Excerpt: Most businesses use their total revenue as a measure of success. However, if you are lumping all your revenue together, how do you know what business lines/products are the most profitable or best-selling? 1-minute read
Do You Know Where Your Revenue Comes From?
When doing your bookkeeping, I highly recommend that as a business owner, you break down your revenue between your lines of business, products, services, etc. Why? Because not all revenue is the same.
While this is an extra step for you or your bookkeeper, taking that step will provide valuable data that can give you a better overall picture of the health of your company. It will help show where most of your revenue is coming from. It can also help you direct your marketing dollars to promote a product or service that is underperforming, or has not generated its fair share of the revenue pie!
A Couple of Examples
This revenue breakdown process is especially helpful to businesses with inventory. Suppose you could see that a certain product has not sold well? In that case, you can use your revenue data to make informed business decisions moving forward. You could either choose to more heavily promote that product, to consider a different price point, or to potentially deeply discount it to deplete your current inventory, recoup your investment, and free up some stock space. It will also give you the insight to know to not offer that product again if it really doesn’t sell.
Equally if you have a business that offers different service lines, do you know which bucket fills fastest in revenue terms? Perhaps you’re an HVAC company that also offers plumbing or electrical services. Do you track what service delivers what level of revenue, and at what cost? Do you need to promote one service more, or even make the choice to discontinue a service if it is not paying its way?
MMM!! Money Management Matters! Knowing how money is coming in to your business is just as important as knowing where it goes!
Contact Flourish Today
If you track your expenses but not your revenue, you are missing valuable business insight. We all like to see income pouring in, but it’s essential to track what products and/or services generate that revenue. As I work with clients on their revenue breakdowns, most are surprised at where their revenue comes from. It is always eye-opening when a business owner discovers that what they deemed to be a “best seller” is actually not!
If you would like some help analyzing your revenue breakdown, Flourish can help. As an experienced business consultant, I’ve spent years helping business owners figure out their budgets and cashflow, and manage the growth of their businesses. Why not schedule a complimentary consultation with me today? Just email Info@FlourishBiz.Consulting, call 480-980-6066, or use the contact form.