Understanding your revenue drivers
For your business to make money, you need to generate revenue.
You produce revenue through your usual business activity by making sales, getting your invoices paid, or taking cash from paying customers. So, 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, you face multiple challenges, such as navigating an economic downturn, adapting to decreased consumer buying, and adjusting to evolving trading and market demands.
Understanding your revenue drivers is the first step to managing cash flow effectively. When you have a clear picture of where your revenue is generated, you’re better equipped to pivot or reinforce certain areas of your business as required. This insight allows for informed decision-making and confidence that your strategy aligns with high-impact areas of the business.
First Class Accounts Ovens & Murray can support this strategic thinking, helping you analyse revenue sources and overall business performance to identify where your revenue is strongest and how to enhance it further.
Important Areas to Consider
Revenue Channels
Where does your revenue actually come from? Do you create income from online sales and ecommerce, 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 that you use a mixture of two, three or more.
With First Class Accounts Ovens & Murray’s support, you can measure the performance of each channel, making it easier to refine and improve your approach as your business and the market evolve.
Revenue Streams
Your total revenue will be made up of a number of different streams. Knowing which ones are most productive and the return they’re delivering helps with prioritisation.
For example, if 80% of your income comes from 20% of your products, perhaps you need to tighten up your product range and ditch some of the poor sellers.
If you’re selling more services to one particular industry, perhaps you should focus more marketing in this specific niche, or downscale your sales activity in less profitable niches.
First Class Accounts Ovens & Murray can assist by tracking these metrics, providing data-backed insights to support decisions on product lines and markets.
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.
With First Class Accounts Ovens & Murray’s expertise you can ensure you have access to real-time financial data to gauge what’s working well.
Value vs Volume
Is your revenue based on selling high volumes at low margin or low volumes at a high margin?
Based on this, 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.
With First Class Accounts Ovens & Murray, you can dive deeper into understanding this balance. By analysing value versus volume, you may find ways to adjust your margin to make products more appealing or identify opportunities to increase volume without sacrificing profitability.
Get Support with Revenue Generation and Growth
If you’re looking to better understand your revenue drivers and make informed financial decisions, First Class Accounts Ovens & Murray is here to help.
We specialise in management accounting, providing insights that empower your business to grow. Let us handle the details so you can focus on what you do best, knowing that your numbers are in expert hands.
Talk to us about exploring and understanding your revenue drivers
We’ll review the numbers in your business, help you to understand your revenue drivers and will give you proactive advice on enhancing your total revenue as a company.