Leadership Tip

How to achieve quality revenue

An uncompromising focus on growth can take companies in the wrong direction. Take office-sharing company WeWork. Once valued in 2019 at $47 billion it filed for Chapter 11 bankruptcy on Monday. Once lauded as the "fastest-growing company ever," it has since lost about 98% of its value after going public in 2021. The key is to find quality, sustainable revenue. Here's what that looks like:

1. It's predictable. It's always easier to forecast if you can be confident that 90% of last year's customers and dollars will be back this year. The money should come from returning clients willing to spend the same amount.

2. It's profitable. A benchmark for a good margin varies by sectors, but quality revenue tends to be higher-margin. Aim for gross margins of at least 70%.

3. It's diverse. While early-stage companies may often have a couple of customers that make up a large portion of revenue, over time you want to build a diverse base. None of your top five clients should make up more than 15% of revenue.


The above leadership tip...
was sent in response to a question from a participant on our acclaimed 10/10 leadership development and mentoring programme. Whether you're a first time manager or an experienced leader, straightforward, practical advice on best practice is hard to find. Until now. To find out how you, your team or your organisation can benefit, please contact us.

 

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