Revenue Planning Process

There is allot of planning that needs to take place in business; much that should be done proactively but all too often is done in response to issues that arise.  Regardless, without any type of planning, most basic operations would be difficult to manage and the overall cost of running the business would undoubtedly go up.

 

This is NOT Revenue Planning

So when it comes to finding new sources of revenue to support your business, how much planning do you do to insure your efforts and resources produce results?  Here’s a scenario that I find frequently from the businesses I come in contact with. 

 

One day, the owner of the business begins to realize that sales have fallen off and monthly expensive are becoming difficult to meet.  The sales declines are the result of fewer clients walking in the door, fewer visits from repeat customers and the realization that competitors are discounting feverously to capture what business seems to be left.  The owner begins to panic as the thought of this trend draining his/her cash and putting them in a position of reducing staff, store hours, inventory and services begins to set in.

 

So, the owner does what others around them do; discount products and services, buy more newspaper or mailer ads and up the budget for Google Adwords in order to generate new sales that will, hopefully, close the cash flow gap.  Sadly, this ‘hurried’ approach usually serves to aggravate the problem while robbing the owner of resources that could be put to better use.

 

Revenue Planning Insures Longevity

Good consistent revenue flow that generates healthy profits and allows the owner to run the business with confidence does not happen on the spur of the moment.  It’s less like turning on a faucet and more like planning a garden.   The most overlooked area of planning is ‘revenue planning’ and if done properly, it can insure a steady stream of good clients that continue to come to you over other ‘cheaper’ alternatives.

 

Revenue planning starts with the realization that ‘enough’ is never a good growth strategy.  The best businesses in every industry go through volume ebbs and flows.  The important thing to remember is, don’t stop planning for new revenue because you never know when existing clients groups will disappear for a variety of reasons.  Have a bold revenue target established for each month and be able to determine where it will come from.

 

Revenue Planning Allows You to Focus on Your Best Source of Growth

The secret to revenue planning is knowing where your sales are coming from and continually mining these sources.  I’m not talking about sales you picked up from participating in a seasonal flyer as this is only the vehicle that delivered your offer.  I’m talking about the people who decided to come to you vs. other options they may have.  Look at your sales for the last 6 months and figure out the sources of your revenue, i.e. client types, other businesses, particular uses for your service, etc.  Each specific channel will have a percentage of your overall sales and a different level of profit contribution.  These are the areas to continue cultivating more revenue.

 

Most of the businesses I have worked with were able to identify between 3-5 specific channels of revenue that they generated sales from but had not fully realized that they existed.  Let’s look at the dentist who routinely advertised for free cleanings as a low risk method of getting people to try him.  After going through a revenue channel analysis, he discovered that his best revenue returns came from people suffering from bite problems, headaches and little league teams needing mouth guards.  Interestingly enough, he had never advertised or marketed these services before.  Each of these areas of dentistry is considered a niche market and they all have potential if the right message is delivered consistently to the right people. 

 

Revenue Planning Connects You with Customers Who Want Your Specialty

Once you understand where your best sources of revenue come from, the next step is to figure out why your customers chose you over other available  options.  Before you attempt to answer this, understand that every customer has options including the option of doing nothing about the problem.  So figuring out why they chose you is essential to understanding how to communicate your specific value to other customers looking for the same service.  Here’s a hint- it’s not how nice you are or how hard you work.  Customers are only interested in getting the results they want.  If they value your service, they will take an interest in you.

 

Each revenue channel requires a specific method of marketing to reach the intended customer in that channel.  Let’s say you have a flooring business and you specialize in replacing old, worn out laminate flooring.  You should probably have a website to highlight your specialty and the available replacement options you provide.  You’ll also want to have a ton of well written testimonials that demonstrate your value and encourage people to contact you.  If you specialize in a certain home value level, you will also want to have a robust referral program to offer customers who really loved your work.  And, if you promote value heavily, have an offer for a year’s free floor cleaning or treatment that’s included.  Notice I didn’t mention running more newspaper ads!

 

Make Revenue Planning a Regular Part of Running Your Business

Think of revenue planning like you would think about planning a vacation road trip.  You identify the destination, the route you will travel, the time you would be on the road and the things you will do along the way.  Your revenue can be planned the same way with your specific channel revenue target as the end destination, your customer profile as the route you will take and the specific marketing program as the means of getting your message there.  As for the time limit; there is no limit!  Revenue planning and marketing should always be part of the business you run.  It’s the best, most consistent way to keep your revenue growing. 

 

Revenue planning is best done when you don’t need it!  Trying to ramp up a solid plan while you’re on the verge of disaster is poor planning at its core.  While things are at a manageable level, start the process now.  You’ll be glad you did when the market gets soft and your competition is giving away the farm to stay afloat.

 

More Business Growth Resources:

If you would like more information on various topics having to do with small business growth strategies, tune in to Steve’s weekly Radio Show on BlogTalk Radio- ‘The Small Biz Growth Show’.  Each Tuesday at 11:00am (PST) and Thursday at 1:00pm (PST), Steve and his co-host, Cash Miller, discuss specific business building topics that small business owners can take action on.  http://www.blogtalkradio.com/the-small-biz-growth-show

If you need help to figure out where your best sources of growth are, sign up for my free business growth guidebook and learn where to look and what to do to improve your revenue, clients and overall health of your business.  http://www.growthsourcecoaching.com/business-growth-strategy-guidebook.html

Originally posted 2015-08-25 19:53:18. Republished by Blog Post Promoter