Part 4: Finding YOUR Revenue Formula

Unlocking the Secrets of Your Revenue Formula

In our previous discussions, we delved deep into the revenue formulas of established companies, highlighting the complex machinery behind straightforward metrics. Today, we're taking a turn toward introspection. It's time to cast aside the safety of examples and dive into your own business, asking tough questions and seeking business changing answers. Let’s delve into crafting and understanding your very own revenue formula.

Identifying Your Revenue Formula: More Than Just Numbers

Figuring out your revenue formula is akin to unveiling your business's DNA. It's the code that dictates how you generate income, and understanding it is crucial to your success.

At first glance, the revenue formula might look like a basic mathematical expression. Yet, as we've previously seen, behind each variable lies a dense web of drivers and sub-drivers, each affecting the overall equation.

1. Establishing a Theory

To start, simply write down what you think the basic math is in your business. Reflect back on the previous posts in this series as examples, and take a stab at what you think your Revenue Formula is. Don't worry so much about being 'right' as about having something to use as your baseline for testing.

Next, imagine your revenue formula as a tree. Each component is a branch with its own set of sub-branches, or drivers. These drivers represent specific tactics or strategies you employ to influence the main component.

For each value in your Revenue Formula, come up with a minimum of FIVE drivers for that value. These are the things you need to do, learn, research, build etc to prove whether or not a value is correct AND how you will, over time, be able to manipulate that value.

Finally, if drivers are the sub-branches of your revenue tree, sub-drivers are the twigs. They represent even more specific aspects of your strategies. Again, for each driver that you have identified, come up with a minimum of 5 sub-drivers for each driver. Similarly these are the things you need to do, learn, research, build etc but with another level of detail.

In theory you could get into sub-sub-drivers and beyond but that is not necessary for this exercise. When you are ready for that level of detail, what you are really talking about is a detailed project plan and should be owned by the business owner.

The Power of Clarity

Your revenue formula, with its myriad drivers and sub-drivers, might seem complex. Yet, there's beauty in this intricacy. Each component, driver, and sub-driver presents an actionable item—a specific strategy to be implemented, tracked, and refined.

This exhaustive breakdown serves as a roadmap. It provides clarity on how each department contributes to the revenue, helps in prioritizing tasks, and offers insights on areas of improvement.

In Conclusion

Your revenue formula isn’t just a guide to your business's current health—it's a diagnostic tool, a roadmap, and a vision board all rolled into one. As we move forward, we'll be building on this foundation, testing assumptions, and refining strategies.

Remember, your journey in understanding and refining your revenue formula is a marathon, not a sprint. With every question asked, every driver identified, and every strategy tested, you're one step closer to achieving business mastery. Stay curious, stay focused, and most importantly, never stop asking "Why?"