BizBoost News
Volume 10, Issue 20
For distribution 3/22/21; publication 3/25/21

Mix Up Your Revenues for More Profits

Many small business owners focus on generating more revenue every year, and that’s a wonderful goal.  But not all revenue is created equally since some items are more profitable than others.  If you sell more than one product or service in your business, then you may benefit from looking at your revenue mix. 

While it’s fun to watch revenues grow, your business profit is what really matters.  If your expenses grow faster than your profits, then you have a lot of activity going on, but you don’t get to keep as much of what you make.

An insightful exercise to try is to take a look at your revenue mix.  Then you can ask “what if?” to optimize your profits. 

Your Revenue Mix

Let’s say you offer three different services: Services J, K, and L. Your revenue pie looks like this:

J:  $700K or 70% of the total

K:  $150K or 15% of the total

L:  $150K or 15% of the total

Total:  $1.0 million

In this example, Service J is clearly the service making you the most revenue in your business.  But is it making you the most profits? 

The profit you receive from each of these service lines is as follows:

J:  $80K

K: $10K loss

L:  $30K

Total:  $100K

While Service J is generating the most profit volume for your business, it’s actually Service L that’s the most profitable.  Earning $80K on $700K yields 11.4% return on Service J, but earning $30K on $150K yields nearly double the return at 20%.  Service L generates the most return.   And if possible, Service K may need to be discontinued or turned around. 

Optimizing Profits

Your strategy for a more optimum revenue mix might be to sell as much of Service L as possible, while eliminating or fixing the problem around Service K. 

It’s fun to experiment with different revenue mixes.  And of course, there are many more variables besides profit, such as: 

There are many more questions to ask and strategies to consider to make you more money, which is why we love being accountants.

A New Mix

We hope you’ll spend some time analyzing your revenue mix and having fun asking yourself “what if?”   If we can help you expedite the process or add our perspective, please reach out anytime.

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Our latest blog article: “Mix Up Your Revenues for More Profits” is available now! Subscribe here: [link]

Many small business owners focus on generating more revenue every year, and that’s a wonderful goal.  But not all revenue is created equally since some items are more profitable than others. Find out how to mix up your revenue streams to increase profit in our latest blog article: [link]  

Business Tip: If you sell more than one product or service in your business, you could increase your profits by taking a look at your revenue mix. Learn how in our latest blog article:  [link]

While it’s fun to watch revenues grow, your business profit is what really matters.  If your expenses grow faster than your profits, then you have a lot of activity going on, but you don’t get to keep as much of what you make. Learn how to mix up your revenues to profit more here:[link]

 There are many variables to consider when experimenting with different revenue mixes, such as: 

• What services/products do you prefer to work on/sell?
• Are you able to sell more of the most profitable service or are there marketing limitations?
• Is one service a loss leader for the others?
• Are you able to adjust price on the lower margin services to increase your profits? 

Learn more about mixing up your revenues to increase profits here:  [link]

Are your expenses starting to outgrow your revenue? You can increase profit by taking a look at your revenue streams and seeing where you may be able to mix things up. Find out more here: [link]

Do you focus on profit volume, or do you also look at what generates the highest return within your services? Many only focus on profit volume, but the return is key to understanding what service is most valuable for you to offer. Learn more about understanding your revenue mix in our latest blog article: [link]

Are you looking for a way to optimize profits in your business? If you offer more than one service, take a look at your revenue mix to see how you can rearrange things to bring in the highest return for your services. Sign up for our newsletter to learn more! [link]