Day 14: 3 Pillars Of Revenue

Intro

Starting a business can be very difficult for many people, but in reality, there are 3 things that need to be followed. The success of any business is explained and brought down to just 3 pillars of revenue by one of the best business growth advisor, Jay Abraham. As mentioned in one of my previous posts (check it out here), any business that follows these 3 fundamental Pillars of Revenue, also known as the 3 Profit Activators, will make progress and grow successful.  

What are the 3 Pillars of Revenue

How do you know your business is successful or not? Simple... If it's generating profit, it is successful. If it's not generating profit or not generating money, then some problems need to be handled. The only ways to make money inside your business and make it grow are represented by the 3 pillars of revenue and they are

1. Get more customers
2. Do repeated business with those same customers
3. Sell higher ticket products to increase revenue

  Most of the time, businesses focus on getting more customers only. Well, it's not bad because if you manage to bring in more customers, in a way, your total number of sales will increase. But the growth is only 'Linear'. What if you are not able to provide repeated sales or no interesting high-value products or services to your customers? Some of your customers can leave you for another business. Let's have a look an example.  

Example

A particular business has 200 customers. Let's assume that each customer buys products for a value of $100, twice a year. So, number of customer = 200 Repeated business = 2 Value of product sold = 100   If we calculate the Annual Revenue (or Turnover), we will get

= 200 * 2 * 100

= $ 40,000

Part 1

What will happen if we increase any one of the 3 factors responsible for increasing the revenue of a business by 10%? a) Number of customer by 10% 220 * 2 * 100 = $ 44,000   b) Repeated business by 10% 200 * 2.2 * 100 = $ 44,000   c) Value of product sold by 10 % 200 * 2 * 110 = $ 44,000   The Annual Revenue is $ 44,000 for any factor out of the 3 factors that are increased by 10%. Therefore the increase in sales is calculated by; \frac{New Sales - Initial Sales}{Initial Sales} * 100   = \frac{44000 - 40000}{40000} * 100   = 10 %  

Part 2

What will happen if we now process on increasing any two of the 3 factors responsible for increasing the revenue of a business by 10% each? a) Number of customer and Repeated business, increased by 10% each 220 * 2.2 * 100 = $ 48,400   b) Number of customer and Value of product, increased by 10% each 220 * 2 * 110 = $ 48,400   c) Repeated business and Value of product, increased by 10% each 200 * 2.2 * 110 = $48,400   The Annual Revenue is $ 48,400 for any 2 factors out of the 3 factors that are increased by 10%. Therefore the increase in sales is calculated by; \frac{New Sales - Initial Sales}{Initial Sales} * 100   = \frac{48400 - 40000}{40000} * 100   = 21 %  

Part 3

What will happen now if we increase all 3 factors responsible for increasing the revenue of a business by 10 % each? 220 * 2.2 * 110 = $ 53,240   For all the 3 factors that are increased by 10%, the Annual Revenue is $ 53,240 Therefore the increase in sales is calculated by; \frac{New Sales - Initial Sales}{Initial Sales} * 100   = \frac{53240 - 40000}{40000} * 100   = 33.1 %  

Results Explanation

Part #	Number of Business Factors increased by 10 %	% increase in Annual Return	Surplus %	Type of graph
1	1	10	0	Linear
2	2	21	1	Exponential
3	3	33.1	3.1	Exponential (steeper)

  When only one of the three factors is optimised, the annual revenue growth is linear. However, as you start you optimise 2 factors, the growth is no more linear but exponential. When all 3 factors (the 3 pillars of revenue) are now optimised, the growth exhibits a steeper exponential growth.   This extra 3.1% can further be raised if all the business resources are used efficiently and this is what Jay Abraham calls the power of leverage. A full explanation can be watched by Jay Abraham himself https://www.youtube.com/watch?v=cvSGC8rpfMU  

Final Notes

From the example given above, it can be noted how important and how the 3 pillars of revenue affect the growth of a business. A list of businesses that follow the 3 pillars of revenue is given below.

	Get More Customers	Do Repeated Business with Those Customer	Sell High Ticket Products to Increase Revenue
9 - 5 Job	NO	NO	NO
Real State Flipping	YES	NO	YES
Brick and Mortar Business	YES	YES	NO
E-Commerse like Shopify and Amazon	YES	YES	NO
MLM	YES	YES	NO
Low Ticket Products Affiliate Marketing	YES	YES	NO
High Ticket Products Affiliate Marketing	YES	YES	YES
Digital Products	YES	YES	YES
Coaching and Consulting	YES	YES	YES
Events and Mastermind	YES	YES	YES

  If you want to learn more about how to set up, grow and scale the businesses that follow the 3 pillars of revenue, please do follow my number one recommendation by clicking here. Another platform that guides people to have their own business is no other than Click Funnels, do attend the web class for more information. If you have found value in this post, always feel free to comment and share it with your loved ones. Stay blessed.   * If you purchase anything through a link in this article, you should assume that I have an affiliate relationship with the company providing the product or service that you purchase, and that I’ll be compensated in some small way at no extra cost to you.