The Chain of Revenue

Over the last few weeks, I have been reviewing the services my company offers and where the greatest potential sources of revenue are. Determining my company’s value chain and its place in it will allow me to better explore where I can capture a higher profit margin or even determine a new service/product offering, to enhance the service I provide for my clients (and capture more revenue).

The value chain can best be defined as the link of activities involved in creating, distributing, and maintaining an end product or service. These activities range from the acquisition of raw materials to providing after-market service. This business framework was made popular by Harvard professor Michael E. Porter in his book Competitive Advantage.

Understanding your value chain helps you understand your competitive advantage and can enhance the way you do business. You may want to add to your offerings by adding a couple of services that you could easily do but your customers currently go elsewhere for. Maybe there is a firm that you usually refer business to but never receive a return from – could you service that business yourself and capture the entire transaction? Subcontract the other firm to still provide the service but include the service as a part of your package, adding a little on top to make sure it is profitable for your firm. Doing this would relieve your customer of having to deal with another company and portray you as more of a lifesaver than you were before – WIN!

Leave a comment to let us know the results of your value chain review and how it will affect your business.