In last weeks post, we discussed the second driver of the business plan, Organisational Responsibility, as well as introducing you to the 5 Drivers of Revenue. In today’s post, we will be continuing with these topics as well as going into more detail around the 5 drivers of revenue, and what they mean to your business.
5 Drivers of Revenue
The revenue of any business are made up of the 5 Drivers of Revenue:
Most business owners are passionate about one, or more, of the 5 Drivers of Revenue. Ask yourself what you prefer? Creating the product or service, generating the lead, converting the sale, or managing the relationship with the client?
If you mostly enjoy making the product and service, spend your time doing this and employ other people to develop the product, generate leads, make sales, deliver the product and service and manage the client relationship.
It’s then about making sure the key people in the areas you don’t manage on a day-to-day basis are given the responsibility and authority to make decisions in their area. But remember, as the owner of the business, it’s your job to provide them with the clear guidelines and strategies for them to implement and manage.
Horses for courses – systems and revenue areas
You should never have the same people responsible for day-to-day decision-making in both the systems and revenue areas. It takes a different kind of person to manage costs and cost-related processes, than it does to produce increasing amounts of revenue.
If you have the same person doing both, they will predominantly revert to the pre-conditioned operating style, either systems or revenue.
Take for an example, when times are a tough, the systems style decision maker will look to limit activities so that cash flow is conserved, when the right strategy at that time might be to grow revenue. When times are good, the revenue style decision maker will tend to just focus on more revenue and more revenue, without focussing on costs, which can be the undoing of the business when the cycle turns.
The key is to make sure that the business owner provides them both with clear outcomes required from their roles and has an effective communication system between them so that they can complement and support each other.
By delegating day-to-day decision making in your business to others in the areas of Systems and Revenue, you free yourself from the business so that you can spend your time doing those things that you want to in ‘your ideal day or week at work’
By removing yourself from the day-to-day decision making in your business, and ensuring that you have the right people taking responsibility for managing the key strategies in the key Systems and Revenue areas of your business to achieve your defined outcomes, you can effectively:
Drive your profits higher
Reduce the business risk
Higher business value
It is important to remember that a potential buyer of your business should feel that the business would operate profitably when you are no longer the owner. Successful delegation and decision-making of duties will ensure this.
This brings us to the end of today’s post, however please join us next week when we will be covering the topic of decision making.
For more information on how we can help you become financially well organised, please visit our website atwww.financiallywellorganised.com or call us on +61 7 3833 3999.