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May 20, 2015
Save EBITDA, or Accelerate Growth? Here’s How You Can Do Both.
By: Matt Sharrers
“No pain, no gain.”
Your coach or trainer probably told you that years ago. Now, you’re mulling how to improve EBITDA performance. You’ll have to go to the “EBITDA gym,” so to speak, and slim down. But you’re worried you’ll cut too deep and jeopardize growth.
The truth is, this process doesn’t have to hurt. You can make EBITDA gains without the revenue pain. You just need to equip yourself to make good decisions. We’ll help you get started.
You can make EBITDA gains without the revenue pain.
Focus on These 4 Questions:
You’ll need to tap into every major function, and dysfunction, in your organization.
1) Underperforming EBITDA: What Are the Most Likely Culprits?
2) In Deciding Where to Cut, How Can We Minimize the Impact?
Determine where your growth acceleration levers are. How does your R&D spend compare to your competitors’? Are you spending more (i.e., aligned with) where market growth is occurring? You should invest in high-growth markets and divest in legacy/maintenance markets.
Baseline and compare market growth.
Then assess your revenue growth strategy. The market is growing at 6%, and you have to grow by 9%. That means you have to perform 50% better. Your investments in sales and marketing, and/or product innovation, are essential.
Zero in on underperforming salespeople.
These are reps who’ve been with you at least two Q’s. For whatever reason, they’re not performing at their full run rate. This group also includes veterans (2+ years) who keep missing quota. Are you hearing “He’s a good guy” or “She’s a good girl”? Don’t let that sway you.
Safeguard your best customers and employees.
Stack rank your customers. Identify your best, by way of Customer Lifetime Value (CLTV) and spend potential. Identify your A-Players. Make sure your actions don’t impact any of them.
3) What Actions Can We Take on the Revenue Side?
This process is about achieving balance. Inputs are as important as cuts. What are your revenue levers?
4) What Does the Team Need to Do?
CFO, Heads of sales, marketing, product, HR. All these leaders need to bring their “A Game” to this process. Here’s what you should ask of them.
You began this process with a high sales cost. You knew you had to act, but you dreaded the outcome. Now you have the tools, direction, and mindset you need to tackle EBITDA with confidence.
Matt Sharrers is the CEO of SBI, a management consulting firm specialized in sales and marketing that is dedicated to helping you Make Your Number. Forbes recognizes SBI as one of The Best Management Consulting Firms in 2017.
Over the course of nearly a decade at SBI, Matt Sharrers was an instrumental early partner guiding SBI as the Senior Partner. Matt’s functional responsibilities included acting as the head of sales where he led SBI’s double-digit revenue growth, and was responsible for the hiring function to build SBI’s team of revenue generation experts.
Prior to joining SBI in 2009, Matt spent eleven years leading sales and marketing teams as a Vice President of Sales. Matt has “lived in the field.” As a result, he is the foremost expert in the art of separating fact from fiction as it relates to revenue growth best practices. CEOs and Private equity investors turn to Matt’s team at SBI when they need to unlock trapped growth inside of their companies.
Read full bio >
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