If revenue growth stops or slows, it’s easy to feel discouraged. You want your business to grow and anything less keeps you up at night.
Fortunately, you aren’t alone. Revenue ceilings are a common challenge for businesses as they grow and scale. While the challenge is apparent, the solution is often elusive.
Imagine you take your car into the shop. You tell the mechanic what is “wrong” with the car but, in reality, the problems you see are often symptoms of a deeper mechanical issue. The job of the mechanic is to use his or her expertise to analyze the vehicle and identify the underlying cause of the problem.
Identifying the root cause of revenue deceleration requires extensive analysis, and the solution may incorporate changes to both strategic and operational aspects of the business.
Knowing you might need to make some significant overhauls, let’s discuss how to overcome stalls in revenue.
1- Look for inefficiencies in the structure of your business:
Before you look outside the business, ensure everything is fine-tuned under the hood.
As your business scales, systems and methodologies that worked for a smaller business may no longer be effective. Identifying and removing these obsolete systems is critical to strengthen your financial performance.
Start by analyzing your overhead and fixed expenses. Compare your numbers against industry averages whenever possible. From there, you’ll want to look into your bookkeeping practices, sales performance, and management structure.
If something sticks out as higher than normal, look for areas to improve efficiency or reduce costs by rethinking or improving processes.
2- Reduce cost of goods sold and customer acquisition costs:
If the business is growing but profit margins are shrinking, you’re in trouble. Efficiency should increase with scale, so you should be seeing widening margins as your volume of business increases.
If that’s the trend you are seeing, it’s time for some spring cleaning. Go back to the drawing board on your full service process, from customer acquisition to product delivery.
Comparisons are quite useful for this, so you’ll want to compare your margins, breakeven, and manufacturing overhead to industry averages.
There are many options for lowering expenses that may be effective, depending on your circumstances. You could renegotiate contracts with suppliers, find more cost-efficient ways to reach customers, or divest unprofitable areas of your business.
The best steps for you will depend on your priorities and current situation.
3- Adjust prices:
While there are risks inherent to price adjustment, it is often both powerful and the most straight-forward tool for increasing revenue.
Market research is key in answering this question. You need to understand what your competitors are charging, what value your product or service delivers in comparison and what your customers are willing to pay.
The goal is to find a happy balance between competitive pricing and sustainable growth. Even if a low price brings in lots of business, it does little good if you aren’t profitable.
4- Call in a financial expert to analyze your business:
It’s challenging to holistically view your business from within. Problems and inefficiencies easily fall through the cracks.
You take your car to a mechanic, so it only makes sense to take your financial challenges to the financial experts.
At CapShots™, we start by analyzing your business from the ground up, noting any potential issues and opportunities for improvement.
From there, our team makes recommendations and works alongside you in the process of increasing efficiency and strengthening the financial position of your business.
Whatever the cause of your revenue issues, CapShots™ has a solution. Connect with us to take control of your business TODAY!