Is a route to the highest turnover the right direction for your business? Financial and regulatory expert, Matt Purser – Director of the Firebird Partnership – invites owners to look at the bigger picture, and steer themselves away from the turnover trap.
We set and focus on plenty of goals in Firebird – being part of an expert growth consultancy, that’s one of the key foundations of what we do.* For many business owners in travel and leisure, their goals have changed dramatically in the past three years. They had to, as we did what we could to respond to the shocks and longevity of the pandemic.
Today, the team and I are seeing many businesses trying to revert to what they were doing in 2019. Their goals aren’t new: they’re mostly aiming to get back to pre-pandemic levels, matching their previous turnover however they can.
But is that a goal which will help them secure success? (Spoiler alert: it’s unlikely.)
“Focusing on turnover exclusively can have damaging consequences”
As a former business owner myself, I’ve fallen in to the turnover trap before – and I see it playing out elsewhere in the sector at this point. Focusing on turnover is, of course, an important consideration. Focusing on turnover exclusively? That can have major damaging consequences.
Say a business wants to achieve one of the top ten biggest turnovers in the country and get themselves on to everybody’s radar. They will need more staff. Their running costs will inevitably rise. They may take a machine-gun approach to marketing: firing out various types of different campaigns to bag the most customers possible, without pausing to analyse which marketing strategies are actually working.
Of course, they will eat in to profits. And often they will become so focused on making sales at any cost that they undermine the value of what the business offers; even starting to make losses.
It’s a well-known phrase in business: “turnover is vanity, profit is sanity.” Yet I can see why some businesses are drawn to making turnover a top priority – as I said, I tried it myself, years ago. Still, there are many other goals that I would recommend to replace this, or at least push it far down the list.
“Now is a fertile time for owners to assess and realign goals”
I know it may not always feel like it given the trials and tribulations the sector has experienced recently, but now is an extremely fertile time for owners to fully assess and realign their goals. Thanks to fundamental shifts in how we operate (thank you Covid) we can be free to tear up earlier ways of working and start fresh. We can pick out the opportunities from the damage.
Strategies that worked well for your business in 2019 might be better consigned to the past now we’re in 2023. If you had to let lots of staff go during lockdown, perhaps you’ve realised you don’t need as many. It may be that in-house processes can now be outsourced, maximising your efficiency.
Similarly, where some tour operators used to feel they needed to sell more and more holidays to succeed, a number are recognising that they can sell the same amount and make more profit. Others are renegotiating fees with accounts and suppliers – or switching their providers altogether. In short, this is a great time to re-evaluate your model and consider how best to optimise what you’re doing. To repeat: it doesn’t have to be all about turnover.
“Your future buyers will want to see your value, and how you’ve been protecting it”
The key is to break things down and spend time really looking at what matters – a bespoke, modular programme like Foundations for Growth is a brilliant starting point. With the right team round you, some critical challenge, and an objective focus on the bigger picture, you can start getting the best out of staff members and strategic campaigns; help set personal targets under which your team truly thrive; accelerate growth in every area, and remove that daunting feeling of having to reach a figure with lots of zeros – without knowing how.
After all, the biggest goal many owners have is that final goal of selling their business at some point down the line. Your future buyers will want to see your value, and how you’ve been protecting it. They will be looking at that bottom line. So should you.
Set your eyes on your destination – make a goal and plot out precise steps to achieve it – and you can be sure that you’re heading in the right direction.
Matt Purser is a Director of the Firebird Partnership, and has worked in travel since 1989, beginning with ATOL at the Civil Aviation Authority. There he was instrumental in scoping out regulatory changes to protect consumers. In 2005, he set up the Travel Trade Consultancy (TTC) and helped grow it from a start-up to a million-pound-turnover business. Matt is an expert for the Finance & MI and Regulatory modules of Firebird’s Foundations for Growth programme.
Learn all about the programme, and get in touch with Firebird, at www.firebirdpartnership.com
(*Note: Being a proud holder of a Crystal Palace season ticket – by far the Greatest Team the world has ever seen – I like to keep my eye on the goals there too…)
Also by Matt Purser: