856-256-1490 | ckm@taxproblemssolved.com

Schedule your free consultation today
  • Home
  • Services
    • Tax Resolution
    • Help with Your IRS Audit
    • Filing Prior Years Return
    • Owing the IRS Money
    • Behind on Payroll Taxes
    • When Your Spouse Owes the IRS
    • Leave a Reply
  • I need help with…
    • Filing Prior Years Return
    • Responding to an IRS Letter
    • Paying Past Due IRS Taxes
    • My (Former) Spouse’s Tax Mess
    • A Payroll Tax Problem
    • A State Tax Problem
    • Going through an IRS Audit
    • Getting Information About My Case From the IRS
    • Bankruptcy and My Tax Debt
  • Resources
    • Resources
    • Mobile Accounting
  • Testimonials
  • Blog
  • About us
    • About Us
    • Send Us Your Referrals
  • Contact
  • Home
  • Services
    • Tax Resolution
    • Help with Your IRS Audit
    • Filing Prior Years Return
    • Owing the IRS Money
    • Behind on Payroll Taxes
    • When Your Spouse Owes the IRS
    • Leave a Reply
  • I need help with…
    • Filing Prior Years Return
    • Responding to an IRS Letter
    • Paying Past Due IRS Taxes
    • My (Former) Spouse’s Tax Mess
    • A Payroll Tax Problem
    • A State Tax Problem
    • Going through an IRS Audit
    • Getting Information About My Case From the IRS
    • Bankruptcy and My Tax Debt
  • Resources
    • Resources
    • Mobile Accounting
  • Testimonials
  • Blog
  • About us
    • About Us
    • Send Us Your Referrals
  • Contact

Mix Up Your Revenues for More Profits

March 25, 2021 In Blog, Business Tips, Profits
Tweet
Share
Share
Pin

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:

  • 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?

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.

Tweet
Share
Share
Pin

Monthly Archives

Categories

  • Accounting (23)
  • Accounting Software (2)
  • Blog (7)
  • Bookkeeping (2)
  • Bookkeeping Tips (5)
  • Business Development (14)
  • Business Financial Planning (1)
  • Business Growth (11)
  • Business Tips (61)
  • Cool Tech Tools (13)
  • Cost-Saving Tips (1)
  • Customer Service Tips (6)
  • cybersecurity (1)
  • Decision-Making Tips (3)
  • Expense Reduction Tips (3)
  • Management Tips (10)
  • Marketing Tips (1)
  • Payroll Tips (3)
  • Personal Development (4)
  • Profitability Tips (12)
  • Profits (1)
  • Tax (4)
  • Time Management Tips (4)

Sitemap

  • Home
  • Services
  • Resources
  • Blog
  • About Us
  • Contact

Contact Us

Tax Resolution Services

TaxProblemsSolved.com

429 Woodbury Glassboro Road
Sewell, New Jersey 08080

856-256-1490 | ckm@taxproblemssolved.com

Client Portal Login

Schedule your free consultation today

American Society of Tax Problem Solvers
Winner of the Top Practitioner Award from the American Society of Tax Problem Solvers

Enter your email below and get FREE special reports on how to deal with tax problems!

 
  • How to End IRS Problems Forever
  • How to End IRS Tax Problems
  • Do I Need to Hire a Professional?
  • What the IRS Never Told You
  • Solving Payroll Tax Problems
  • Have Your IRS Lien Withdrawn and Improve Your Credit Score
  • And many industry-specific reports to help you with your tax problems

Lists*

Copyright TaxProblemsSolved.com 2020 | Site Design by Accelerator Websites