How to Identify Your Most Profitable Revenue Stream

by Stephanie Ward on December 10, 2009 · 2 comments

in Articles, Blog, Business Model, Connector, Follow Up, Measuring, Revenue Streams

How to Identify Your Most Profitable Revenue Stream Stephanie WardSometimes as a business owner you can get so caught up in running your business that you may no longer have a good overview of where your business is most profitable.

I’m sure you probably know how much money your business is making overall but are you clear about how each of your specific revenue streams are performing?

If I asked you right now which product or service is the most profitable can you answer immediately? 

It you’re not clear about how your business is making money, now is the time to find out.

It is possible that some of your products and services that require the most amount of time and energy are your least profitable. Or, you may be ignoring a very profitable part of your business that requires hardly any work on your part.

Analysis may not be your favorite thing to do but it can be thrilling if you keep the end goal in mind. You will discover where you’re making money and increase your profitability by giving that part of your business more attention.

Not only that, you’ll see where you can stop wasting time and money. If that’s not enough motivation I don’t know what is.

Steps to Get Started

1. For every product or service you offer calculate the profit each generates (total revenue minus total costs = profit). You can use the totals from the last twelve months or another time frame that works for your business.

2. In addition to the actual costs, add in the average amount of time you spend to market and deliver each product and service. Because time is another form of money.

3. Now comes the fun part. Combine the information from steps one and two and identify which products and services have the highest profitability.

Once you know which of your products or services are the most profitable select the best two or three (or only one if it is significantly more profitable than the others) and focus your marketing exclusively on your choices. Read more on this here.

It’s that simple. Once you know what part of your business is the most profitable, put a laser like focus on that revenue stream.

Taking your focus a step further, find out what makes your most profitable products and services so attractive to your clients. Is it the content, the packaging, the way it’s delivered?

Once you understand what your clients really want, you can think about opportunities to expand or extend your most profitable products and services.

Another way to extend the focus is to pay even more attention to the clients who purchase your most profitable offerings. You can do that by staying in touch, providing them with extra value, and delivering the highest level of service.

This is also a good time to seriously consider dropping the products and services that have a low profitability and require a lot of your time.

That will free up time and money you can use to increase the scope and scale of the marketing you are investing in your most profitable products and services.

Don’t delay, schedule the time to find the source of strength in your business and concentrate on it.

The time that you invest to identify your most profitable offerings may be the best investment you’ve made in your business so far this year.

© Stephanie Ward

WANT TO USE THIS ARTICLE IN YOUR NEWSLETTER, BLOG, OR WEBSITE? You can, as long as you include this information with it: Stephanie Ward is the Marketing Coach for Entrepreneurs who want to create meaningful and prosperous businesses. Grab your FREE copy of the special report ’7 Steps to Attract More Clients in Less Time’ plus business building tips, at: http://www.fireflycoaching.com.

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{ 2 comments… read them below or add one }

1 Jane Stephenson August 29, 2011 at 4:22 pm

Hi Stephanie,
this is a great post – I worked for years as a financial analyst, before I became a coach, and I know how difficult it is to bring these concepts across in a clear step by step approach.
Its a reall help to busy small business owners to use these simply set out strategies.

2 Stephanie Ward August 29, 2011 at 4:33 pm

Thank you for your feedback Jane, much appreciated!

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