In current economic conditions many companies find themselves scaling back. Unfortunately, most begin cutting without understanding the impact of their cuts. This often leaves them worse off than when they started. Cutting back in the wrong place can harm your business more than no cuts at all!

So, how do you know where to scale back? Easy, by understanding the dynamics of your revenue engine. In this article you will be introduced to a quick and very simple method to strategically understand the cause and effect of your actions on your revenue engine. 

The "revenue engine" is made up of your marketing, sales, and operations functions. It is what you do to make money in your business.

You know how important it is to measure what is happening in each function. But, even more critical is knowing how changes in one function impact the others. For example, if you want to increase sales, how much can you increase sales before you reach your operational capacity? Not knowing this choke point can destroy your business faster than underperforming sales! 

In my next posting I'll share the critical values you should be monitoring to make more effective decisions to improve your company's revenue.