Boost your business revenue: understanding key drivers
Revenue. It’s one thing all business owners have in common. It’s often the most celebrated number in a business, and many owners will spend their lifetime trying to perfect the formula of finding it, keeping it, and growing it. You produce revenue through your usual business activity, by making sales, getting your invoices paid, or taking cash from paying customers. The better you are at selling your products/services and bringing money into the business, the higher your revenue levels will be.
But what actually drives these revenue levels? And how do you get in control of these drivers?
Knowing where your cash is coming from is more crucial than ever.
As a business owner, you’re likely no stranger to the multiple challenges of an ever-changing consumer landscape. The global recession, coupled with decreased consumer buying power and higher inflation have all impacted markets and buying expectations. The better you understand the nature of your revenue and its drivers, the more you can flex, manage and control your ability to generate this income.
Get to know your drivers
Important areas to consider:
Revenue channels – where does your revenue actually come from? Do you generate income from online sales and e-commerce, through retail sales in bricks and mortar stores, or through wholesales to other businesses? You may focus on just one of these channels, or it could be a mixture of two, three or more.
Revenue streams – your total revenue will be made up of a number of different ‘streams’ So, you might be a coffee shop, whose revenue streams include coffee sales, cake and pastry sales and lunch sales. Knowing which revenue streams you rely on, which are most productive and what return they are delivering allows you to make decisions. If 80% of your income comes from 20% of your products, tighten up your product range and ditch some of the poor sellers. If you’re selling more services to one particular industry, focus more marketing in this specific niche, or downscale your sales activity in less profitable niches.
Product/service split – Do you know which products/services are the most profitable in the business? Which products/services have been resilient to market changes (giving you some revenue stability) and which have adapted well to change? The more you can dive into your metrics and find the most productive and adaptable products and services, the greater your ability is to provide constant and evolving revenue for the business.
Value vs volume – Is your revenue based on selling a high volume of products/services at low margin, or low volume at a high margin? Can you move your margin down to create a more attractive price point (and more value for customers)? Or are their ways to push volume up, shifting more units and boosting total revenue? By diversifying into new channels, new streams or new products/services you can aim to balance value and volume to create brand new sales – and higher revenue levels.
Understand drivers, increase profits
If you want to boost revenue and increase your overall profitability, talk to us about exploring your revenue drivers. Our accounting and advisory services are tailored to your business, and are centred around CPA-led guidance and support.
We’ll review your numbers, help you to understand your revenue drivers and ensure you’re taking proactive steps to enhance your total revenue as a company.
Get in touch to kickstart your revenue generation.
