The 10 Commandments of Business Growth: The Timeless Guide to Growing any Business by Wayne Wright

Author:Wayne Wright [Wright, Wayne]
Language: eng
Format: azw3
Publisher: UNKNOWN
Published: 2020-09-20T00:00:00+00:00

6

Thou shalt understand the ‘numbers’ or die.

If you have been in business for any length of time, you will have heard the mantra that ‘revenue is vanity, profit is reality and cash is king’. There is real truth to this statement and it is worth understanding each one of the terms.

Revenue

Revenue is important as it helps position the business differently in the eyes of suppliers and customers alike, both in a good and in a bad sense. The good sense is that the negotiating power of the business is enhanced for purchasing raw materials and products, and the clients’ perception is that the business is financially stronger because it is bigger by virtue of turnover. In addition, due to the risk-averse nature of public-sector authorities, the perception is that larger companies ‘supposedly’ have deeper pockets to negate any issues around lack of supply, failure or other adverse developments. The stock market clearly is affected (unfortunately in my view) by revenue as an indicator of a company’s growth although, in a recessionary environment, market share and profit should be the overall indicator of growth.

It is frightening how often I hear business owners say that they would like to reach £1m turnover, £10m turnover, £300m turnover, as if this number helps them to define themselves or their business. ‘I run a £300m business’ is a vanity statement. The statement does not define the health and strength of the business or its future viability, as proven by many large businesses with high turnovers that have gone bust (Enron, Lehman Brothers, Woolworths, Kodak, Curry’s, Karen Millen and Clintons Cards in the UK are notable examples). However, although revenue growth is important, it is only part of the equation of what makes a sustainable and successful business.

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