One of the very first signs of a viable business is the ability to generate revenue. The ability to generate revenue separates hobbyists from entrepreneurs. In many instances, revenue is the first large source of capital (cash) used to invest back into growing the business; unless you’re funded by loans and investors. Revenue is a big factor in predicting the growth and sustainability of businesses.
As CEO of your business, you’re the face of the company. You’re most likely the first face potential clients meet when they reach out to learn more. As the sales leader, you must be confident in your offer and the ability to deliver. And you must be able to do this repeatedly with predictable profit margins.
A good financial strategy sets the roadmap for all other efforts from marketing to operations, and it sets a baseline for achieving each of these milestones – growth, sustainability, and scalability. But, you must prioritize which is the most important of the three. While you won’t completely lose sight of the others, you will want to keep a single focus to achieve a greater impact. Today we will set the focus on growth – in particular, revenue growth.
Revenue Growth
We want you to have a clear understanding of the requirements to maximize your company’s revenue. While many revenue maximization strategies focus on growing at any cost; we’ve found smaller companies must use revenue AND profit maximization strategies. Both strategies focus on growth. Yet, coupling them means we won’t create a separate issue while trying to solve the former.
Here’s how to start a revenue maximization strategy that also considers profit maximization.
Analyze Pricing for Revenue Maximization
Use these questions to determine if your revenue is maximized:
-
Are my offers profitably priced? Determine a profitable price for your offer by including the costs to provide your offer and the profit margin you’d like to achieve. Check what it costs ($) to provide your offer – Do you need to pay a subcontractor? Do you need specific software to deliver the offer? What does it cost to manage the client experience?
-
Are my offers priced according to the industry and market demand? What do potential customers share with you about what they’re willing to pay for your offer? Have you researched your competitors? What industry publications can you use to gain insight on pricing?
-
Does my pricing appeal to my ideal audience? What is the acceptance rate for your offer? Your pricing should be reasonable for your audience, it should also be competitive.
-
What immediate needs do my clients/customers have after working with me? Is it within my expertise, and do I have an offer that supports their ongoing needs?
Creative Options to Maximize Revenue
It may be necessary to spend money or use internal resources to generate more revenue. Explore these costs carefully as they will likely have a direct impact on profit margins. The goal is to maximize revenue while keeping profitability in mind.
-
Are there missed advertising and marketing opportunities to generate new clients?
-
Is there a large enough margin in my pricing for sales and discounts? How does a sale or discount impact a client’s perception of the brand?
-
Do I have any peripheral “products” I can repurpose to generate revenue?
Example: A workbook you use behind the scenes that gets immediate results. Sell it as a standalone product! View it as a paid opt-in to invite a new potential client into your ecosystem.
A revenue maximization strategy is an effective growth option when you keep key considerations and analysis top of mind. And by focusing on revenue maximization AND profit, you’ll take a proactive approach to shield the business from potential losses. Thus making your next strategy – cash maximization – even easier to put in place.