be a smart strategy.
This article is the first in a multiple-part series exploring several different paths that business owners and managers should consider to improve their company’s bottom line. The emphasis will be on practical and cost-effective strategies — some of them possibly unfamiliar solutions that you haven’t heard or read about (until now).
This series will also take a somewhat unconventional approach. One conventional method is a variation of a Top 10 list for improving the bottom line. This approach simply lists 10 ideas and leaves you in the lurch about what the abbreviated suggestions require in practical terms. In this series, each article will focus on one or two paths that can lead to an improved bottom line — including a concise and practical explanation about implementing the suggestion.
One Path to a Bottom-Line Improvement: Practical Inbound Marketing Sales Processes
While the term “inbound marketing” was coined just a few years ago, the underlying principles have been around for almost two centuries. Inbound marketing is an educational and customer-centric sales process — customers are at the center of the process and prospective buyers are truly in charge from start to finish. Two examples of educational inbound marketing content strategies are case studies and white papers.
At the opposite end of the spectrum from customer-centric processes are brand-centric or marketer-centric sales processes that are rapidly becoming obsolete — marketers and sales people are in charge and decide how and when potential buyers receive information. Examples of marketer-centric strategies include cold calling, print ads, spam email blasts and radio/television advertising.
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Many businesses are still using brand-centric strategies — perhaps because the transition from marketer-centric to customer-centric sales processes is a dramatic one and represents massive change. Failure to adopt practical inbound marketing sales processes can be harmful to the bottom line — especially because today’s consumers want to be in charge of the entire sales process and are increasingly resistant to “old” sales techniques.
Here’s an illustration of the “old” and the “new” approaches to selling either products or services. With the old marketer-centric sales process, businesses might use an email blast campaign to take readers to a landing page that is full of promotional language and geared toward closing the sale immediately. With customer-centric content, the focus is on educating the prospective buyers at whatever pace they are comfortable — this educational content can include extended articles, case studies, short videos/presentations and white papers.
Popular search engines are on the same customer-centric wave length — for example, Google is routinely penalizing content that is too promotional. By making the transition to an inbound marketing sales process, opportunities for improving the bottom line include the following:
- Reducing or eliminating time and expenses for traditional advertising and cold calling
- Reallocating part of the cost-reduction savings to quality improvements that can increase sales
- Increasing sales due to customer-centric content that fully educates prospective buyers
One More Thing — A Steve Jobs Observation About the Bottom Line
In his popular presentations about the latest new consumer product, Steve Jobs was fond of adding “One more thing” at the end and then unveiling an unexpected announcement. In that spirit, here is a pertinent insight from Steve Jobs about managing the bottom line: “Manage the top line: your strategy, your people and your products — and the bottom line will follow.”
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Different Paths, Part 2
This is the second in a series discussing cost-effective and practical ways that business owners and managers can improve the bottom line. In part one, the focus was on how customer-centric and educational inbound marketing sales processes can contribute to reduced expenses and increased sales.
A Second Path to a Bottom-Line Improvement: Better Use of Yes and No
The challenge of using “yes” and “no” effectively is not a new one. For example, here is an observation attributed to Pythagoras: “The oldest, shortest words — ‘yes’ and ‘no’ — are those which require the most thought.” In today’s fast-faced business environment, those words represent timeless wisdom that can help in the never-ending quest to improve the bottom line by making business communication more precise and effective.
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The focus here is shining a light on different paths that businesses can follow to enhance financial results. But it is worth taking a moment to note that learning how to do a better job of using yes and no can also improve parenting skills. There is a parent education program (Say Yes to No) that builds on the relationship between yes, no and willpower.
This parent-teacher coalition recognizes that the effective use of yes and no is a steep challenge at any age. The inspiration for Say Yes to No has its origins in a study referred to as the Marshmallow Test. While the original study took place at Stanford University several decades ago, the universal communication concepts focusing on yes and no have been updated in a practical and relevant book by Dr. David Walsh — “No: Why Kids of All Ages Need to Hear It and Ways Parents Can Say It.”
Yes, No, Negotiating and the Bottom Line
Perhaps the most visible example of how using yes and no more effectively can help a company’s bottom line is represented by negotiating in all forms. Business negotiations can provide multiple opportunities to reduce expenses within a short-term period, immediately in some cases — and improve the bottom line.
