Dude, Where’s My Revenue?
It is the middle of June, mid-year; and it is likely past time to take a hard look at those things that are standing in the way of increased revenue in 2013.
Hope continues to be a failed strategy especially when it comes to increasing revenue. Yet, many owners maintain this as their only strategy.
Some owners, because it is easy to do so, have already begun to think and act, perhaps even say, 2013 is over, so I need to start thinking ahead to next year.
I don’t think anyone should jump ship quite so fast; there is still plenty of time to turn things around. An owner investing time now on revenue strategy will see improvements as early as next month.
Jim Collins writes in his best seller “Good to Great” that one of the best tools a leader can use is the process of conducting a business autopsy without blame. The owner can perform this activity if the focus is on the business issue (revenue) and the processes involved, and avoid discussing the people. Blaming people when the policy doesn’t work or the process is broken is a wasted effort.
That giant sucking sound you hear is the missed opportunities occurring everyday when it comes to lost revenue possibilities.
I reference Ross Perot’s 1992 statement to American jobs going to Mexico if the NAFTA treaty was approved. Owners often wonder where revenue that had been projected or at least hoped for went; time and inattention sucked them away.
The answer is that revenue opportunities appear daily to the owner. Often these are not even seen and even if recognized, they are not acted upon in an organized manner.
Growing top line revenue and controlling costs associated with that objective is the best way to grow and keep profits long term.
Revenue improvement includes price increases, current client retention and new client acquisition, client volume purchases, new product introductions, reduction of cost of goods sold through increased efficiencies, and reducing days of sales outstanding.
Lost revenue opportunities take place with inefficiencies in the sales team and the individuals in it, a lack of convenience for client to place orders and to pay for goods or services; lack of internal follow through on prospect and client issues, and a lack of knowing what impacts client satisfaction ratings.
Reduced revenue can be blamed on poor planning, or no planning at all. Revenue planning cannot take place at a strategic level because the details matter. Pennies count.
The starting point of a revenue autopsy should be a review of current practices starting with the items noted above.
One of the best things a company can do to protect current revenues and increase them it is to have a revenue and profit plan for each client. This is a time consuming task with high and almost immediate return on investment.
This type of plan details what each client buys, for what price, and lays out price increases, promotional offerings, the new products presented calendar, opportunities to improve ease and speed of payment by the client, the client satisfaction goals and the sales coverage calendar.
The goal of this entire process is to increase gross profit margins, if only slightly, on every client during the course of the year.
From these strategic client goals tactical plans can be created, with calendared due dates and responsibilities assigned to specific individuals to implement.
There are many reasons not to do this type of analysis and planning but one excellent argument for making the investment of time: it will quickly yield a bottom line improvement to the company.