Tag Archives: revenue

Every Run is Precious

Last week, I attended a retirement party for my friend Bill Beckman.  Bill is retiring from a career as a regional manager for an insurance company, but before that, Bill was a high school history teacher and a baseball coach.  As long as I have known Bill (14 years) he has used baseball analogies to explain his business concepts.  It is just how he sees life and the world.

We roasted Bill a little at his retirement party, and the surprise guest of honor was Bill’s son, Chuck – an executive at Coke Europe.  Chuck told the story of a time when he was playing baseball for his dad, and the team, even though winning, gave up a run through a careless error.  Bill, who can be emphatic, was not happy.  He told the boys, in terms that caused his son to remember the event 25+ years later, that “Every Run is Precious”.  And so they are.  A careless error that gives up a run in the first inning seems like less of a big deal than the same run-giving error in the 9th, but it is not.  If you lose 5-6, the run you gave up in the first was just as much a part of their 6 as the one you gave up in the ninth.  Chuck told the group that not only did he remember that day vividly; he also used that lesson to guide him in his business and management success.

In business, “runs” are what wins the game – revenues are runs for your team, costs are runs against you.  You win or lose each month or quarter or year depending on that critical final score.

As in baseball, every run – for you and against you – is precious.  If you “loose the game”, the cost you carelessly incurred on the first day of the month is just as much a part of the score as the one you incurred on the last day of the month.  The revenue you let slip away in January matters as much as that lost opportunity in December.

The real power of this analogy is in paying attention to the small things, and empowering your team.  “Every Run is Precious” means that the person who can cut a small cost is as important to the overall success of the team as the person who can cut a large cost.   You may have an awesome pitcher who mows the opposition down, and a golden gloved center fielder who can run like the wind, but if the 3rd Baseman boots an easy grounder and gives up a run, and you lose 5-6, that one error that gave up that one precious run mattered.

It’s ten o’clock.  Closing time.  You have just locked the door and turned off the “Open” sign, when a man dashes up and tries to open it.  “I just want to buy a chess set” the man says, through the door.  You are tired – it has been a long day and home is beckoning.  “We’re Closed” you shout back through the door.  The customer walks away, dejected.  The sale is lost. The run not scored.  Bill Beckman wants to shout at you “Every Run is Precious!”   

Your business is a team, and everyone needs to have their head in the game.  Every one on the team matters, because every run is precious.  Chuck told me he uses the story and its lesson to motivate his team to seek cost cutting measure, no matter how small, and no matter who suggests them.  “We are not going to lose 6-5”, Chuck tells them.  You can use the story to motivate your team to open that door at ten o-clock, and sell that chess set.  Because every run is precious, and teams that understand this win.

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Create Business Value Now (II): Pay Attention to Gross Revenue

This is the second in a series of suggestions for small business owners on how to start now to create value in their business.  There are things a small business owner can pay attention to now that will give their small business resale value in the future.  If one waits until he is ready to sell, it is often too late to create this value, which may increase the business’s time on market and decrease its ultimate resale price.

Earlier, I discussed the bottom line, and how showing a profit, year after year, creates an easy to tell story of business value that potential purchasers and lenders will listen to.  Today, I want to discuss the top line – gross revenues – and its impact on resale value.

  • Grow Annual Gross Revenues.  It is not hard to have a steep growth curve during your start-up and ramp-up phases – the first 3-5 years of your business.  But after that many small business owners become complacent about gross revenue.  The business is doing fine, they are making a decent enough living, and the focus tends to be on maintaining the status quo or growing profits by cutting expenses and streamlining operations.  While profit is the measure small business owners tend to focus on, having a long-term growth curve tells a great story about your business and will go a long way to attracting a buyer.

 A buyer is likely to be using a significant portion of your businesses cash flow to pay you or repay his lender or his 401(k) over the first 3-7 years he operates the business.  A profitable company with a flat growth curve means that if the buyer wants to make any significant money during that time, he will have to change things up and figure out a way to grow the business.  But if you can show a long-term (3-5 year) steady growth curve, you are selling him not only your profitable business but also the way for him to grow the business and therefore have money during the buy-out period.  This makes your company easier to sell – all other things equal a buyer is buying the growing company.  So begin now to focus on how to increase your top line, year after year.  You will find that it doesn’t take much more than what you are otherwise doing to run your company, or certainly what you did to grow the company in the first place.  It mostly just takes intentionality.

 Next:  Create and Manage Intellectual Property