How to keep your business afloat with a revenue strategy

Running a successful business starts with being serious about revenue.

People can’t live without water, and businesses can’t survive without cash. Cash pays bills, makes payroll, and puts food on your table. Without cash, your business can’t operate, and you can’t survive.

Unfortunately, we struggle with poor cash flow driven by a lack of consistent revenue.

We don’t have a reliable revenue strategy in place.

Instead, we just try to sell more, hoping more business will bring in much-needed cash to stop the bleeding. Instead, we wind up burnt out and back in the same financial hole:

• We promise to do more for customers, leading to costly out-of-scope work.
• We fall behind, meaning we have to outsource more work or, even worse, disappoint customers.
• We pick up the slack by taking time and energy away from loved ones, exchanging stress in our business for stress in our relationships.

Rather than grind to get more business, we can reconsider the work we already have. We can find ways to increase revenue without generating more work.

This requires developing a revenue strategy, which is a plan that focuses on increasing income by connecting offerings, pricing, and operations. You can start optimizing your revenue strategy with these three steps:

Step 1: Identify your most profitable product(s) or service(s).

A more profitable offering brings in more cash, while spending less cash to deliver, than a less profitable offering. List your 1–3 most profitable offering(s).

And don’t forget to factor in time! if a product brings in 20% more profit but takes twice as long to deliver, you may actually be hurting yourself by focusing solely on financial profit here. Think about profitability in terms of deliveries within a certain timeframe, such as weekly or monthly.

Step 2: Optimize your pricing for your key offering(s).

Too many businesses rely on industry standards or fear customer rejection when it comes to revising prices.

“That’s what our customers expect” or “That’s how our competitors do it” is a defensive, and usually incorrect, recoil when I ask about different approaches to pricing. Look at some of the top companies today that have disrupted long-standing business models:

• Netflix overtook Blockbuster with its DVDs-by-mail offering and subscription pricing.
• Airbnb disrupted the short-term rental market by tossing out the standard one-week condo stay.
• Microsoft now offers its Office software suite via subscription.

The dominant trend in today’s market is the move toward subscription: if your customers come back to you for repeat service, or you can offer them the peace of mind that comes with ongoing delivery, consider a subscription pricing plan.

Step 3: Develop standard operating procedures (SOPs) to consistently deliver.

Inconsistency kills profits. Constantly needing new expertise, different supplies, or another contract technical expert eats away at profit margins.

Eliminate costly inconsistency with SOPs. Focusing on your key offering(s) means you can standardize the delivery process, making operating expenses more predictable. Optimizing your pricing — especially with a subscription model — brings in consistent revenue. The combination stabilizes cash flow, keeps customers happy, and prevents burnout for you and your workers.

Profitability. Pricing. Procedures. It’s a winning formula.

This post was created with Typeshare