Revenue is overlooked in Cost Reduction and Cost Cutting Initiatives.
Revenue just isn't part of the cutting equation.
Cutting, cutting and more cutting not only reduce costs but they
also undermine the enthusiasm and good will that are critical to
growth. Some companies take decades to
recover from cost cutting campaigns if they ever recover.
The Profit Improvement Process (PIP) is more effective because it focuses on loss
and
revenue in addition to expense. There is room for growth and a
future with a Profit Improvement Program.
Examples of avenues for revenue growth include:
 | Increased selling prices |
| Reduced selling prices (volume growth/market share growth) |
| Increased sales of existing products to existing customers |
| New products to existing customers |
| Retreat from sub-optimal businesses and/or customers |
| Product line variations and extensions |
| Bundled products and services |
| New markets for existing products |
| New products for existing markets |
| New products for new markets |
|
Revenue growth is a focal point of the process to keep the company vital and alive. |
|
Provides a forum for the fair evaluation of revenue opportunities. |
|
Recognizes that you usually cannot sell yourself out of bad businesses. You just
can't make it up on volume when the contribution margin is negative. |
|
Puts management focus on what's right for the company. It is quite often easier to
have your old ideas approved. |
|
Builds teamwork between the various factions in the company that might have stood in the
way of progress. |
|
Helps educate people on what constitutes profitable business. |
|
Facilitates better business decisions. |
