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The 8 Factors Limiting Your Revenue Growth

entrepreneurship leadership marketing revenue throughput Dec 15, 2020
The 8 Factors Limiting Your Revenue Growth

Every business owner would love to snap their fingers and see their revenue grow, right? Wouldn’t that be the dream? As business owners we always seem to have ideas about what we could do to take our business to the next level, but there is all too often a gap between vision and implementation. Why is that?

Over the decades that I’ve coached business owners, I’ve found that there are 8 common factors that constrain business growth. If you’re familiar with the Revenue Throughput model, you’ll recognize these as the 8 major components that we tackle to spark revenue growth.

A Quick Recap: What is Revenue Throughput?

If you’re unfamiliar with the Revenue Throughput model, I’ll give you a quick definition. Revenue Throughput is the volume and velocity that your business converts opportunities into revenue.

Think of your business as a pipe with 8 valves. Your goal is to maximize the flow of water through that pipe so you need to make sure your valves are as open as possible. Now replace water with revenue - it enters your pipe as revenue opportunities and exits the other side as revenue realized.

Your goal as a business owner is to open those revenue valves as wide as possible to enable your business to maximize the amount of revenue it produces based on the opportunities coming in. When valves are closed or not fully open, they constrain the amount of revenue your business is able to produce.

For a more in-depth discussion of revenue throughput, dive into our full article What is Revenue Throughput?

An Overview of the 8 Key Limiting Factors

As I mentioned, while working with business owners, we developed the Revenue Throughput model as a process for businesses to identify, troubleshoot, and optimize their “revenue system”. Through that process , we found that these eight key valves consistently emerged as “trouble spots.”. Each plays a critical role in contributing to (or restricting) your system’s ability to produce revenue. They each affect your business in separate, specific ways, but they are all ultimately tied to your revenue generation.

Revenue throughput demonstrates that it only takes one factor being critically out of alignment to restrict your ability to produce revenue. But by the same token, when you take intentional steps to improve each factor, you will be taking continuous steps to a more efficient “revenue system” that turns opportunities into revenue.

I’ll walk you through a high level view of each revenue factor and how to diagnose each one’s health

Limiting Factor #1: Unclear Targeting

Knowing your ideal customer lies at the heart of your revenue system. Every other aspect of your business stems from this core insight. It informs your marketing, your offers, your delivery, and everything else you do as a business.

Have you ever tried to reach for something when you don’t have stable footing? That lack of stable footing makes every other effort shaky, lacking strength. This is what it looks like to try and grow your business without clear customer targeting.

Your marketing will lack the clarity it needs to connect with your best customers. Your products or services won’t be developed to thrill the kind of prospect you want to attract. Every attempt to grow your business will be robbed of its maximum impact if you don’t have a stable base of clear targeting.

You improve this factor and allow opportunities to flow through by creating a clear picture of who your ideal client is through a combination of dialogue, data, and decision. For more on this factor, take a look at our article on how to identify and commit to an ideal customer.

When we work through this factor, we like to focus on things like:

  1. Developing a research-driven picture of your ideal customer persona
  2. Demonstrating clear value creation in what you offer that ideal customer
  3. Narrowing your prospecting to maximizing your marketing and sales efficiency
  4. Clearly articulating what success looks like for your sales goals

Limiting Factor #2: You Don’t Stand Out|Differentiation

Each purchase is a decision in the mind of your prospects to choose X over Y. That’s why you need to give your prospects a clear, memorable “why you? answer”. Differentiation answers the question “Why you? Why not this competitor?” Why not this work-around?

This factor is tied directly to the first one focused on clear targeting. You want to craft a value prop that cuts through the noise in your market and speaks directly to the kind of customer you want to build your business around. The result of a clear and powerful value prop is connection with your ideal customer. (For more on developing a winning value proposition, check out my book on the topic.)

So what does this factor look like when it’s functioning properly? You’ve developed a strong, articulate value prop that attracts and retains your ideal customer. The right people are coming to you for the right reasons, consistently willing to do business with you because they see the unique value in working with you instead of your competitors.

When we work through this factor, we like to focus on things like:

  1. Identifying the most compelling “why” your business currently or could eventually leverage
  2. Understanding your competition’s posturing and emphasis within your market
  3. Effectively leveraging any unique Intellectual Property (you have more than you know)
  4. Fine tuning your messaging and branding to amplify your value prop
  5. Developing pricing strategy that’s consistent with your positioning

Limiting Factor #3: Unorganized (Inefficient) Marketing

I have yet to meet a B2B business owner who doesn’t think marketing plays (or should play) a critical role in their revenue  growth. Still, for one reason or another, marketing tends to be a particularly weak link in the chain. Why is that?

There’s a big difference between “doing marketing” and having “on purpose marketing”.

When businesses don’t take a coordinated approach to their marketing, they often end up with a combination of poorly designed campaigns and sporadic communications. What kind of results does that approach produce for any other business process? Right. Sloppy, uneven, and disappointing. Well, marketing requires the same effort as any other part of the business.

 

Marketing that isn’t on purpose will still consume your time and energy, but it won’t convert revenue opportunities to revenue. It’s a clogged valve that restrains your revenue.

When your marketing is on purpose, you’re coordinating your resources for maximum output and efficiency. Every person, strategy, tool, and budget has a clear purpose that is contributing to generating new revenue.

