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Top line versus bottom

We often come across the phrase ‘It’s all about the bottom line’ being bandied about in the form of idiom or pointed conclusion in general conversation. So much so that many may approach investment or business marketing with that dubious principle as a subconscious mantra.

Financial forecasts

The financial landscape is a fickle beast even in times of relative stability. In a climate of mass migration, financial crisis, and international negotiation, financial forecasting leans towards cautious optimism at best. Ambitious net profit forecasting is questionable when current events present a landscape of universal hardship.

Business trends responding

Current trends in business show a general reshuffle to focus on slow burn growth strategy, with minimal but ongoing investment into returns-focused initiatives that build on that top line revenue growth in the longer term.

For example, Microsoft’s chief financial officer Amy Hood spoke recently at the Morgan Stanley Technology, Media and Telecom Conference. She revealed interesting details of the software giant’s handling of LinkedIn, which it acquired at the end of 2016.

According to Hood the plan from LinkedIn CEO Jeff Weiner is to continue to run the two companies with separate core staff but to combine the sales clout of both companies while Microsoft integrates LinkedIn into tools like Office 365. Hood revealed that their goals, are:

“To add more customers. To increase their impact. To have it grow faster. To accelerate our business. To have the technical integration to deliver customer value…. I’m deeply, deeply focused on driving revenue growth.”

Hoods goals show an approach that concentrates on growing the value of the product – its databases, opportunities for monetization, reach, channels and audience. These are resource-hungry but potentially low-outlay endeavors that certainly should grow the company and its income streams, while not necessarily showing a huge improvement in net profit in the short term.

Adapting to the environment

During a period of administrative upheaval and tax reform in the United States alongside de-unification in Europe, a conservative strategy like that used by Microsoft for its new acquisition is provides a stabilizing influence in an otherwise volatile landscape. The example is an interesting one for SMEs that are at risk of stagnation as a result of muddled and apprehensive decision making. Cautious but proactive use of resources, and a reshuffle of expectations and KPIs against a clearly understood and communicated plan will help to keep staff, directors and investors content.

Investors might find a discussion on the pros and cons of backing top line focused companies with their financial marketing services provider as part of a longer-term, low risk strategy of their own.