There are basically 2 ways to drive profitability in any
business.
• Increase
income opportunities through policy strategies aimed at streamlining costs
efficiently, effective use of organizational assets, providing product/ service
differentiation and managing risks properly.
• Increase
revenue drive through market expansion and quality service delivery whilst
diversifying current customer patronage to other exiting services within the
organization.
The diagram below seeks to illustrate how this can be
achieved.
How Can This Be Achieved?
Policy Strategies
These are strategies which I believe will increase revenue
by driving market share, weaken competition, cut operating costs and maximize
profitability. To achieve this you will need to consider the following options:
Differentiated
Service Delivery: This can be achieved by differentiating services such
that consumers become attracted to the service because of its unique features. Another
approach which many organizations fail to prioritize is its customer service
drive. In today’s business world, customers are increasingly knowledgeable
about service standards and above all consumer rights, hence the increase in
buyers bargaining power. Exceeding customer expectations has become a must do
for any business that is serious about profitability, loyalty and customer
trust.
Budgeting and Costing
Strategies: Here, I suggest you operate a zero based budgeting approach in
which all expenses must be justified for each new period; as such every
function within the organization is analyzed for its needs and costs. An
effective costing strategy suggests you operate a lower cost of production
while keeping price constant in other to reduce costs and increase profits. To
effectively achieve this, find ways to cut costs across board by ensuring all
cost drivers are lower than that of your competitors.
Internal control and auditing will equally be key to
ensuring costs are efficiently managed across cost drivers.
Asset Management
Effective and efficient use of organizational assets is key
to driving revenue growth. This can be achieved by:
• Disposing
obsolete/ idle assets to reduce costs.
• Revamping
faulty assets cost effectively and reinstating them into use to increase
revenue
opportunities.
• Ensuring
optimal usage of all assets for profit maximization.
Risk Management
Strategies: Managing risk is an essential part of any business. Business
risks may appear in any facet of the business. Risks and uncertainty are
realities every business must face. For instance, these risks could be:
Financial Risks, Economic Risks, Production Risks, Human Resource Risks, Legal
Risks, Political and Social Risks, Management Risks and Market Risks.
Improperly anticipating risks or managing them when they occur will eventually
lead to revenue loss and ultimately business failure.
There are basically 3 ways to manage business risks;
• Transfer
the risk
• Mitigate
the risk
• Ignore
the risk
Marketing and Distribution Strategies
Marketing and distribution are essential elements to
increase revenue along various lines.
Expand Total Market
Demand
This can be done by introducing your services to those who
are not aware of it yet, those who are aware of it but do not use it and those
who use it but have not taken advantage of the companies complete product offering
Protect Current
Demand
Protecting your current market is a good way to ensure you
do not leave yourself exposed to attacks that lead to losses. Constantly review
the service in a bid to include additional functionalities. To achieve this i
suggest:
•
Advertising as a tool to constantly remind customers of the companies’
services.
• Leveraging
on an area of competitive advantage to drive profits along that profit line.
Increase Market Share
The company must continually seek ways to increase its
market share. Increasing market share can be done through new service
introductions, boosting current performances through target driven approaches,
increasing marketing and distribution efforts to new geographical areas and
technological avenue such as social media etc.
Conclusion
The above strategies for revenue growth are a few amongst
others. However, I do know that every organization is unique in terms of its
strengths and weaknesses and the challenges it faces. Where your challenge is a
unique one, please feel free to reach me through the contact form.
