As Australia and indeed the world enters an extremely challenging time, the strategies which businesses put into place now will determine their survival against mammoth odds associated with potential recessionary pressures which most have never experienced before.
Now, more than ever, is the time to ‘Strategise for Revenue’
Businesses must now realise that Revenue is the real key to growth and along with an aggressive and appropriate reduction of costs, but this must also be a part of developing new and/or increased revenues.
- Revenue is the total amount of income a business generates by the sale of their products and/or services
- Income is the total earnings or profit generated by the sales of products and/or services less costs
If you consider that by reducing costs of products and/or services the increased revenue growth could well be without limit.
Global competition today remains fierce and cost cutting will always be an important strategy. But cost cutting by itself is becoming too defensive. For success in today’s business environment and to realise the opportunities which are still available, businesses must complement their cost-cutting defenses with revenue generating offences.
Cost cutting would be best focusing on a narrow set of processes that provide the most significant and direct benefits to the client base and that have the most potency to generate new revenue.
However, this strategy must not be totally confined to products and processes. They need to include the most valuable asset of the business which is the employees. Human resource management must also be an integral part of any business strategy.
Businesses must take a new step in forward strategies by also ensuring they are using activity based budgeting, costing, and revenue management.
The demanding market place that Australia is working in presently and being in competition with overseas importers makes activity based management principles essential which will help them identify, evaluate, and invest in those activities which promise the greatest improvements in revenue and value-adding to sustainable growth and profit.
Now is the time to be looking at all aspects of the business to assess what each product, process, and person brings to your sustainability and what really contributes to the Revenue and Income?