Operating Revenue Explained
There are a number of metrics that a business owner can use to gauge the health of their business. Making consistent profits is key for any business, but sometimes that does not happen. One of the best metrics to utilize is a business’s operating revenue. We’ll take a deep dive into this important metric.
Operating Revenue in Brief
Operating revenue is that revenue that comes directly from a business’s principal business activities. If you own XYZ widgets and widgets are the only thing your sell, then the number of widgets sold will represent your operating revenue.
Operating revenue is a strong indicator of the vitality of any company or business. Strong and steady operating revenue is indicative of a healthy and vibrant business.
Increasing operation revenue is always a good thing for any business. Several ways that might be considered if your operating revenue appears too small are:
- Build up a larger customer base
- Raises prices for your goods and services
- Expand into new niches
- Open up a new location
- Encourage your customers to make more and larger purchases
Distinction from Non-Operating Revenue
Not all of a business’s revenue comes from operations. Some of the forms of revenue that are non-operational in nature include these:
- Investment gains
- Customer fees such as late fees
- Proceeds from legal actions
- Royalty and licensing revenue
Keep an eye on the ratio of non-operating to operating revenue. If it is high, say over fifty percent, this may be an indicator of future cash flow issues if any of the non-operating revenues cease coming in.
Connect with Brightview Commercial Capital
If your operating revenue isn’t what you’d like it to be, an infusion of working capital may be need to put in some course changes at your business. The folks at Brightview Commercial Capital are ready to help. Give them a call today to discuss your options going forward.