Over the past few weeks I’ve been attending FastTrac Growth Venture©. This is a entrepreneurship program designed by the Kauffman Foundation to help revenue generating small businesses grow to the next level. During one of the sessions each business owner took some time to dive into there revenue patterns. Understanding revenue patterns is a critical piece of every business. A good understanding of this line item can help business owners plan for cyclical slowdowns, identify high volume customers or lucrative products\services. Below are a few things you can implement in your business right away to begin to understand the revenue numbers:
Create a Cash Flow Analysis – Cash flow is the movement of money in and out of your business. Analyzing your cash flow can help you plan for late paying customers and slow seasons. Analyzing your cash flow in advanced can help your business stay away from costly stop gap measures like a line of credit. An analysis tool can be created in a tool like Excel or by utilizing a stand-alone package like Quickbooks.
Create Revenue Slices – There are different ways to cut your revenue to discern patterns. For example as a small business owner you can cut your revenue by client demographics, product\service type or various time horizons to name a few. Each slice tells a different perspective, together they tell a story about your businesses revenue. These slices can be setup with a simple table in Excel. The addition of trend visualization tools like sparklines can assist with identifying revenue patterns.
Every business owner should understand the numbers, especially the revenue numbers. In addition business owners should develop a plan to measure and provoke growth. With the help of some of the techniques highlighted here small business owners can soar to new heights in revenue.