To illustrate this situation, we will discuss the actual story of a small automotive repair and towing business. The business had a regional towing contract with AAA Auto Club, which gave the business top priority on all service calls. For four or five months during the year, however, the business was operating six to seven days a week but not making any money. After a third-party review of costs, it was determined that the AAA business was costing on a cash basis several dollars per call more than the revenue being generated. The owner was reluctant to give up what represented 40% of his business, but he took professional advice and eliminated that contract. The result was a normal work week throughout the year, much higher profitability and time to focus on work that is more profitable.
Here are six steps your company can take to make sure that your revenue stream is the best one for your business.