A demand-driven revenue model (top-down) may not be for you. Today we delve into bottom-up so you can stay on the track of gaining competitive advantage and becoming more profitable for 2017. Let’s check out a supply based revenue model & our second candidate:
This is driven on resource supply. It answers questions like “how many hours of work can I bill?,” “how many widgets can I get produced?” and “how much crop will my fields yield?” Estimate potential sales revenue of a product in order to establish the total sales figure.
“Known as an operating expense plan, bottom-up forecasts examine factors such as production capacity, department-specific expenses, and addressable market in order to create a more accurate sales projection. Many experts believe this approach is more realistic than top-down because bottom-up forecasting employs actual sales data, the resulting forecast may be more accurate, which enables you to make better strategic decisions moving forward. (quickbooks)”
Calculate revenue by individual employee based on hours, cost rates, multiplier and utilization rates. 9DOTS provides the functionality to calculate and aggregate these figures to a fiscal year revenue model. St0re values for each individual’s hours, expected revenue, direct and indirect labor costs by fiscal period and then calculate and aggregates those values and deliver them to the budget reports. This entire process simplifies and automates previously labor-intensive activities.
Budgeting season is beginning for professional services organizations. Sales are rolling in & each month you have to prepare for the next–increasing your sales, generating profit. New projects are starting, old projects are continuing on. Making sure your organization’s headcount is in balance with your backlog and projected pipeline is a constant challenge. You need the right tool to help you see far enough into the future to understand your organizations staffing needs.