Hello! Hello! And welcome back.
The question dreaded by husbands and lovers, “Does my bottom look big in this?”
Good news today though – we want a BIG, FAT BOTTOMline!!!
Profit is about more than just making money - it's about being able to invest and grow your business in the future. As such, it’s more complex than just Sales less Cost.
Let’s take a closer look:
The “bottom line” we referred to earlier is the Net Profit. In order to benefit most from making a profit, we need important information about how the company is doing. The different measures of profit can help indicate whether recent trends – good or bad – are likely to continue.
Gross Profit
A company's total revenue (equivalent to total sales) minus the cost of goods sold. Also called "gross margin," "sales profit" and "gross income". Gross profit = sales revenue - costs of goods sold
Use this “above” the line formula into increase your Gross Profit
No of customers x Sales (sales value and sales volume) = Turnover x margin (selling price calculated on selling minus cost of sales) = Profit
You can influence your gross profit by ensuring you get the right customers paying the right prices and that you are pricing your products or services correctly to get the profit you need.
So often I have had sales people telling me how they can double their sales if they could halve their price. My answer is always the same:
"Anyone can sell a million of something for nothing."
Now lets look “below” the gross margin line
Operation Profit
The amount of profit realised from a business's operations after taking out operating expenses or costs (eg salaries, rent etc). Also referred to as "operating profit" or "net profit".
Operating profit = Gross Income - Operating Expenses
If the costs associated with sales have risen faster than the company’s sales revenue over multiple years, it may be difficult for the company to maintain healthy profit margins going forward. Factors that we look at vary depending on were we find errors or weakness in our records. If your net profit is too low you need to look at the following:
- Are you making enough Gross Profit?
- Are you marking up your products correctly?
- Are you managing your costs in the business effectively?
or do you need to do some belt-tightening that will enhance profitability?
Define where you going wrong, so that you can then develop strategies to increase your profits, and decrease costs.
Complimentary Download
Just for you, we have a Formula for Increased Profit Template available for download from
Drive - https://drive.google.com/open?id=0B3zopj0OTdVLSkRuQ1lLTGxULUk
Dropbox - https://www.dropbox.com/s/i204lko6hxxxtfu/Formula%20for%20Increased%20Profit%20.xlsx?dl=0
Think back to why you started your business…
On a factual plane, profit is a mathematical formula. We know, however, that from an emotional level, profit = SO MUCH more.
Contact Sonja NOW to get those profits soaring.
083 256-0378 | This email address is being protected from spambots. You need JavaScript enabled to view it.
Next Week:
Marketing Magic - how to track and measure your marketing efforts.