CHAPTER TWENTY-TWO:

The way to increase your revenue is to think of your business as a machine. You have new levers, existing levers, cogs, and growth levers.

Existing levers offer the opportunity for organic growth within your company. Ask yourself where you want each existing lever to be in three years. Where should this lever be to make sure everyone reaches their full potential, taking into account industry trends, competitors, and company potential?

To increase your revenue and profitability, you need to have all your levers and cogs working like a well-oiled machine. Randy Nelson outlines the process in his book, The Fourth Decision: The Maximized Entrepreneur:

• Increase existing revenue streams (existing levers)
• Increase your productivity in your organization with existing revenue streams (metrics)
• Implement new organic revenue streams by developing your “growth pyramid:” vision and execution (new levers)
• Employ growth leaders who can lead revenue growth (levers)
• Manage mergers and acquisitions (inorganic growth levers)
• Decrease expenses (“cogs”) Common “levers” in most businesses are:
• The number of customers and revenue per customer
• The number of products sold and price per product
• The number of services sold and price per service
• The markets/industry segments served
• Geographic locations
• Customer retention
• Customer turnover
• Salespeople
• The method of sales delivery (direct or online)

There are different methods you can use to analyze your total company revenues. But, for the next exercise to work, the levers must add up to the total company revenue.

Once you have identified which levers generate what income, you can determine what each lever would deliver. Now you can know the key thrusts that will propel your business and start to generate increased revenue.

According to Nelson: “By identifying all of the levers in your organization and conducting a three-year projection for each, you should see where your greatest opportunities are in the future, by different levers, and where your growth is not as strong. The levers are the starting point, the pure gold in your organization. They clearly identify how you operate today When you add your intuition and decide where you should be with each lever, that is how you mine for the real diamonds for the future!”

Begin by defining your core values; for instance, what are your hire and fire rules? Then, focus on your core purpose. Why does this organization exist? Your three- to five-year key thrusts will show you where to focus your efforts. Your annual goals and plans define what you will accomplish; the quarterly goals and plans specify how you will do it; and your daily, weekly, and monthly goals outline who does what and by when. Without the foundational knowledge of your core values and purpose, your day-to-day work will never head in the right direction.