Business Operations Can Affect Top-Line & Bottom Line Growth

Smiling female business partners discuss ways to improve business operations in a bright office

Business Operations Can Affect Top-Line & Bottom Line Growth

Smiling female business partners discuss ways to improve business operations in a bright office

Financial statement data helps business owners understand their company’s performance during a specific accounting period. But ensuring your company’s trajectory is in line with your financial and growth goals also requires you to read between the numbers. That’s where hidden opportunities to improve business operations often lie, and tightening up business operations can help you improve your company’s top and bottom lines. 

Top and bottom-line figures are aptly named for their respective positions at the top and bottom figures on an income statement. Your company’s top line, its gross revenue or sales, indicates how effectively your company is generating sales. Your company’s bottom line is its net income, which is the top line less total expenses. Your bottom line indicates how efficiently your company manages spending and operational costs, so increasing your bottom line also helps you boost net profit. 

How Do Business Operations Affect Your Top Line? 

Increasing your company’s top line allows for business growth and helps you improve your position in the market and against competitors. To do so, businesses often raise their prices, add new product lines, improve the quality of existing products, and increase advertising efforts. However, there may be less costly opportunities for improvement in your day-to-day operations. 

According to data compiled by the Baymard Institute, on average, nearly 70% of website users abandon their carts before making a purchase. Among other reasons, abandonment is often attributed to lengthy or difficult checkout processes. Before raising prices, an e-commerce business may consider optimizing their website experience, as ease-of-use often leads to increased sales and higher lead-to-customer conversion rates. Instead of narrowing your focus to new customers, you could look for opportunities to improve customer retention. Before adding new products or services, you may consider promoting add-on products or services to your existing customers. Or, instead of spending more on advertising, you could check for new ways to leverage data and analytics and lower your customer acquisition cost. 

Increasing your top line is all about business growth, so doing so requires adequate cash flow. And since expense management is one of the best ways to improve cash flow, business owners should also focus on the business operations that affect their company’s bottom line.

How Do Business Operations Affect Your Bottom Line?

You can increase your company’s bottom line significantly by reducing administrative and operating expenses. So taking a look at your expense tracking is an excellent place to start. You want to ensure you capture and account for expenses appropriately and have checks and balances to alert you to unusual increases or changes in expenses. Fraud and human error can also put your business and cash flow at risk, so bolstering your internal controls can help you avoid costly issues.

Managing cash flow also includes assessing the cash you bring into the business. Outstanding and overdue balances can interrupt that flow, so take a look at your accounts receivable and collections procedures to see if there are ways to reduce your days sales outstanding.

Your employees are an investment. They can directly affect the quality of your products or services, customer satisfaction, sales, productivity, and operational efficiency, so it’s crucial to provide them with the proper atmosphere, resources, and training to do their jobs well. The return on investment for automated solutions can also be substantial. According to a study by Zapier, when asked about the benefits of automated software, 43% of those surveyed said it helps them work faster, 40% said it helps them stay organized, 38% said it improves work overall, and 36% said it allows them to focus on important work. 

Investing in software for job costing, HR, project, practice, and customer relationship management, particularly when you acquire integrated options, can help you improve productivity and efficiency, streamline your operations, increase transparency with data, analytics, and insights, limit the time, expense, and vulnerability to risks associated with performing manual tasks, and allow management to focus their attention on business growth rather than administration.

Taking advantage of the tax benefits available to your business, such as tax relief, deductions, credits, and other incentives, is an effective way to increase your company’s top and bottom lines. Pandemic-related challenges and new and evolving legislation have made it increasingly imperative for business owners to have a trusted advisor by their side. 

Albin, Randall & Bennett Is Here To Help.

ARB has specialized teams of professionals who focus on business tax and advisory services, including those specific to closely-held businesses. When we work with business owners, we consider all aspects of their business, whether financial or operational. 

I provide businesses and their owners with comprehensive tax planning and compliance services, assist with forecasts, projections, and cost management, perform budgeting, cash flow, benchmarking, and profitability analyses, provide operational consulting services, and assist with process improvement. If you’re ready to improve your business operations and increase your top and bottom lines, contact me today to talk strategy.

by John E. Hadwen, CPA 

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John Hadwen joined ARB in 2021 as a tax director. He specializes in providing individuals and businesses with comprehensive tax compliance and consulting services related to closely-held business, manufacturing, construction & real estate, and professional services firm taxation. Prior to joining ARB, John was a Tax Principal at a large, regional CPA firm.

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