Obvious Revenue Bandwidth Issues

I specialise in coaching CEOs and MDs running established six, seven and eight figure businesses. All of those businesses experience problems but often the problem is the actual the stage of the business and often that is shaped by your current revenue.

For example, your problems and responses to those problems are very different if your business is pre-VAT (<£82,000) as compared to a company turning over £2m.

You both have problems – just different ones.

There are about 5.2M businesses in the UK and about 400,000 new businesses started in 2014.

The obvious revenue bandwidths* are:

  • Pre VAT <£82,000
  • £120,000 – £300,000 – about 74% of all UK businesses, av. £55k per employee/5 staff
  • £300,000 – £2m – about 20% of all UK businesses, av. £90k per employee/20 staff
  • £2m – £7.5m – about 4% of all UK businesses, av. £155k per employee/40 staff
  • £7.5m – £25m – about 1% of all UK businesses, av. £185k per employee/130 staff
  • £25m – £50M+ – about 1%.

*Pure averages only

If you want to learn more about this topic and how it impacts your business you might want to attend the KPI London Brand Accelerator. Click here for details.

For whatever reason there are psychological barriers around these levels as well as practical issues. For example, many businesses who push through £2m can experience cashflow and cost issues and interminable frustration. I know a company at the £1.9m with 37 staff. A quick rule of thumb calculation puts staff averages at £51,000 per employee which is well below £90,000 required to sustain that business. Therefore I would expect cashflow and cost problems.

This business owner will be feeling quite frustrated.

One solution is to increase revenues per employee, fund your way out of it or explore an M&A.

A £300k – £2m business is often a sweetspot business that gives you a good lifestyle provided your staff levels match your turnover (i.e.m, £300k is about 4 -5 staff) and on average are earning you about £90-100K.

These are broad rules of thumb but a good starting point for a coaching discussion around business performance.

If that sounds worth discussing call me.

 

 

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