When you step out on faith to run your own business, one the first questions growing business owners encounter might be “How will I make money?” This is an important question to address because its answer could set you up for success or failure.
Revenue is the lifeblood of your business. Knowing how revenue makes its way into your bank account is a critical step in building a profitable and sustainable business. Whatsmore, having multiple streams of revenue (that is, more than one way people buy from you) can help you prepare for inevitable economic shifts.
For instance, if you’re a contractor, it’s important to understand which portion of your revenue comes from commercial or residential construction. Or if customers will buy more kitchen & bath projects or whole home renovations. For salons, is braiding bringing in the majority of revenue or sew-ins? The answers to these questions can help you determine how to market your business, where to invest in equipment and so much more. And being able to address more than one customer need is the key to financial stability for your business.
Let me share an example from our own revenue planning.
Growmetix® creates and delivers training programs designed to help growing businesses scale. We sell these services to organizations who want their suppliers to be ready to scale. If this were our only way of making money, we’d be stuck in the long cycle of submitting and hoping to win work through proposals or cultivating relationships with supply chain professionals.
Instead, we couple this work with one on one and group coaching programs offered directly to business owners of color. The sales cycle for these revenue streams is shorter. It’s important that we figure out the right mix of revenue sources to balance our revenue potential.
Thinking about your own business, what are your revenue sources? Do you have the right mix of revenue coming in from lower priced products that customers purchase easily and quickly vs. higher priced ones that customers give more or longer consideration? Do you know what’s popular in your industry right now? Are chicken sandwiches selling more than turkey or beef burgers? What other ways can your customers buy from you?
