How to Analyze Your Revenue Streams and Prepare for Significant Business Growth

Several times each year I go through an exercise where I analyze my revenue streams and forecast where I want them to be. There is a lot to be learned in this process, and it can have a significant impact on the growth of your business.

No matter what kind of business you run, you have multiple revenue streams. Years ago when I owned a bookstore, I had revenue streams from book sales, audio book rentals, greeting cards, art, and gift items. Several times each year I would assemble a report to analyze sales from each revenue stream, and I broke it down by genre of books in order to determine which ones sold best, and which ones struggled. For example, for a brief period of time we sold text books, but in reviewing the sales data it was clear that they didn’t generate enough sales compared to other categories, so text books were removed in order to make room for more profitable genres.

For a service-based business, your revenue streams can be broken down by offering. For example, a consultant might have revenue streams that include one-on-one consulting, workshops, online classes, speaking, and book sales. If you keep a month-by-month report of these revenue streams, you can watch for growth patterns, and then you can determine what is causing each to increase or decrease. Did you launch a new marketing campaign that produced great results? Do more of that! Has more competition come into the market that’s making it harder to sell a certain type of workshop? Perhaps it’s time to launch a new workshop or redesign the one you have.

If you use a bookkeeping program such as Quickbooks, you should be able to pull this data out of the reports. I prefer to track my revenue streams with a spreadsheet.
You can download a free Revenue Streams – Template.

Forecasting Revenue Streams

Aside from analyzing the data, you can also produce projections for the coming months. I find it especially helpful to set goals for my individual revenue streams, which helps me to prioritize where I will spend my time and allocate resources and marketing funds. Often times experience alone helps us determine which areas are likely to be high-performers within our businesses.

For example, I run a publishing company and am also an author and speaker. Here are some of my revenue streams:

• Custom book publishing
• Social media marketing services
• Consulting
• Speaking
• My book sales
• Client book sales
• Online events
• Corporate sponsorships

At the beginning of each year, I forecast what I intend to generate from each of the above revenue streams. I start by setting an ultimate revenue goal for the year. Next, I look back at the previous year’s data, and then make some assumptions about where the business is headed for the year. I move numbers around until I develop a plan that helps me reach my ultimate revenue goal for the year. The forecast becomes a sort of road map that helps me focus my efforts, and I review it throughout the year and make adjustments as needed.

If you go through this process and discover that you have some struggling revenue streams, it may be time to let them go, devote more time to them, or add new revenue streams to your business. It’s a good idea to always be on the lookout for new opportunities to add revenue streams. If you customers are asking for something that you don’t yet offer, consider how you could add it to your menu of products and services.

The bottom line is that if you want your business to grow, you’ve got to understand where it is today and where you want it to go. Staying idle and doing the same thing year after year is unlikely to lead to growth. You’ve got to plot a course for your business and reevaluate it often if you want to achieve big success.

I am blogging on behalf of Visa Business and received compensation for my time from Visa for sharing my views in this post, but the views expressed here are solely mine, not Visa’s. Visit http://facebook.com/visasmallbiz to take a look at the reinvented Facebook Page: Well Sourced by Visa Business. The Page serves as a space where small business owners can access educational resources, read success stories from other business owners, engage with peers, and find tips to help businesses run more efficiently. Every month, the Page will introduce a new theme that will focus on a topic important to a small business owner’s success. For additional tips and advice, and information about Visa’s small business solutions, follow @VisaSmallBiz and visit http://visa.com/business.

Stephanie Chandler is the author of LEAP! 101 Ways to Grow Your Business.
She is also CEO of http://AuthorityPublishing.com, a custom publisher of
nonfiction books, and http://BusinessInfoGuide.com, a directory of resources
for entrepreneurs. Also visit http://StephanieChandler.com