Greg Stanley - Secrets of Value Growth with the Right Revenue
On today’s show, Ed talks with Greg Stanley, owner of Accelerant Consultants, on the sub-segments of revenue. Ed and Greg uncover tips to increase business value by sharing common value gaps, evaluation perspectives, thoughts on sales and marketing integration, and why business owners should avoid the habit of revenue tunnel vision when success doesn’t always translate to top-line growth.
[1:40] About Greg
[3:20] About Accelerant Consultants
[3:38] Why Accelerant Consultants?
[5:34] Value gaps
[6:02] Holistic view of increasing revenue
[6:45] Revenue distribution
[7:12] The cost of revenue
[8:12] Maturity cycle of a business
[9:35] How to separate sales from marketing
[10:25] Integration and Intentionality
[11:54] Today’s customer
[12:30] Good customer vs. Bad customer
[14:25] Unwinding small business mentality to grow
[15:00] Expanding customer portfolio
[15:30] Customer concentration and low profitability
[17:05] Recurring revenue models
[18:02] Retention of good customers
[18:23] Capitalize on expansion of customer base
[19:00] Risk of recurring revenue models
[20:08] Lifestyle driven and legacy driven owners
[20:28] Reality of business transition
[22:00] Prepare for evaluation
[23:37] Letting go of the business
[24:09] Hiring good people
[25:09] Owner operator to leader
[26:26] Key man strategy
[27:34] When and why reach out to a consulting firm?
[30:05] Accelerant Consultant services, assessments, and client portfolio
[33:45] Advice for immediate business impact
[34:45] Connect with Greg
Learn More From This Podcast
About Greg Stanley
Greg Stanley has been in the business of community leadership, sales, marketing, and building practices for over 25 years. He has built strong relationships for PwC, SmartIT, and Support Net/Arrow. President at Accelerant Consultants, Greg helps companies big and small discover strategies to achieve higher levels of success. He serves as the chair of Butler’s Lacy School of Business Board of Visitors, The Butler Business Consulting Group Advisory Board, JDRF, and Kids’ Voice.
About Accelerant Consultants
A lot of business owners don’t have a background in business—they come from all walks of life, with experience in engineering, accounting and science, and little working knowledge of sales. Accelerant Consultants helps companies to bridge this knowledge gap by generating new sales opportunities, identifying growth, maximizing evaluation, and building strong sales teams.
The Value Gap
Many business owners look solely to revenue as the indicator of increasing value. But increasing value is understating the challenge in front of them. Because companies only focus on top-line growth, profitability, customer retainability and expansion are not keeping pace. Greg notes that while revenue is good, many fail to realize that it costs money to generate that revenue. Greg and Accelerant Consultants look at businesses from a 360-degree view, identifying how the rest of the organization is impacted when the strategy is to increase revenue by a certain percentage—zoning in on operations, staffing, etc. Ideally, if you can optimize your operating expenses, that’s where you can see the financial difference. When associated costs are not considered, businesses do themselves a disservice when it comes to the evaluation perspective, advises Greg.
How to separate sales and marketing
Businesses tend to blend sales and marketing when they should really be defined separately, but intentionality integrated. Today, there is content overload in the market which is why a solid sales force is crucial. It’s one thing to bombard the market with content, but it’s another to have a sales force that genuinely resonates and connects with the customer—this is how customers show their appreciation and see the value in the business.
What is a “good” customer?
Business owners believe that their best customer is the one driving their top-line revenue. But Greg explains that this isn’t the case. If the customer’s only focus is low price, they are low margin and take up a lot of resources to support. These kinds of customers often degrade valuation. Good customers understand and appreciate your business value proposition and are willing to pay a higher price or premium for it. They are those who represent profitability expansion, and those who by industry and brand affiliation are recognizable.