Without paying more attention to negotiating and using both yes and no more effectively, many businesses are probably paying “full sticker price” for a long list of services and products. While the principle of buying a car below sticker price is now a well-established habit for most buyers, the same is not true of many business purchases and contracts. For example, what is the full sticker price for banking services, commercial loans, credit card processing and working capital financing? Without some research and due diligence, business managers can easily be paying full sticker price (and possibly higher) for each of those examples and more.
Common negotiating opportunities for improving a company’s bottom line include the following:
- Utility costs
- Supplier agreements
- Legal, financial and accounting fees
- Sales and marketing expenses
- Initial financing and refinancing terms for business loans and commercial mortgages
- Working capital agreements
- Credit card processing fees
One More Thing — Learning About the Power of No
Some individuals are already skilled negotiators. However, many business owners and managers could probably add valuable elements to their skill sets by learning more about business communication — especially any training about using yes and no.
William Ury is a prominent expert in the practical use of yes, no and negotiating. Along with President Jimmy Carter, he helped found the International Negotiation Network. He has written a series of books sometimes referred to as the “No Trilogy” — the most recent one is “The Power of a Positive No: Save the Deal, Save the Relationship and Still Say No.” Here is a closing thought from one of his many works about yes and no — “No is perhaps the most important and powerful word. Saying No the right way is crucial.”
Different Paths, Part 3
This is the third in a series reviewing common-sense ways that business managers can improve the bottom line. Part one covered educational and customer-centric inbound marketing processes. In part two, the focus was on how to use yes and no more effectively as a means of improving the bottom line.
A Third Path to a Bottom-Line Improvement: Make Better Use of Business Proposals
Effective business development is a critical step in one of the basic underlying elements needed to improve the bottom line — increase sales. While using business proposals is a popular business development strategy, many business owners and managers either overlook the regular ongoing use of business proposals or are not using proposals effectively.
One common use of business proposals is in response to a request for proposal (RFP) process initiated by companies and government agencies. One of the most appealing advantages of responding to an RFP is that a potential client has publicly announced in writing that they are interested in buying a specific product or service. If this involves a service or product that your company sells, the organization issuing the RFP immediately becomes a prime pre-qualified prospect.
One potential disadvantage to this process is that because RFPs are usually required to be announced and published, the competition can be intense. Another disadvantage is that a typical RFP (especially if the RFP is issued by a government agency) requires a specific format that can often require a final proposal involving several hundred pages.
To increase the success rate in responding to RFPs, here are several alternative strategies:
- Initially focus on smaller contracts involving less competition
- Collaborate with other companies that have a track record with the RFP issuer
- Engage in research and due diligence to evaluate various RFP contract opportunities
Another Solution: Informally Solicited, Unsolicited and One-Page Proposals
A less conventional path involving the use of proposals is to avoid the ultra-competitive RFP process in favor of unsolicited or informally solicited proposals. Unlike formally requested proposals via the RFP process, unsolicited and informally solicited proposals are outside of a formal RFP solicitation process. This allows companies to be more proactive instead of reactive — business owners and managers can focus on a target list of prospective buyers rather than limiting their attention to companies or public agencies that recently issued an RFP.
Unlike proposals submitted in response to formal RFPs, informally solicited and unsolicited business proposals rarely involve the extended time period and lengthy format that is common with RFPs. Especially with the unsolicited version of business proposals, a company should focus on developing an abbreviated and attention-getting format — a one-page business proposal is often the ideal solution.
While a one-page proposal might seem to be unusual, the results are often surprisingly good — with the primary caveat being that excellence and high-quality must be reflected throughout every aspect contained in the one-page format. Whether you choose to use one page or more, here are four advantages of unsolicited and informally solicited proposals:
- Less direct competition
- Usually a faster process because strict deadlines are avoided
- A proactive marketing process
- More cost-effective due to shorter proposals and fewer rigid guidelines
One More Thing — Effective Proposals Can Lead to Immediate Business
Most proposals involve an adept combination of specialized business writing and technical writing. Business managers should make a candid assessment to determine if they have the time, expertise and personnel resources to produce effective proposals internally or require help. Whatever the decision, proposal writing is a highly collaborative activity that requires high-level project management and teamwork from start to finish. As observed by Tom Sant, “Although a great proposal by itself seldom wins a deal, a bad proposal can definitely lose one. Poor project management is the leading cause of failure in technical projects.”
Business managers should never lose sight of a paramount reason to consider proposals as a key business development tool — effective proposals can lead to immediate business.
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