Track your revenue this year… really track it!
January 2nd, 2014
Ah… the start of a new year. The excitement. The possibilities. The same ol’ stuff?!
Before you can decide where you want to go, you need to understand where you’ve been… and the following little exercise can help you leverage the past to think more effectively and more strategically about the future of your firm.
Every firm tracks revenue… it’s the lifeblood of their business. But if you’re willing to drill down a few layers, you can develop a deeper understanding (based on data, not gut feel) as you plan for the future. Consider this…
- Track your revenue by month and year-to-date (YTD) – of course, everyone does that!
- Each month, compare revenue to your started goals and to last-year-to-date (LYTD). Yeah, most are probably doing that, too.
- Have a sales team or senior executives responsible for business development? Make sure you’re tracking revenue by rep/exec (for each rep/exec – by month, YTD, vs. goal, vs. LYTD)
- By key account… how’s your relationship with your biggest and best clients? (for each key account – by month, YTD, vs. goal, vs. LYTD)
- What about by service line… to see what your clients are really buying? (for each service line – by month, YTD, vs. goal, vs. LYTD)
- How about by the industries you serve? (for each industry – by month, YTD, vs. goal, vs. LYTD)
- How about by application… what are your clients using you for? (for each application – by month, YTD, vs. goal, vs. LYTD)
To understand your business at this level, you’ll need to do three things:
- Think about goal-setting differently. Start with your overall revenue goal and break it down several ways – by service line, by industry, etc. Alternatively, some firms will start at the detailed level and build their overall goal from that.
- Create a few new codes in your accounting system so you can track each project at this level of detail. Once those are in place, the output/reports should be available at the touch of a button.
- From the reports, create the charts and graphs necessary to monitor it easily. I recommend enlarging them and putting them up on the wall as a tangible reminder of what you’re trying to achieve.
All companies change over time… it’s the nature of the beast. Monitoring your revenue at this level of detail will help you understand how your firm is evolving – so you can leverage that knowledge for a competitive advantage.
Final note… it’s the start of 2014… don’t miss this opportunity! If you’re going to make this change (or any change, for that matter), do it now… before you get too far into the new year and it becomes too difficult to go backwards. Happy New Year!