Put a Meter on Your Revenue Streams

Monitoring revenue streams is the fun part of managing a business.

Chicago, IL (PRWEB) October 26, 2005 – No matter how important to the livelihood of a company, there are a lot of things that aren't exactly fun about the accounting side of the business—that's why there are accountants. One part that's about as fun as it can get in managing a business is the counting and monitoring of revenue streams.

What is critical is to be aware of each revenue stream and to be detailed in the way you think about them.

Knowing what percentage of the whole that each revenue stream contributes will allow managers to better analyze and react to their data. If, for example, a manager finds that one revenue stream produces an extremely low percentage of total revenue, but is relatively expensive to staff or maintain, the manager may decide to close off that stream or to make it more efficient and more profitable.

Among hundreds of other businesses, Kaplan consulted with a water park plus entertainment center that had nine different revenue streams, totaling over $4.8 million in annual sales. He also helped one-man and one-woman businesses with single revenue streams roughly equal to their total pre-tax income.

Kaplan stated: “What is critical is to be aware of each revenue stream and to be detailed in the way you think about them.”

The water park noted above had revenue streams such as a bowling alley, a volleyball court, a snack bar, and an indoor swimming pool. Any good analysis of the park had to include a breakdown of each revenue stream, so managers could look at the percentage of total revenue that each stream was contributing.

Kaplan gave further insight: “Knowing what percentage of the whole that each revenue stream contributes will allow managers to better analyze and react to their data. If, for example, a manager finds that one revenue stream produces an extremely low percentage of total revenue, but is relatively expensive to staff or maintain, the manager may decide to close off that stream or to make it more efficient and more profitable.”

Knowing the revenue streams–both as total dollar figures and percentage values–will also allow managers to see if their management decisions are affecting change, and, if so, how rapidly.

So, if possible, enjoy detailing where each revenue dollar is coming from–it's detailed work that will pay returns in a sharper perspective, a more manageable business, and a bigger bottom line.

CONTACT:
Michael Drew
850-747-8188

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