As one business year closes, another begins. Funny that. Wouldn’t it be nice if there was a break between one year ending and the next one starting? Like a ‘timeout’ when the clock stopped ticking.
It could be a time to contemplate the previous year’s performance and then properly plan for the year ahead. But this is the real world, and we cannot stop time. And as much as we would love to take a relaxing ‘timeout’ to strategise, we are locked in that cycle of continuous business growth – if for no other reason than to keep paying the regulator’s ever-increasing fees.
Despite having no time for a breather, we have had a good year. We increased turnover by a mighty 41 per cent without really increasing our costs all that much. Something is going well and I need to put my finger on what it is.
The 20 per cent of clients accounting for the smallest fees generated less than 5 per cent of turnover, yet consumed more per unit of revenue than the top 20Good management information helps and I have been pouring over the data looking at it from every angle I can think of. Last year, for example, our top 20 per cent of clients contributed 49 per cent of our revenue. Our best sources of non-recurring revenue came out of referrals from our top clients. Our largest fee-earning client referred us to what is now our second largest fee-earning client.
At the other end of the scale the 20 per cent of clients accounting for the smallest fees generated less than 5 per cent toward our turnover. Yet, in terms of resources, they consumed proportionately more per unit of revenue than our top 20 per cent.
This throws up some interesting questions and choices, and they are not necessarily comfortable ones. Fortunately we have not yet reached full operating capacity so there is time to contemplate the options, but sooner rather than later we are going to have to make some tough decisions.
We did not achieve a 41 per cent growth rate by fluke. It was a conscious decision to give the business a challenging target, and it made us sit back and think carefully about how to achieve it. Yet looking back, the growth came from different areas than the ones we originally forecast.
This year we have a similar stretching target and I have not the foggiest idea how we are going to achieve it. All right, I have done the numbers and made my projections, but if last year was anything to go by, the real growth will come from elsewhere.
The key is activity, and it was ever thus. Too many of us put our planning hats on and try to think our way to the answer, but it is possible to over-think. The best examples of growth I have seen from inside and outside my firm have come from doing something, and if it proves to be the wrong thing, doing something different.
So, as much as I would like a ‘timeout’ it is probably better to simply get stuck in and do something.
