Small business owners can aim to increase revenue with a well-planned strategy. Identify opportunities to level up your knowledge, create operational efficiencies and set attainable goals to benefit your bottom line. Here are some actionable tactics to increase revenue for your small business.
1. Become a Market Expert
As a business owner, it is essential to know your market, especially if your industry is typically tied to a specific geographical area.
Strive to be an expert in your market. Your expertise can help streamline your marketing expenses, increase your return on investment (ROI) on marketing dollars and help you attract the right customers that fit your pricing model.
2. Price for Profitability
Improper pricing can cause cash flow shortfalls. It's important to remember that pricing isn't just about inventory but also the cost of providing a service. Determine what your goods and services are costing you and develop your pricing model accordingly. By creating healthy margins, you achieve a consistent pricing model that can scale as your costs of goods, services, labor, etc., increase over time.
Pricing and expense management establish the business's profitability, so it is crucial to have a plan and remain disciplined.
3. Drive Business Metrics
Identifying essential business metrics and understanding how to influence them puts you in the driver's seat when responding to challenges and opportunities. It can be the difference between a successful operation and one that struggles with cash flow and growth. EBITDA, or Earnings Before Interest, Taxes, Depreciation and Amortization, is an excellent way to track and assess the overall financial health of your business.
Establishing your EBITDA targets for the upcoming year can help determine your business's required revenue and expense structure. EBITDA targets, combined with your projected call volume, can establish your ideal pricing model. Base your revenue targets on your project price per call and your projected call volume for the year. If that call volume needs to increase, you may revisit your target market and marketing strategy mentioned earlier. Often, backing into goals such as EBITDA can enable you to pinpoint gaps in your plan that you need to revisit, such as expenses and pricing.
When budgeting for expenses, set limits for each category, such as salary promotion percentages, benefits, vendor contracts, and fixed costs like phone, Wi-Fi, power, vehicles, and part-time help. These limits should expand based on call volume but should correlate with some key metric. Consider the reasons behind expenses before having them approved.
Revenue is a direct result of the number of goods and services provided and the price you charge. Without revenue, there are no earnings, so make sure you pay close attention to EBITDA and set strategic goals to ensure your business is profitable.
4. Invest in Your Staff
Has your staff been appropriately trained in selling products and services? Can they accurately convey the unique value that your business offers? Can they confidently overcome pricing objections and customer complaints?
Having each staff member trained adequately in selling products and services and representing your business can often be the difference in hitting financial goals.
Be clear about your expectations. Encourage each staff member to have personal and professional goals and provide them with opportunities to achieve them. Having employees who are empowered and in control of their success can result in more fulfilled employees, happy customers and a highly profitable business.
5. Set Goals for Growth
The first four points are focused on successfully managing what you have. Once you dial these areas in, the next step is setting specific business growth goals. Understanding your business's current cash flow, market, and financial health is a prerequisite to business growth. Then, when you're ready, expanding your business can increase market and revenue share.
As you grow, so do your balance sheet, executive team, and experience. Live Oak Bank can support the evolution of your business with access to capital. SBA loan programs have low down payments and competitive terms and can be an excellent solution for growing businesses that need loans up to $5 million. As your business evolves in size and experience, we have additional lending solutions that may work for you. For example, if your needs exceed the SBA's $5 million lending limit, we have creative combination debt solutions to combine an SBA loan with a commercial loan. We are also comfortable with more significant commercial and industrial exposures based on credit approval. As you grow, we grow with you.
Many of us fall into the habit of getting buried in the day-to-day tasks of running a business. These tasks matter, but not at the expense of your business's financial health. That is why the beginning of the year is the perfect time to assess your business and set goals. Set aside a few hours a week or at least a day each month to check your progress and reassess your goals.
If you'd like to discuss your opportunities, learn more here.
