ELEC TRICAL DIS TRIBUTOR
• Jan. 17
HEN IT COMES TO GROWING A
business, there are two options. One is top-line growth, which involves in- creasing revenue by driving more sales or increasing revenue per sale through advertising or promotions, higher markups, or programs to increase repeat purchases. The second option, bottom-line growth, is about in- creasing profit margins by reducing expenses—e.g., reduc- ing advertising costs, cutting unprofitable or low-margin products, increasing prices, and cutting staff or shutting down production lines. In an uncertain economy, companies often resort to the latter. But while bottom-line strategies may yield short- term profits, they can be detrimental in the long term. With that in mind, here are some top-line strategies that can be immediately implemented to grow business:
. Leverage strategic partnerships with comple- mentary companies.
A strategic partnership (or strate- gic alliance) is a relationship between two complementary businesses, often formalized by a contract, that enables companies to garner new business at a very low cost. For example, an electrical distributor that sells solar panels, wiring, and related products could partner with a solar energy consultant, forming an exclusive contract to provide products for solar installations. Or the companies could make joint sales calls or refer customers to each other. Most importantly, both parties must benefit from the arrangement, perhaps by offering finders’ fees or a per- centage of sales resulting from a referral.
. Create a consortium or network.
A more sophis- ticated version of the strategic partnership is a network or consortium of similar companies with a common goal. For example, independent electrical distributors are joining forces to offer expanded inventory, services, expertise, and solutions to serve national accounts. Plus, the owners/ members of these groups are helping one another reduce risk, streamline product procurement, minimize noncriti- cal inventory costs, and increase profits.
. Harness the power of PR.
Marketing is a neces- sary function of any business, but too often others in the company see marketing as an expense, not a revenue gen- erator. That’s why PR is such a powerful tool. It can cost very little in real dollars, as the main expense is the staff time it takes to implement PR activities. PR may be as sim- ple as writing a news release or posting on social media, or as complex as organizing a free, manufacturer-sponsored workshop or training session for customers.
. Cross-promote or joint-promote with comple- mentary businesses.
Cross-promotion or joint promo- tions can stretch the participating companies’ marketing dollars and build brand awareness simply by leveraging
SPECIAL REPOR T /
BUILD YOUR BUSINESS IN 2017
Seven ways to increase profits that have
nothing to do with reducing expenses.
to grow revenue.
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