Although most companies focus on multiple goals like innovation, product development, and customer loyalty, the true purpose of any business is to be a money-making machine. Revenue generation is key to a company’s success because higher revenue solves problems for the business industry.
The reason that 82% of failing businesses are declining is due to cash flow problems. Money keeps your business running, pays employees, and supports the efforts of your development, marketing, and sales teams. But revenue is more than a lifeline for your company. It can also provide valuable insights into areas of your business that guide important decisions and shape your product development and marketing strategies.
Keep reading to learn about revenue generation and understand how higher revenue can solve a multitude of problems for your business.
Key Takeaways
- Revenue and profit are two different things; a company can generate revenue yet still lose money.
- Revenue growth helps identify problem areas and find solutions for success.
- By focusing on higher revenue, a business can solve many of its main problems.
What Exactly is Revenue Growth?
Revenue growth is the amount of money your company generates from its typical operations during a certain amount of time in comparison to a previous amount of time. (For instance, how much money your business made this month versus last month.) Revenue falls into one of two categories:
- Operating revenue: money earned from main business activities, like sales when you increase advertising revenue or grow page count.
- Non-operating revenue: money earned indirectly, like investments or leasing your building to another business.
Often referred to as sales, revenue is the amount of money made before paying any operating expenses. Profit, however, is the amount of revenue that remains after all debts, expenses, and income streams are paid. This concept is explained further in the following video:
So although profit and revenue both involve earned money, a company can grow revenue while still experiencing a net loss.
Why Focus on Revenue Growth?
Revenue growth reveals important information about your business. It can confirm which of your strategies are succeeding and alert you about areas that need improvement. Revenue growth can help shape strategies about how you approach:
- Customer acquisition and retention
- Human resources
- Pricing
- Professional development
If your revenue isn’t where you want it to be, you can focus on these different business areas to see where breakdowns are occurring. Then you can determine how to improve them for growth and success.
By focusing on revenue growth, you can understand the overall health of your publication. Revenue helps identify challenges, determine solutions, and continue to build your business’s earnings.
4 Ways Higher Revenue Solves Problems
While it isn’t the answer for everything, higher revenue solves problems for companies. Here are four ways increasing revenue can positively impact your business and help you ultimately succeed.
1. Business Profitability
The ultimate goal of every company is to make a profit. The more money you make, the more opportunities you create for growth. You can afford to hire top talent, pay for innovative product/service development, and boost your marketing and sales budget to help promote your brand and products. Profit is driven by higher revenue. By generating more revenue and minimizing expense costs, you increase the profitability of your business.
The quicker you increase your revenue, the sooner you can earn a profit. This allows you to:
- Make more money
- Put money back into your company
- Create new sources of income
- Expand your business
Higher revenue means more profitability, which, in turn, becomes a virtuous cycle for your company.
2. Perceived Valuation
The more revenue you generate and the higher your profit earnings, the higher the valuation your business will earn. Valuation empowers your business to make strategic decisions for your continued success. It determines what your business is worth and serves as a critical factor in whether you can secure investors, sell your company, acquire another publication, or get a loan.
Higher revenue and its growth rate are significant indicators of a company’s success. This is especially important for companies who are just beginning or whose products may not earn a profit for some time. In these instances, higher revenue is key in determining the valuation. It gives businesses a certain level of currency and clout for engaging in business transactions that impact their future.
3. Customer Experience
Today’s consumers are less driven by quality products at low prices and are more concerned with having a personalized, positive customer experience (CX). In fact, 86% of buyers will pay more for a better CX. Companies who aren’t focusing on this aspect of their business are jeopardizing customer loyalty, brand identity, and sales generation. By bringing in higher revenue, you can invest more in creating a positive experience that will keep customers returning for future purchases.
You can hire content writers to craft customized messages that resonate with your audience. Your business could invest in tools and people to run chat features that allow customers to receive timely responses to questions. You can train them better to deal with unhappy customers. In turn, you’ll increase customer retention, and those satisfied customers will continue to buy your products and services. This generates more revenue and continues the cycle of success.
4. Talent Retention
Talent retention is critical to a business’s success, but it’s also one of a company’s greatest challenges. Many employees become dissatisfied with their job position, and a leading reason is the lack of growth opportunities. Research shows that 86% of employees want to receive training and education to help them succeed in their roles. Unfortunately, many companies can’t afford to provide these tools and resources to their staff.
Higher revenue would help cover the costs of on-the-job training. It would help improve talent retention and possibly even attract new talent to join the team. This would mean more people are helping your business succeed and generate more revenue, which could be used to pay for even more training. By investing in your greatest resource (your employees), you continue to boost sales growth and further strengthen a satisfied, hard-working team.
BOOM Communications Group Helps You Increase Revenue
BOOM Communications delivers printing, marketing, advertising, and consulting solutions to help grow your business. Let us help you create an effective strategy to increase revenue and alleviate some of your company’s problems.
Contact BOOM Communications today to learn more about increasing revenue and driving success.