In our Revenue Throughput Analyzer, this factor encompasses:

  1. Solidifying your understanding of your market
  2. Retooling your marketing strategy and budget to accomplish your goals
  3. Strengthening your online presence including your website and social media
  4. Improving the quality, creativity, and consistency of your communications
  5. Connecting your marketing efforts to effective lead generation outcomes

Limiting Factor #4: Your Sales Process Is Undefined

This might be the most obvious of the factorss when it comes to improving your revenue throughput. Especially in B2B - where every sale usually comes down to sales conversations and often, proposals. If it’s so obvious, why do we include it in our Revenue Throughput Analyzer?

Because the solution isn’t always obvious.

Many businesses look to experienced sales reps who are really unexceptional long-timers. Or they look to sales courses to sure up sorry sales skills. This might provide incremental improvement, but I see business owners wrestle with disappointing sales results time and time again. Why does this happen?

 

It’s because sales is much more than just your current salespeople. Your sales element encompasses your sales team, your sales process, and your business model as a whole. The Revenue Throughput Analyzer takes a holistic look at anything that constrains the flow of revenue that’s involved in your sales process.

To help you improve your sales to receive new business, we’d look at:

  1. Define and map out your sales process
  2. Build up your sales team and talent
  3. Get a firm grasp on your channel management
  4. Improve your sales pipeline management process
  5. Implement better negotiating and closing techniques such as cross selling and upselling

Limiting Factor #5: Your Leadership Isn’t on the Same Page

There’s something I’ve found in talking to small business owners doing about $2 million to $50 million a year.

At this range, business owners are usually meticulously involved in running their businesses. Sometimes this works out well.

Other times this means too many critical decisions are consolidated to one person, and the broader vision of the company can struggle.

 

As businesses mature, they need effective leadership to see above the weeds of operations. They need a clear line of sight to strategies that can help sustain growth on a larger scale. Competing with other well-established businesses requires someone with their eye on the larger business landscape.

When we help our clients improve their leadership effectiveness, it creates advantages like

  1. Preserving your ability to maneuver around other competitors
  2. Helping you assess and solve high-level risks such as customer concentration
  3. Effectively navigating banker and investor relationships
  4. Producing a strategy for long term equity and eventual exit plan

Limiting Factor #6: Inefficient Use of Resources

It’s true that great plans are often limited by the quantity and reliability of resources available. These resources range from working capital to research to your team members and the culture you’ve built into your company.

Every task requires some combination of time, talent, tools, and capital to accomplish. If your business is not effectively managing these resources, it has a direct impact on your ability to win and retain revenue from your clients

When this factor is inhibited, it means you are constrained by a lack of resources. Other times, the resources you do have can be - and need to be - leveraged more effectively to generate more revenue.

Within the Revenue Throughput philosophy, we assess how you can create the biggest impact on your top line through resources like:

  1. Access and best use of working capital
  2. Effective infrastructure and administration
  3. Creating skill and depth in resource management
  4. Data-driven decision making
  5. Mission aligned culture
  6. Increasing the quality and depth of your supplier network

Limiting Factor #7: You Aren’t Delivering on your Promises

No list of revenue-impacting components would be complete without touching on production. You’re well aware of this impact, and you’ve probably spent a great deal of time trying to improve how you produce your actual deliverable. This is true if you make a physical product or you produce a service on demand. 

In the Revenue Throughput model, we have an eye on the end-goal of delighting your customers, driving repeat business and referrals. If the production component of your business can accomplish this, you will see a direct lift to your top line.

That’s why I like to start at the top with your product strategy. Are you planning to deliver a unique and effective client experience?

That’s why I like to start at the top with your product strategy. Are you planning to deliver a unique and effective client experience?

When you get down in the weeds of your operations, it can be easy to lose sight of your priorities and spend too much time and resources on things that are less important to your end goal. So start with your overall strategy, and streamline your process to give time and attention to the things that matter most.

When we work with a company implementing our Revenue Throughput System, we sit down with you and analyze your:

  1. Overall Product Strategy 
  2. Your ability to design and engineer of your deliverable
  3. Your Scheduling and logistics 
  4. Your Training and development
  5. Your overall Adaptability (can you respond to the unexpected from customers?)

Limiting Factor #8: Your Customers Aren’t Satisfied

The last factor in the Revenue Throughput model is the last factor in your customer’s purchasing cycle. You’ve already found customers, developed products they want, and convinced them to purchase from you. The final step is to make sure your delivery of your product or service is everything your customer is hoping for.

Delivering your product includes two aspects: fulfillment and support. 

Fulfillment includes everything from the moment an order is placed to the moment the product or service is delivered. It focuses on turnaround time, organization, presentation, and more. Anything that will solidify a great experience for your customer and a strengthened relationship with your brand.

Support encompasses what you do for a customer to provide confidence in you and your deliverable. This might be anything from your return or “make right” policies to customer satisfaction tracking.

It’s important to note as well that these aspects aren’t just concerned with your customer - they take into account your internal logistics as well. Many companies have great customer service intentions but fall short when it comes to actually making customer service an enjoyable part of the relationship.

When we work with a business on fulfillment and support, we help make sure this factor is operating effectively by assessing areas like:

  1. Optimization of your ordering process
  2. Developing a customer service process designed to inspire confidence
  3. Ensuring that inventory or availability management meets customer expectations
  4. KPI tracking to gauge process success

Ready to Dig Deeper into Revenue Throughput?

 At Value Prop, we’re here to help businesses like yours grow their revenue and empower their future with our Revenue Throughput SystemLet us know which revenue valve you're struggling with, and we'll help you unlock it. If you’re ready to take the next step into strengthening your business and its revenue-generating ability, let’s start the conversation with a no-obligation 15-minute Discovery Call.