Top-Line Thinking: The Power of Understanding Fixed vs. Variable Costs in Sales Growth
In the world of business — especially for franchise operators and self-starting entrepreneurs — understanding your financial structure is key to achieving scalable, sustainable growth. Yet, many overlook how their costs interact with their revenue goals, especially when it comes to aligning those costs with proactive sales activities.
So, let’s break down a deceptively simple concept: the difference between fixed expenses and variable expenses — and why it matters if you want to generate more top-line revenue.
Fixed vs. Variable Costs: What’s the Difference?
At a glance:
- Fixed expenses are those costs that stay consistent month-to-month. Think rent, lease payments, software subscriptions, base salaries (including benefits and taxes).
- Variable expenses fluctuate depending on priorities, sales volume, growth efforts, client acquisition and lead generation. These also include commissions, bonuses, incentives and yes — sales training. (Question: Are you still retaining most of the revenue when a sale is made and you pay out commissions?)
Why does this matter?
Because you don’t grow a business by trimming what’s already fixed. You grow by investing in the people, processes, and activities that generate revenue. That’s your variable cost lever — and it’s what moves the needle.
Sales Efforts = Variable Investment
This is the shift in thinking I want to champion: sales expenses are not just costs; they are investments. When you hire and onboard new sales reps, launch a targeted marketing campaign, or invest in sales training, you’re not just spending money — you’re planting seeds. These are investments in revenue growth, not arbitrary expenses. And yes, they’re variable. You control the pace, the volume, and the direction.
The Overlooked Lever: Capacity
Here’s where many franchisees and business owners stall — they think, “I’m making money. I’m paying myself. I must be on the right path.” And yes, you are. You’ve moved beyond survival mode. You’re probably covering your fixed expenses and have begun seeing some consistent take-home pay.
But here’s the truth: you might be operating far below your full capacity.
If your fixed costs are paid and your business has unused capacity — open appointment slots, underutilized staff, or operational bandwidth that’s sitting idle — you’re leaving exponential profit on the table.
Let’s break it down:
- Fixed costs are already covered.
- Every new client, order, appointment, or service added from this point forward generates higher profit margin revenue, because there’s no additional fixed cost.
- That means increasing from 70% to 85% capacity can double or triple your net income, even if top-line revenue only increases modestly.
This is where proactive sales activity fuels profitability. It’s not just about making more sales — it’s about filling your open capacity to maximize the return on fixed infrastructure you’re already paying for.
A Framework for Franchise Operators and Self-Starters
Let’s talk about strategy. Here’s a 3-question diagnostic assessment I encourage every growth-minded business operator to run regularly:
- Do you believe there are more opportunities in the marketplace?
- If yes, great. The market is alive — so the question becomes: are you poised to capture them and fulfill your open capacity?
- If no, it may be a matter of awareness, a product/service refresh, new approach or repositioning your unique selling proposition (USP), not demand.
- Do you have the right people on the bus to convert those opportunities into revenue?
- Think beyond warm bodies — is your team applying the best selling skills, practicing productive behavior, and maintaining the right attitudes, beliefs and confidence during adversity?
- Talent is a variable lever, and an investment. And not just in hiring — but in equipping them with tools, training, and process.
- Are you prepared to work with your team to capitalize and convert the opportunities you uncovered?
- If you hesitate, this is your call to action. Sales enablement isn’t optional — it’s essential.
- This is the point where investing in training becomes a variable expense that has a defined return.
Sales Training as a Revenue Catalyst
Often, business owners hesitate to invest in sales training because it doesn’t feel “urgent.” But here’s the paradox: Training your team to close better, faster, and more frequently is the most direct path to higher top-line revenue. Think of sales training not as a seminar, but as a system upgrade for your revenue engine. You’re teaching your people how to create, pursue, and win more deals — deals that fund everything else. Sales is the engine that pulls the train.
The Proactive Path to Top-Line Revenue
Let’s stop thinking of sales as a passive outcome of having a good product or service. Revenue is the result of intentional, proactive, and consistent sales efforts.
This means:
- Understanding where your fixed costs cap your profit ceiling monthly. Before you earn a single dollar of profit, you must first cover your fixed costs
- Embracing and evaluating variable costs that tie directly to your growth goals.
- Recognizing underused capacity as a missed profit opportunity — and filling it through focused sales execution.
Final Thought: Build for Growth, Not Just Survival
If you’re a franchise operator, a self-starter, or a leader wondering why revenue has stalled — look at your financials. Not just the bottom line, but the top line and what’s feeding it.
Are you fully utilizing your capacity?
Are you spending reactively or investing wisely to increase top-line revenue?
Are you willing to invest one dollar in variable costs to gain three in return?
Because if you believe there are more opportunities in the marketplace, and you’re willing to work with your team to capture them — then the next level of profit isn’t far away.
