How to Improve Top Line Growth In Business

Dec 18, 2020 How to Improve Top Line Growth In Business

Goals & Strategies

Top line growth for a company essentially occurs through two paths:

External growth, like acquiring a company or getting involved in a joint venture.
Internal growth, like launching a marketing campaign or developing a new product.

Deciding what’s best for your company is determined by a number of factors, but most essentially, plans have to fit into your company’s vision, goals, and ability to succeed.

External Growth for Top Line Improvement

In addition to an acquisition or joint venture, external growth could include distribution or manufacturing deals with outside companies. As with just about anything in business, there are pros and cons. Pros to External Growth:

Can potentially take advantage of opportunities more quickly
Engage with an already established market or customer base
Acquire or involve complementary talent or processes that strengthen your own

Cons to External Growth:

A wrong fit with your services, culture, or customer expectations can be disastrous
Complex and complicated financials
Can spread resources thinner than expected if talent isn’t aligned

When involving a company outside your own to grow your top line, you’re tapping into their way of doing things. This can be a significant advantage. For example, if you’re a technology company with wide reach and a loyal customer base, buying a smaller company for a great product they’ve developed can immediately be positive for your own portfolio. On the other hand, you’re also potentially taking on problems, from their processes to their people. Due diligence and a thorough study of all aspects of their business is key before decisions are finalized.

Internal Growth for Top Line Improvement

Growing internally can involve new product development or introduction to new categories. Marketing campaigns or widening distribution are other strategies for growing the top line. The key to growing the top line internally is deepening the relationship you already have with your customers while creating new customers. Pros to Internal Growth:

You maintain control, limiting outside factors
Consistent with existing processes and people
Potentially less risk in making new hires for key positions than making an acquisition

Cons to Internal Growth:

Can take longer to achieve success or penetration than tapping into somebody else’s existing customer base
Refining processes and acquiring talent can be time consuming and difficult
If your grand new ideas fail, there can be expensive lessons learned

Not long ago a major food company released a new health product with glitzy marketing, huge fanfare, and wide distribution. It was everywhere. It also flopped. Customers just didn’t think it tasted good. In this case trying to grow internally, rather than perhaps acquiring a nutrition or wellness company already succeeding in this space, lost the company money and blemished the brand.

The Role of the CFO for Top Line Growth

However you decide to grow your top line, there are sophisticated questions to answer. Besides considerable financial analysis, you need to ask questions like:

How much will you sell a thing for?
How will you market it or reach your customers with messaging?
What will be sales and distribution channels?
Where and how should we produce or manufacture this?
How will this idea fit into our organization, goals and strategies?
What are potential brand impacts to this decision?

A capable CFO should be positioned at the intersection of all departments in a business, able to shed light on key considerations like these. Your CFO should be able to evaluate sales and business plans, deliver strategic guidance, and share robust financial analysis. Make sure you’ve included the kind of business and financial expertise necessary to consider the problem and the solution. Your CFO should be a key aspect of that research.

Grow the Plan, Plan the Growth

The most important thing about growing a business is planning growth to meet and match your company’s objectives, culture, brand, goals and strategies. That’s hard work! There’s an ideal time for growing externally, and a time when internal growth is the right decision. Your CFO can help can rationalize decisions relative to everything else going on in your business, industry and market.