Most people know that a business needs a strong “bottom line” if it is to remain viable and stay in business. But they may not be as clear about the meaning behind this phrase. It comes from looking at a financial P&L (profit and loss) statement. The final item on this report—that is, the bottom line—is labeled net profit.
Net profit is the result of subtracting all expenses from all income. If the result is a positive number, the business made a profit and the number is shown in black. Therefore a business that is “in the black” is profitable. However, if the number is negative, the business operated at a loss and the number is shown in parentheses or in red. A business that is “in the red” is losing money; it is unprofitable.
A related term, one that is not so common, is “the top line.” As you might guess, this references the first entry on the P&L statement—the top line, which is “gross sales.” It is simply the total of all sales, without consideration for any expenses. So, which is more important for your telephone answering service, the top line or the bottom line?
The answer is both are important.
Every business needs a strong bottom line to remain viable, but a strong bottom line is not possible without a healthy top line. Too many businesses focus on just one to the detriment of the other. Either extreme is harmful to the business. In simple terms, your top line looks at your ability to effectively market and sell your services, while your bottom line looks at your ability to effectively manage your operation.
If your top line is good and your bottom line is good, you are ahead of most businesses—but then they could always be better, right? To improve your top line, bring in a sales and marketing service company that can grow it; make sure they know the industry and have proven themselves. To improve your bottom line, bring in an answering service consultant who can show you ways to reduce costs and streamline operations.
The result is a healthier business with a higher market valuation. Janet Livingston is the president of Call Center Sales Pro, a premier sales and marketing service provider for the call center and telephone answering service industry. Contact Janet at email@example.com or 800-901-7706. Peter Lyle DeHaan is a freelance writer from Southwest Michigan.