IDENTIFYING YOUR BUSINESS ’ S SWEET SPOTS
Using revenue data to win
Reaching your goals as a business isn ’ t an event . It ’ s a process that you have to recommit to every day . Have you outlined what goals you as a business owner want to reach ? And have you thought through how you might achieve these goals ?
Here at Rea , we make it a priority to look at how we can sharpen our focus to create growth that is not only economically viable , but that also utilizes our skills and fulfills our passions . One of the ways that we identify areas of opportunities to reach our goals is through analyzing our revenue . Each month , we create three reports giving our management teams three different views of our incoming revenue . The three reports are :
• Revenue by industry . In sorting our revenue data by industry , we can see , for each industry that we serve : 1 . Which services are most popular , 2 . The average number of services that clients utilize , and 3 . The average transaction size .
This serves as a benchmark and identifies opportunities to grow our practice in each industry .
• Revenue by service . This report is just like the industry report , but focuses on service .
• Revenue segmentation . This is where it gets fun – we combine our industry and service data to get a comprehensive picture of our financial performance . We create a column for each of our industries , and a row for each of our services . Each cell – where a service and an industry intersect – shows the total revenue for each service within each industry . With this set-up , we can see exactly where our revenue comes from each month .
Put Your Revenue To Work
Could a similar method help you elevate your business ? Here are four ways that revenue segmentation can help you :
1 . Identify your core products or services . No one can be everything to everyone . Are you using your resources in areas that are most fruitful ? Or are you pushing a product to those who are just not that into you ? Determine what your core products or services are and make that your focus .
2 . Pinpoint areas for improvement . Are there areas of your business that are underperforming ? Get creative about how you can make a difference , like adjusting your pricing or updating your packaging .
3 . Identify opportunities for growth . If your data indicates that most of your customers buy six products from you each month , look for the customers who buy less than six and see if they ’ re interested in trying something new .
4 . Predict the future . As you compare these reports over time , you ’ ll soon identify critical trends and cycles of your business . This information will help you budget and manage your cash , and may also identify opportunities to increase sales during historically slow periods .
What Are You Waiting For ?
There ’ s nothing special about our data – the excitement is in the slicing and dicing . When you look at your revenue sources , you ’ ll be able to see what your core products or services are , who buys them , where you should concentrate your resources and where you have areas for improvement .
If you want to learn more about how we use our data to identify opportunities for growth , give me a call ! I ’ d be happy to walk you through an example of how you can analyze your revenue data in different ways to ensure you ’ re making the most of any growth opportunities . by : Kyle Stemple
CPA , CGMA , Principal 122 Fourth St . NW PO Box 1020 New Philadelphia , OH 44663 ( 330 ) 308-6883 kyle . stemple @ reacpa . com