What is revenue? What types are there? Calculation formula, meaning? How to evaluate the business performance of the store? A lot of questions are raised regarding the issue of revenue. In this article, the answer will be revealed fully and clearly. Readers who are interested in this issue can consult and learn.

What is revenue? How to evaluate the business performance of the store

Revenue knowledge overview

First, let’s briefly explore the basics of revenue. Issues such as concepts, meanings, classifications, calculation formulas, etc. will be solved.

Revenue is the amount earned from sales and service provision
Revenue is the amount earned from sales and service provision

What’s the revenue?

Revenue is the total amount of money that a business earns in the course of its operations. In English, this concept is called “revenue”. Each type of business will have different revenue sources such as from providing services, selling goods or financial activities, …

In production and business activities, revenue is an important factor used to measure the level of efficiency. This is also the number that should be included in each periodic financial statement.

Separate net sales and net sales

Revenue (DT) is divided into two sub-concepts: net sales and net sales. They are distinguished as follows:

  • Net revenue: The profit after deducting production and business expenses, tax expenses, depreciation and maintenance fees,…
  • Net revenue: The actual profit of the business after deducting expenses related to sales activities and indirect taxes.

Revenue formula

To make it easier for you to imagine, let’s see the formula for each type of revenue mentioned above:

  • Total revenue = Number of sales/service orders * Product/service price
  • Net Revenue = Total Revenue – All costs of production, business and taxes
  • Net Revenue = Total Revenue – (Discount + Discount + Returns + Indirect Tax)

Common revenue types

Depending on the type of business, revenue is also collected from many different sources. Here are some common types of revenue:

  • Revenue from product sales
  • DT from service provider
  • Internal sales
  • Revenue from property rental
  • Revenue from bank interest, loan, bond investment,…
  • Revenue from difference in foreign currency sales, transfer, etc.
  • Extraordinary revenue (irregular revenue)
There are multiple revenue sources depending on the type of business
There are multiple revenue streams depending on the type of business

What does revenue mean?

Revenue is very important to the survival of the business. Detail:

  • DT helps pay related expenses in the course of business activities such as the cost of renting premises, paying fees, charges, taxes,…
  • DT used as working capital to promote re-operation
  • DT is used as reserve capital, avoiding too much dependence on banks
  • DT helps develop business activities and expand scale, develop businesses
  • DT determines the existence of each business
Revenue is vital to business survival
Revenue is vital for business survival

How to evaluate the business performance of the store

Next, we’ll learn about the store’s performance. How important is revenue in evaluating business performance? What factors are required to evaluate business performance? All problems will be solved in the section below.

What is business efficiency?

Business performance is defined as the economic, social, political, … benefits that individuals or organizations achieve in the course of their operations. With stores, business efficiency can be understood more simply as good revenue, standard profit The rate of new customers increases, customers return a lot, the store’s reputation is good,…

Each business will have a different goal, from which the performance evaluation criteria are not the same. However, most businesses will rely on the following basic criteria:

  • Measurement of production and business efficiency: Revenue, profit, profitability,…
  • Measurement of financial performance: Net profit, total assets, profitability ratio,…
  • Measurement of socio-economic efficiency: Job creation, employee income, state budget,…

The business performance of an enterprise includes many factors, not just revenue. However, revenue is one of the most important factors that cannot be ignored.

Measurement of business performance is essential
Measuring business performance is essential</td >

How to evaluate a store’s business performance

So for a business store, how will we evaluate specific business performance? Here are the ways that you can refer:

View financial statements

Not all stores will have financial statements. Retail stores will not make this data sheet. However, the purpose of looking at financial statements is to see how cash flows are performing. For stores that do not have financial statements, we can replace them with other figures.

For example, the income statement measures a store’s profitability through profit or loss. The balance sheet shows the financial health of the store. It can measure the relationship between the amount of money owned and the amount owed. The statement of cash flows will show the level of liquid cash.

Balance helps determine the cash balance and debt of the business
Balance helps determine the cash and debt of the business

In general, if you want to measure business performance, you must first check cash flow. Looking at the financial statements or alternative metrics such as balance sheets, cash flow statements, etc. is the best way to gauge business performance.

Are customers satisfied?

Next, measuring customer satisfaction is a step that cannot be skipped. Customer satisfaction is considered a key factor in the existence and development of the store. If the guests are satisfied, they will come back next time, they will recommend and spread the word.

Unsatisfied customers will leave us and go to competitors. More serious is the act of “exploiting”, widely reviewed in the mass media.

So how to measure customer satisfaction? There are quite a few ways, here are the most effective and popular ones:

  • Make a survey for all customers who have purchased or used services
  • Please give direct feedback, take care of each customer by calling, private message
  • View reviews, comments, comments on information channels, fanpage
  • Receive comments and complaints from customers and send them to the customer care channel

Only when the percentage of customers increases almost absolutely, the store’s revenue will be stable. Business efficiency will also gradually improve and develop sustainably.

Customer satisfaction is important
Customer satisfaction is important

A lot of new customers?

Next, a store with good sales but too little new customer rate is also alarming. New customers reflect whether the products and services you provide are pervasive and attractive. To increase the number of new customers, you can run marketing strategies.

Strategy plays the role of zoning, directing the store to find potential customers. From there, the store will take specific actions to attract customers to their products.
At the same time, the store should also have a customer database, personal information. This is the easiest way to measure the percentage of new customers, long-term customers.

Evaluate employee performance

Employees are also an essential factor, directly affecting the store’s revenue. Measuring business performance also needs to consider employees.

Specifically, evaluate how employees are doing? Is it effective? Is the revenue that employees bring up to standard? Is the salary for employees okay?

From those aspects, the store can offer standard KPIs for employees. Employees will rely on KPIs to bring revenue and value to the store. Moreover, you also need to consider the turnover rate which is the average length of time employees are engaged.

What is the reason for leaving the job, from the objective side or the store,… A good business needs to meet the basic needs of employees. Sustainability and stability inside will only be able to develop and build, develop the scale outside.

Update market situation

The store’s business situation and revenue also depend a lot on the social market situation. In the case of a decrease in demand, competitors also do not perform well.

It’s not hard to explain why your store doesn’t make sales. For example, during the epidemic period, most consumers simplify and tighten details.

At this time, the business efficiency of the store decreased due to external factors. They do not have to come from within the business. At that time, if you want to increase revenue, you need to monitor the market situation, make immediate and reasonable strategies.

Assess your expectations

Finally, to evaluate business performance, store owners also need to compare with initial expectations. When starting a new business quarter or year, most business owners will create a detailed plan with estimates of revenue and profit.

At the end of each business period, you should compare actual results with expectations. Its difference can reflect business performance. However, the expectations you set should be consistent with the current socioeconomic situation.

If expectations are too high, it is understandable that the goal is not achieved. At that time, you cannot determine the business performance of the store.

In short, revenue is an important indicator when doing business. It combined with other factors will indicate the business performance of the organization. Therefore, in the process of operation, enterprises need to come up with comprehensive strategies. Strategy plays a role in comprehensive, sustainable and long-term business development. If you need support to develop a comprehensive marketing strategy, you can look to VSM. A leading professional and prestigious digital marketing company in Vietnam. VSM’s website address is https://www.vsm.vn/.