Stagnant growth is a result of a misfiring revenue engine. In order to grow your business you must expand.
The revenue engine is a concept DE, Inc created to explain how to evaluate the operational cash flow cycle of the business to small business owners. If you don’t understand when your revenue engine hits its limits then when you get to those points growth slows. If you don’t recognize that your revenue engine is broken growth stops all together and the business stagnates.
Many small business owners find themselves in this predicament. The problem is they don’t know what’s wrong. Or, if they do know what’s wrong, they don’t know where to focus to begin to fix the root-causes to their situation.
Fixing Stagnant Growth
To fix stagnant growth first you must identify from where your problem originates. I can guarantee with 100% certainty that it originates somewhere in your revenue engine, as it is the revenue engine which produces business growth. This is why the Revenue Engine Performance Checkup is such a powerful tool. It is design to show you exactly where your chokepoints lie. Once you know the problems you can systematically determine what you need to do to correct your specific situation by asking a series of specific questions.
One key to this process is you must work the problem backward. That is, start from the back of the revenue cycle and answer the questions in order toward the beginning of the cycle. So, you must start with the operations, move to sales and finally go to marketing. Lets take a look at the questions you should be answering to solve your stagnant growth problem.
Fixing Operations Issues that Cause Stagnant Growth
First understand that typically business growth stagnation is the symptom of capacity problems. So you must understand the capacity metrics of your business to identify the problems. Answering the following question can help you pinpoint operational capacity problems:
- How long does it take to produce one unit of your product or to service one client with what your business offering? (cycle time)
- With your current resources what is the maximum number of units you can produce or number of service offerings you can provide during a specific period of time (day, week, month, etc.)
- How much more can you currently handle before you reach you maximum capacity?
- How much will it cost you to add capacity beyond your current resources and when might you get to that point?
If you currently have capacity, then your problem isn’t operational, it’s a sales or marketing related. So, you should move to asking the sales questions next.
Fixing Sales Issues that Cause Stagnant Growth
You measure the capacity of your sales function via your sales funnel. If you are not familiar with the sales funnel concept I would recommend reading the post “Is Your Revenue Underperforming?” Here are the questions you must answer from a sales perspective to fix stagnant growth:
- What is your current sales close percentage?
- How long does it take on a calendar to close a sale (sales cycle)?
- How many additional sales must you close in order to reach maximum capacity?
- Is your current sales team sufficient resources to sell the required number of sales to reach your goal?
- If not, when do you reach sales capacity and how much will it cost to add more sales reps
- What is the source of this capital?
If you currently have enough a sales staff to hit your maximum capacity, but are not there yet your problem is probably not a sales problem. It is a marketing problem. There is a critical distinction between sales and marketing and small business owners frequently don’t understand the difference. This can cause tremendously big issues. If you’re not sure of the difference I would recommend that you read the post “Sales Slump? Do You Have the Right Resources Assigned” to understand the difference between sales and marketing.
Fixing Marketing Issues that Cause Stagnant Growth
If you have sufficient capacity in both sales and operations then why don’t you have enough sales to fill your capacity? Because you don’t have enough leads to sell to! Seems obvious, but without the answers to the previous questions it is difficult to determine exactly how many more leads your marketing needs to produce. Here are the questions you must answer regarding your marketing to fix stagnant growth:
- How many leads does your marketing currently produce during a given period? (day, week, month, etc.)
- How many leads do you need to get before you are asked to write a quote or proposal?
- How many additional leads must you generate in order to reach maximum capacity?
- Is your current marketing team sufficient resources to generate the required number of leads to reach your goal?
- If not, when do you reach marketing capacity and how much will it cost to add more marketing resource?
- From where will the capital come?
Begin Fixing Your Stagnant Growth
This is a fairly simple process. Join us for our next Tuning Your Revenue Engine Masterclass to find out how to apply the process to your business to fix stagnant growth. Just click the button below to register.