Top Line or Bottom Line Growth: How to Decide which Strategy for your Business.

Growth and development boils down to one simple factor – sales. Business growth means more sales made, and sales are also what fund business development. As such, any business looking to grow, spread, and succeed needs to focus on its sales and how best to make bigger sales, more sales, or both.

When it comes to development, though, there are a number of ways that sales can be increased. One important distinction to make is whether a development strategy works to increase sales top line or bottom line.

Top Line vs. Bottom Line

Top line and bottom line refer to the direction and method of sales growth initiatives in a business. Depending on the type of business, one of these strategies may prove more appropriate and effective than the other.

•      Top Line – A company’s top line refers generally to its gross revenue and/or sales. In other words, top line sales for a company refer to the amount of sales being made. For most businesses, improving the top line means getting more customers in the door or on the website. This typically leads to a greater number of sales being made.
•      Bottom Line – A company’s bottom line refers to its net income and profits. It takes the top line, the number of sales, into account, but also subtracts any expenses that may be taking away from those sales. For many businesses, improving the bottom line has less to do with generating higher numbers of sales and more to do with decreasing the amount of expenses taking away from these sales. In other words, it means creating a more beneficial sales-to-expenses ratio.

How to Decide Between Top Line and Bottom Line Growth

Both top line and bottom line growth are important and can obviously prove beneficial to any business’s development efforts. However, companies generally achieve the best results when they focus their efforts efficiently on one direction or the other with an effective strategy.

Factors in Making the Decision

Before a business decides on which path of sales growth to pursue, they must first consider a number of different and important factors. These factors are as follows:

- The amount of money available in the company’s development budget

- The number of customers that the business is currently receiving 

- The business’s current conversion rate between customer visits and sales made 

- The amount of time that the company has to achieve their development goals 

- The overall objectives that the company plans to achieve with their development strategy

Creating a Strategic Plan

With these factors in mind, businesses should then establish a development plan that follows the direction which best suits their situation. Creating and reviewing this plan is critical before implementing any new growth strategies, particularly as you will need some way to measure the effectiveness of your strategies once you implement them. If you haven’t set clear steps toward clear goals, then you may not know if your plan is working or not until it’s too late.

Out of all of these factors a business’s development budget is one of the most important. A lot of bottom line improvements can be made relatively cheaply with the right strategies. Top line improvements, meanwhile, often mean implementing more or bigger marketing strategies, which can eat up a company’s budget more easily.

Another of the most important of these factors is the timeline that a company has to work with. As a strategic factor, time has the opposite effect on top and bottom line strategies as money. While bottom line improvements tend to be less expensive, they do take a good deal of strategic thinking to be able to identify areas where the customer-to-sales conversion is least efficient, how it can be made more efficient, which expenses can be cut or reduced, the effects this will have, and so on. In comparison, top line improvements usually take much less time, as strategy is often reduced to simply pulling in more and more customers.

What’s the Bottom Line?

Both top line growth and bottom line growth can benefit any company that undertakes them. How much benefit they bring, though, depends on the company involved. Before diving into a development plan, take the time to examine which of the two will prove best for your business’s situation. Then focus your development plan on just one of these two areas and watch your sales growth increase much, much quicker.