Revenues are your receipts: the cash collected from your sales. They are the top line results of your company and are based on both price and quantity. A revenue-starved start-up doesn’t last very long so it is very important to analyze the drivers / root causes of your revenue performance. You can consider:
- How does your pricing compare to others? If there is an opportunity for you to raise prices while keeping your quantity constant, (PxQ=Revenues), you will grow your revenues. Conversely, if you drop your price, you will need to sell more to maintain the same revenue. Your pricing decisions are a critical part of your plans. Pricing may seem like an art but you can use benchmarking to add more science to it.
- Is your sales force incentivized properly? On the quantity side, your sales force needs to push your product. Make sure they get rewarded appropriately if they do so. The proper alignment of incentives will have a significant benefit on your sales.
- What other products can you sell to your customers? You’ve already done the hardest part by acquiring a new customer. Now that you’ve spent to acquire the customer, you should expand your relationship and revenues with additional product offerings. For every hard good you sell, think of additional services you can offer the customer, as seamlessly as possible, and grow your revenues organically.
Revenue analysis is a fundamental part of planning a successful start-up.