Small business mentality is often limited with the belief that any customer is a good customer and any revenue is good revenue. But unwinding this mentality is the key to expansion. The more runway that businesses give themselves to architect a customer portfolio that’s going to be desirable for the market—those are the businesses that are going to demand a premium when it comes to evaluation.
Greg recommends that sometimes it’s beneficial for business owners to carefully vet certain clients because of low profitability. There are businesses that can become more profitable when they let go of their biggest customers. In fact, they actually become more profitable by becoming smaller and letting go of clients that produce top-line revenue due to the cost and effort it takes to sustain these transactions.
Recurring Revenue Models
Recurring revenue models are predictable revenue streams like subscriptions, memberships and plans. They usually generate revenue on a monthly or yearly cycle. For some companies, recurring revenue models mean multi-year contracts, while for others it means selling more to the same company and making sure that you maintain that revenue stream. Predictability drives the higher evaluation, but companies need to ensure that those streams are sustained to continue to grow.
Three Aspects of Revenue Growth
Revenue growth can be measured by the retention of existing good customers, capitalizing on expansion—generating opportunities within those good customers—and expanding net new customers, says Greg. The greater understanding of your customer base, how much it costs to keep them, and service them, helps value. The understanding of what you have as opposed to pushing out service and/or product is what will increase evaluation.
Lifestyle or Legacy?
Lifestyle driven owners believe that as long as they can take out the right amount of money to support their lifestyle and enrich their families, they consider their business to be running well. But what happens when the time comes for a transition, when it’s time to sell the business or pass the company to the heir of the family? Greg suggests that refocusing on the legacy aspect is crucial because if that isn’t prepared for, owners will miss out on the opportunity to exit their business in a way that’s going to be most meaningful for themselves and their families. The greatest challenge that a business owner has is at what point to look at the business as an income producing asset than a lifestyle business.
Letting Go of The Business
Sometimes it’s difficult for business owners to let go of the business when it’s time for a transition because they’ve been a critical driving force for their company’s success. However, if they are the business and the business is solely driven by them—and revenue is at risk if they are taken out of the business—then they are doing a disservice to the business by being that integrated. The key is to hire good people who can sustain the legacy of your business as you slowly extract yourself from the equation. Train them well to avoid micromanagement. Overtime, the business owner should start to take some of the functions of the owner operator and become an owner leader. Create cohesion and create capabilities by letting those hires do their job to sustain the business in moving forward.
Accelerant Consultants’ services, assessments, and client portfolio
Accelerant Consultants help businesses increase evaluation with more top-line sales, and help to shape a business structure that is much more effective and efficient. Even companies that don’t have a revenue problem are encouraged to use services like those of Accelerant Consultant because when a company is in a period of economic growth, investing to ensure that they sustain that growth is crucial, advises Greg.
Greg helps companies look at their leadership team, their hiring process, KPIs—all things that tend to be at a management or leadership level from the sales perspective. He and his team consider if the right commission structure is in place to drive the right behaviour, or if there is a strong integration between sales and marketing. Greg will go through these assessments, come up with a recommendation and give it to his clients to decide whether or not they will move forward with his recommendations. Greg has also assumed temporary roles for companies on the fraction of sales until he has implemented a structure, transferred knowledge, and hired his replacement to complete the projects.
Greg’s client portfolio ranges from companies who generate 5 to 50 million dollars in revenue, who think they can use improvement in their sales function, or who may have lost a sales meter and are looking to retool things. Accelerant Consultants has been engaged by companies from all different fields, North American Wide, with common issues that the firm works to resolve, including the hospital and health safety arena, oil fields services arena, clinical businesses and more.
Advice for Immediate Business Growth
From Greg: “Business owners should be doing everything with a high level of intentionality and focus on evaluation…stop doing things for money and make decisions with a high degree of intentionality and reach out to consultants who can put you in a higher position to develop.”
Connect with Greg Stanley
Visit www.accelerantconsultants.com to learn more about Accelerant Consultants.