Getting to Revenue
How do we get to revenue? It isn’t an uncommon question and it is something business owners stress about every day. With so many people focused on it, why isn’t there an answer yet?
Before you can even think about revenue and how to increase it, you need to make sure you are breaking even first. Break-even is hitting a point where there is no profit or loss. That doesn’t sound that great, but breaking even is a whole lot better than losing money and it is actually seen as a win in the economics world. The “break-even point” is the revenue needed to cover the total amount of variable and fixed costs. Once those are covered, every unit you sold afterwards goes toward profit and straight into your bank…after taxes of course.
So here you are, enough income to cover all of your costs. You know that the next dollar to come in will be strict revenue, but how do you get that next dollar?
1. Raising and Lowering Prices
Prices can be a sensitive topic. If you charge too much then you’ll lose business. If you charge too little, you won’t make money. You need to find something that fits just right. Finding that right fit often comes through trial and error, but research can soften that blow. Do a self evaluation and then pull out your calculator.
Labor + Overhead Costs + Profit Goal
Total Number Product/Service Sold
This is the absolute minimum you would need to charge per product/service order to cover all of your expenses, pay salaries, and still earn a profit for the company. Test the numbers and find what fits for you. Startegy also calculates these numbers for you.
2. Enlarge Your Market
Having a tight market area helps you know where your consumers are, but reaching out to a larger market area can give you more access to potential customers. Sometimes the additional cost to cover a larger market is minimal compared to the potential sales. Always be looking for an underserved market.
3. Team Up
If you run a young, fresh, sock company, the idea of teaming up with a shoe ecommerce is great for you. Reach out to companies that sell complementary products or services to yours. This will give you a larger reach and your partner company a new money maker.
4. Pick Your Side Of the Coupon
People love a good deal, but they can also sniff out a false “20% off”. Giving coupons and discount codes is great to attract customers, but don’t let them rely on it. You don’t want people coming to you only when you are on sale. Don’t be the furniture store that is always going out of business, but never actually closed.
Take a page out of Level Nine Sports’ book. While they may have end of season sales, they recognize their fantastic products and refuse to use coupons. “Levelninesports.com offers the best prices, service, and selection. We know it, you know it, competition knows it. We don’t resort to gimmicks to get you the best deal, you get it every day just shopping at our site.”
5. Let Startegy Evaluate Your Company
Startegy was built to help your business. It is business forecasting at your fingertips. After you fill out your information, you can see all of the numbers laid out simply in front of you. From there, adjust it! Startegy will show you the outcome of raising or lowering prices, hiring new employees, and ultimately how to get to success.