Segmenting Your Business to Grow Revenue

We recently had a conversation with a client who owns a coffee roastery and several cafes.  One of his top goals for 2021 is to segment his streams of revenue by location, online and special projects. Essentially, he’s creating a cost center for each stream, location, and product - with the goal to make each stream individually profitable.

Segmenting your Own Business to Boost Profitability

Instead of viewing revenue as an aggregated summation at the end of a month or year, what if you successfully segment revenue stream by location, entity, product grouping or even product-level? Instead of  reviewing the total revenue at the end of the month, these new revenue segments could better highlight strengths and expose weaknesses in your business.

These segments can be straight forward delinations such as:

• Online vs. in-store

• Carry-in vs. take-out

• Location based (e.g. downtown location vs. uptown location)

• Product type or genres

• Top 5 selling items vs. bottom 5 selling items

The idea is to focus your attention on different revenue drivers, track, and reach profitability goals per segment.

Results-driven Revenue Decision Making

Once you have a clear picture of how your revenue streams are divided, track data and results for a couple months. Eventually you’ll be able to see which segments in your business are growing, declining, staying flat, or need your focus (and a reboot).

Your business will be smarter and make more informed decisions by focusing your attention on the revenue segments that have the most opportunity to change, largest growth, and highest margins. It’s also a good way to expose problems that otherwise may be overlooked at an aggregated level. 

What are some ways your business have segmented revenue and what did you find?  Did it change the way you made decisions and did you have the tools to be able to segment the revenue successfully?

Best,

Brent