5 ways businesses can increase revenue
Don’t confuse increasing sales with increasing revenue, while the two are related one does not guarantee the other. For most companies, the goal is to increase sales, but the real goal needs to be increasing revenue.
The economic landscape during the last few years has made it more difficult for small business to get a bigger piece of the pie. Although the situation and opportunities available will vary by industry. Fortunately, regardless of the industry, there are always ways to increase the bottom line.
Here are five strategies that you can implement that can help boost revenues:
Consider offering better terms to targeted customers as an incentive for them to purchase more of your products or services. This can be particularly effective with bigger profile clients that are in need of more. Thus, it is more advantageous to both parties when you offer terms; but only extend this privilege to credit worthy customers. Before extending an offer, research your database of clients and include a clause that stipulates if a payment is late you can charge a late fee.
Increase accounts receivable turnover:
Make sure your organization has a good collections process in place to ensure that invoices are paid timely. If you are selling on terms you don’t “earn” the money until after you have been paid (most business think that after the sale is booked they can move onto the next deal).
Review your core competencies and look for ways you can re-invent the wheel within your business. If your business currently specializes in manufacturing stuffed animals for children, research how feasible it would be to adapt and expand into another market i.e. manufacturing stuffed toys for pets.
Are the price points for your goods or services too low? If you have not adjusted your pricing in the last five years, and your costs are increasing, you need to review the pricing structure of your goods or services to make sure you are not giving away all of your margin.
Get rid of “bad” customers:
If a customer is costing you money, it may be time to cut ties. Review your total customer base and determine where you make the most money. Concentrate on the profitable customers and focus on building a pipeline of customers along the same lines. When analyzing who to keep and who to walk away from look at the bottom line –customers that take lots of unnecessary deductions, never pay on time should or cost you in other ways, should not be customers.
While each of these strategies can be implemented individually, you can implement several of them simultaneously for greater impact on revenues. The key to success as a small business is to constantly listen to the marketplace and adapt your products, services and operations to meet the growing needs of your current and potential customers.