The current global marketplace is strewn with complications across industries. Obstacles of all kinds are omnipresent. Issues like rising inflation, difficulties retaining employees, increasing competition in marketing, supply chain disruptions, and regulated access to capital are hindrances for almost all companies. The right direction and resources can make all the difference.
Between changing consumer demand, growing competition, and regulatory pressures, the choice to prioritize growth or improve profitability is no longer a choice. Companies that want to survive need an approach to capture both growth and profitability if they’re going to remain competitive in the long term. As prior business models become antiquated, business leaders must pivot for sustainability in the new market.
Let’s take a look at a few crucial considerations to stay relevant and keep your company alive in this complex market.
Control of Staff Costs
Staff costs are a necessary investment toward the profitability of any business. But they’re a costly investment. Controlling staff costs is critical to improving profitability.
Firms can achieve this through various means, such as:
- Reducing headcount
- Outsourcing non-core functions
- Increasing staff productivity
- Retaining top employees
- Rethinking compensation
Organizations should be careful when reducing headcount, as it can negatively impact morale and service quality. External consultants like the Hunter Stevens team can help your organization approach this process methodically.
On the other hand, increased productivity through training and development programs, investments in software and technology, and performance improvement practices can increase morale and service quality. But driving growth and improving profitability aren’t limited to just cutting costs.
Employee Retention
One way in which the balance is met between driving growth and improving profitability is through employee retention. Keeping top performers onboard is essential to stay competitive, as employees with specialized skills or knowledge help companies rise the ranks. These employees are also influential in the longevity of client relationships. Star employees that have tact in client-facing roles are a valuable asset to your organization.
Compensation and Bonuses
Another point of balance is rethinking compensation and bonuses. Since 2020, several HR leaders across numerous wealth management firms have reevaluated their approach to compensation and found that a shift out of formulaic sales rewards and into annual bonuses offered the firms more flexibility to control staff costs. An interim management strategy could help your firm find the right approach while shifting gears.
Scrutiny of Cost Management and Operating Expenses
A profitable business needs a routine process for checks and balances. It’s considered best practice to regularly evaluate operating expenses against profitability. The goal of this process is to identify feasible areas of cost reduction without compromising quality or forfeiting regulatory compliance.
This system is called cost analytics and can be achieved through data-driven evaluation of a company’s cost management practices including:
- Review of vendor contracts
- Benchmarking against competitors
- Cost prioritization
- Fee structures
- Implementation and tracking of cost-saving initiatives
For example, firms can leverage technology solutions to automate back-office functions, such as trade processing and reporting, which can reduce operational costs and improve efficiency. Automation drives growth through efficiency and improves profitability by minimizing costs. In this way, it is possible to optimize financial outcomes from a data-driven approach.
Economies of Scale
Organizations must balance growth ambitions with profitability targets which are mitigated by investing in the right facets. While some restructuring investments can be costly, they can often deliver a worthwhile ROI and achieve economies of scale.
Alternative growth strategies firms should consider include:
- Prioritization of client relationships
- Mergers and acquisitions
- Diversifying products and services
- Expanding to new markets
Hunter Stevens has expertise in advising and aligning executive management on corporate objectives to position firms to reach adequate economies of scale.
Start Planning Now
Unfortunately, the simple formula of increased sales directly leading to increased revenue is no longer relevant. Risk of losing market share to more nimble competitors as you adapt to the mounting pressures of the current environment are high.
That’s why it is paramount to develop a clear understanding of staffing costs, operational expenses, market position, competitive landscape, and customer needs, now.
Regular strategic reviews and continuous updates to business models will provide the necessary forecasting and insight to move forward successfully. Investment in technology and digital solutions to enhance service offerings, improve customer experience, and achieve operational efficiencies can make a crucial difference.
Consulting firms such as Hunter Stevens can provide customized solutions to help you achieve growth and profitability targets and stay ahead of the competition.
How Hunter Stevens Can Help
Hunter Stevens is a consulting firm that specializes in helping clients achieve sustainable growth by providing tailored solutions to address their unique needs and challenges.
We offer talent management services to help firms control staff costs and increase productivity. We also provide performance improvement services to identify cost-saving opportunities and help organizations align revenue streams with industry standards.
Our team of consultants has demonstrated experience in helping companies achieve economies of scale through growth strategies and identifying new growth opportunities through market research and analysis.
Contact us to learn how we can help your business drive growth and improve profitability today.