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Revenues sources are an integral part of the functioning of any company as they create the basis for the further rise and its evolution. The functioning of the given company depends on several most important sources of revenue. The first and the most important source is the direct sales of the product of Safe and Sound company. Before running a new business venture, a company has obviously investigated the existing market, its conditions, and the existing demand for goods. For this reason, the bracelet that is created to assist children and other people suffering from mental problems will obviously be popular. The given equipment will be able to improve the quality of their lives and guarantee that people will be protected.
It means that the high level of sales could be expected. Moreover, the given products unique character and its great efficiency will also result in high revenues. Thus, a device that tracks a patients way and shows parents or other close people some possible problems will also be popular with customers (Herman, 2011). It should be sold together with the bracelet and supplied to local police departments. The given scheme could be considered another source of revenue as it guarantees the increased demand for Safe and Sounds product. Besides, the necessity to equip police departments with the above-mentioned products ensures that many devices will be needed and, in its turn, it will also increase the number of sales and revenues.
Additionally, the company also offers an application that works alongside the tracker device and provides basic information about an autistic patients movement. This application could be taken as the second source of income. It is obvious that people who care for these patients have a great need for the monitoring of their movements and this application is one of the best possible ones to accomplish this task. For this reason, its sales will be at a high level. Furthermore, the company has a tendency towards its further rise. It means that Safe and Sound will be able to diversify the products created by it and introduce a wide array of new sources of this kind to satisfy the existing needs. Finally, the maintenance of the devices that are produced by the company will be another source of revenue. For this reason, the above-mentioned aspects could be considered the main factors that will contribute to the companys further evolution and the rise of its financial power. The exploration of these sources of revenue will help Safe and Sound evolve and continue its gradual evolution.
One should realize the fact that the revenues model depends greatly on the sources of revenue as they determine the functioning of the company and its further rise. Thus, this mutual dependence is one of the major concerns of every companys functioning. For this reason, there are several crucial aspects related to Safe and Sounds revenue model. First, it will obviously explore the production model that implies the creation and distribution of a certain product to customers who value this very product or service and are ready to pay for it (“New commercial models in medical devices,” n.d.). Besides, bracelets and applications as the main sources of revenue contributed to the choice of the given model. At the very stage of the companys evolution, it will have to attract customers attention. For this reason, the efficient and popular pricing strategy will be used as the main competitive advantage that could guarantee a good position at the local market. Comparatively low prices will be needed as the first element of the suggested revenue model. This pricing strategy will attract new individuals, and they will increase the popularity of the suggested product and contribute to the stable and high level of demands for Safe and Sounds services. The broadening of the target audience and attraction of new customers will create the basis for the further rise and constant increase in prices that might promote the companys evolution.
Table 1. Revenue Sources.
|Safe and Sound Bracelet||Contribution to total sales revenue |
Unit sales per month
Price per unit
|Application sales||Contribution to total sales revenue |
Unit sales per month
Price per unit
|Maintenance||Contribution to total sales revenue |
Operations per month
Price per one operation
The given table demonstrates the model that could be used by the company to obtain stable incomes and guarantee its further rise. As comes from it, the three main sources of income are not equal, and direct sales of Safe and Sounds bracelet comprise the main item of income. The model used by Safe and Sound presupposes the focus on the promotion and distribution of bracelets. Moreover, the price of $100 contributes to the acquisition of a significant competitive advantage as the company attracts new customers by it. Application sales and maintenance are other aspects that might help a company to evolve. The exploration of the given model also could serve as the guarantee of the efficient commercialization and Safe and Sounds rise. For this reason, we could state that the given three sources of revenues precondition the choice of a certain model and result in the further companys rise.
The financial aspect is one of the most important elements that determine the companys further rise and profitability. Safe and Sounds financial plan presupposes several important aspects that should be explored to create the basis for the further rise of this very organization. Moreover, the creation of the financial plan will help to analyze the potential financial viability of this very business venture, create a forecast that could describe potential threats and expected incomes (Ittelson, 2009). Besides, resting on the above-mentioned revenue sources and model, there are several basic assumptions that could be made. First, the income statement for Safe and Sound should be considered beneficial.
Table 2. Income statement.
|Total sales revenue||240000||260000||280000|
|Cost of sales||156000||156000||154000|
|operating costs||Selling |
|Total operating costs||65000||75000||66000|
The given table shows the possible incomes in the further three years. Besides, we could admit the fact that there is an expected growth of incomes related to the increased popularity of the suggested product. It means that the cost of advertising will become much lower. A company will not have to spend so much money to promote its product as its positive image will serve as the best guarantee of the increased demand for Safe and Sound products. Moreover, the unique significance of the given product will also guarantee that new customers will appear. For this reason, the given financial income statement provides us with the information that is needed to outline the most important aspects which will alter in the course of the companys further rise. First of all, total operating costs will decrease. It should be taken as the logical aftermath of the companys evolution. Besides, according to the income statement, the price for the product will be $200 for this period of time. The low price contributes to the expected rise in unit sales. The company will be able to earn 16000 in the first year, and then the level of income will increase to 24000 and 50500 correspondingly. The gross margin will rise to 35,40, and 45% within the next 3 years. Altogether, these statistics indicate the unique efficiency of the firm, its ability to evolve, and perform operations that might help it to rise and evolve. Finally, this income statement creates the basis for further cogitations about the expected income.
Like any new business venture, Safe and Sound company will obviously face some significant risks in the process of its rise and evolution. First, it might suffer from the increased level of rivalry between companies that also function in the same sphere. There are numerous actors who sell medical equipment and try to attain revenues. For this reason, the risk of the new entry is rather high and impacts the functioning of Safe and Sound greatly. it determines the comparatively low price of at the first stages of the companys rise as it will obviously draw over numerous clients. Thus, the company should also be ready to act in terms of traditional market risks which are high manufacturing costs, negative industry trends, a decrease of the level of demand, unstable economic situation, etc. cause these risks might result in the significant downfalls and even future companys collapse. Additionally, the companys officials should consider the fact that medical facilities business is characterized by numerous powerful corporations that control a bigger part of the whole market.
For this reason, except for the high rivalry, the company should be ready to follow the tendencies established by these very powerful corporations, especially at the beginning of its evolution. Another risk is related to the companys possible inability to attract customers attention and guarantee the high demand for the product it suggests. In such a case, the level of revenues needed for Safe and Sound to survive will hardly be achieved, and it will collapse. Finally, poor and inefficient management should be taken another crucial aspect that might condition either its rise or collapse. In this regard, considering the unique importance of these aspects, the creation of an efficient and flexible strategy is one of the most important tasks (Ebben, 2005). It will help to monitor the situation at the market and implement efficient measures that will alter the situation and guarantee the acquisition of a certain competitive advantage. Additionally, the implementation of different monitoring tools is needed to trace the evolution of the company and admit the most important changes in its structure. Only under these conditions, Safe and Sound could become prosperous and create the basis for its further stable growth and becoming a significant actor.
Ebben, J. (2005). Managing risk in a new venture. Web.
Herman, B. (2011). 10 Ways for hospitals and health systems to increase profitability. Web.
Ittelson, T. (2009). Financial statements: A step-by-step guide to understanding and creating financial reports. Franklin Lakes, NJ: Career Press.
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New commercial models in medical devices. (n.d.). Web.