Got Revenue?
August 3, 2009, 9:43 pm
Copyright © 2009 Integrated Profitability TM
If you’re in business, and the business is profitable, then you most certainly have revenue. How well do you know your revenue?
- How much revenue does your business generate?
- Is the revenue steady, like an annuity; or does it come in bits and pieces? Perhaps it comes according to clearly identifiable cycles, or at specific periods? It’s said that the year-end shopping season (say from Thanksgiving through New Year’s) is the make-or-break time for major retail stores. Their annual profitability is decided in those few short months.
- What kind of revenue streams does your business have? How many are there? Are they related? Does the business have any leader-follower revenue streams?
- What kinds of relationships exist between your sources of revenue? If your main revenue stream is increasing, do others follow it up, at the same (or slower, or faster) pace? Do any of your revenue streams have an inverse relationship: as one goes up, the other goes down or vice versa?
- Where is your revenue coming from in terms of your products and services?
Who is providing your revenue? What kinds of clients provide the best kind of revenue? (How do you define “best kind” of revenue?)
- What kind of revenue concentration do you have, in terms of either your product offerings or from your customer base? If the vast majority of your revenue is from a single customer, how much is your business at risk? Risk in terms of losing that one customer, in terms of buyer-leverage?
- What is your revenue currently doing?
The last question is aimed at what is happening over time with your revenue, not with what part of an annual or business cycle it is in. If your revenue is always slow during summers (e.g., you are in the snow blower or snow mobile business), of course your revenues would be down right now. The intent of the question is for comparable time periods, how are your revenues doing? Have comparable-period revenues over the past three cycles been increasing? Holding steady? Decreasing?
To put your revenue experience into the proper perspective, what have your industry’s revenues been doing over the same time period? If they’ve been going down, and your revenues have been holding steady, then that’s not necessarily bad news: presumably your share of the customer’s wallet is growing. On the other hand, if the industry’s revenues have tripled and yours have gone up 10%, then you’re definitely losing your share of the customer’s wallet, and, assuming you’re not low-balling everything, market share.
Are you satisfied with your revenue?
Bill
William A. Stong
Email: william.a.stong@gmail.com
SBF&P # 35
Copyright © 2009 Integrated Profitability TM
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