Enhancing Key Business Processes

Do you know the key business processes in your company? What are you doing to monitor the performance in these processes? Do you have systems to review these key business processes periodically and improve them?

As Entrepreneurs grow their companies, the emphasis should not only be on generating revenues, but it should also include improving the processes that deliver those revenues.

Total Quality Management emphasizes documenting your critical business processes; developing key metrics; measuring and posting these metrics; and continually improving the processes.

Entrepreneurs will then benefit from the enhanced quality and efficiency of their business processes.

Ravi Patel

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How Do You Generate Revenues?

The cliché that “in order to help a hungry man for the longer term one teaches him how to fish rather than giving him fish” has lessons for Entrepreneurs.

For Entrepreneurs to be successful they should not only focus on increasing revenues, but should more importantly also improve the processes that deliver those revenues.

Entrepreneurs might be able to increase revenues in the short-term by doing it themselves. However, in order for revenues to continue growing for the longer term and through other people, they need to establish and keep on improving the processes that generates such sales.

In order to do so, they first need to understand the processes, improve them as necessary and then ensure they are repeatable with no lapse in quality. Documenting the procedures, training the people and monitoring compliance are necessary to implement robust revenue-generation processes.

Do the Right Things!

Ravi Patel

www.patelCFOservices.com

Published in: on June 5, 2018 at 4:42 am  Leave a Comment  
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How Does Your Business Model Work?

What drives your business and what affects it? Entrepreneurs need to fully understand their Business Model.

What creates revenues in your business? What are the key variables that affect your revenues? Understanding your revenue model completely and analyzing the key drivers is an important component in knowing your Business Model . Perform sensitivity analyses on key variables to see how they affect your revenues. What could you do to control the variables and affect the outcomes?

Similarly, what are the key cost and expense components in your business? What is fixed and what is variable? Do you know the broad categories that account for 80% of your costs and expenses? What can you change to increase your bottom line?

What is controllable versus non-controllable in your Business Model? Are external factors a key component?

As an Entrepreneur one needs to fully understand the Business Model not only to improve performance but also to talk intelligently to potential investors.

Ravi Patel

www.patelCFOservices.com

Published in: on September 27, 2016 at 4:17 am  Leave a Comment  
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Knowing your Business Model

Entrepreneurs, do you fully understand your Business Model? What drives your business and what affects it?

What generates revenues in your business? What are the key variables that affect your revenues? Understanding your revenue model completely and analyzing the key drivers is an important component in knowing your Business Model . Have you ever performed sensitivity analyses on the key variables to see how they affect your revenues? What could you do to control the variables and affect the outcomes?

Similarly, what are the key cost and expense components in your business. What is fixed and what is variable? Do you know the broad categories that account for 80% of your costs and expenses? What can you change to increase your bottom line?

What is controllable versus non-controllable in your Business Model? Are external factors a key component?

As an Entrepreneur one needs to fully understand the Business Model not only to improve performance but also to talk intelligently to potential investors.

Ravi Patel

www.patelCFOservices.com

Published in: on October 15, 2013 at 3:20 am  Leave a Comment  
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Focus on Revenue Generation Processes

Almost everyone has heard the cliché that in order to help a hungry man for the longer term one teaches him how to fish rather than giving him fish.

Similarly for Entrepreneurs to be successful they should not only focus on increasing revenues, but should more importantly also improve the processes that deliver those revenues.

Entrepreneurs might be able to increase revenues in the short-term by doing it themselves. However, in order for revenues to continue growing for the longer term and through other people, they need to establish and keep on improving the processes that generates such sales.

In order to do so, they first need to understand the processes, improve them as necessary and then ensure they are repeatable with no lapse in quality. Documenting the procedures, training the people and monitoring compliance are necessary to implement robust revenue-generation processes.

Do the Right Things!

Ravi Patel

www.patelCFOservices.com

 

Published in: on February 26, 2013 at 4:47 am  Leave a Comment  
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Revenue Concentration Risks

When Entrepreneurs start their businesses, they might depend on one or a few clients for bulk of their revenues. This revenue concentration scenario is acceptable for the very early start-up stage of a company.

As the company’s revenues grow, hopefully the increase is from having more customers rather than only from additional business with the same clients. Diversification of the source of revenues is a critical factor in the long-term success of the company.

The risks of concentration of revenues from only a few clients or one or two big customers could be huge. If a significant portion of the revenues are derived from, say one customer, it could be devastating for the company if such business was lost, reduced dramatically, or even if there were payment problems with such receivables.

Entrepreneurs, at the appropriate stage in their company’s growth, would be well advised to diversify the sources of revenues such that dependence on a few clients does not end up hurting their business.

Entrepreneurs might need to determine a risk tolerance model to determine what is the maximum revenue concentration from one client that would be acceptable for their business. In addition, they need to also assess the acceptable revenue concentration levels from a small number of clients. Such risk assessment would have to take into account not only the business and financial stability of the customers, the length and quality of the relationships, and the competitive situation, but also their own company’s performance with such clients and the level of risk that the company can take without jeopardizing its survival.

Managing revenue concentration risk is a critical component of Doing the Right Things!

Ravi Patel

www.patelCFOservices.com

Published in: on October 10, 2011 at 5:56 am  Leave a Comment  
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Which is preferable – Revenue or Profit?

If you ask an Entrepreneur whether he/she would prefer growth in Revenues or Profits, the answer would probably be – both.

However both might not be possible for Entrepreneurs in growing companies. Depending upon the stage of growth of a company, there is a potential for a Catch-22 situation. If I have profits, I can have internally generated cash to invest in growing the top line. Or, if I had more Revenues, I would be able to squeeze out more profits due to certain economies of scale.

Choices have to be made at different stages of growth as to whether Revenue or Profit is more important to focus on. These choices would most probably change over time.

However, have you ever thought about what is better in the long-term – growth in Revenues or Profits? You might be surprised by your quandary!

Ravi Patel