Do You Want To Be More Profitable?
Are you ready to increase your own profits?
These simple lessons will help you understand what is really happening in your business so you can expand the income you have.
You must know your profit margin in your business. Here is how to calculate your profit margins:
- First, you need to know your gross profit. Let’s say you brought in $100,000 in revenue, this is your total sales or revenue. Now you take out the cost of your services or products. Gross profit is the profit you make after you take away the costs of selling or providing your product or services.
- Next, you calculate your net profit. Net profit is the number of sales dollars after you deduct all expenses, interest, taxes, stock dividends, etc. from your total revenue. Net profit is also referred to as your bottom line.
This calculation is your profit margin formula. The definition of profit is the amount you keep after expenses and this comes from your net profit. Profit margins will give you a very clear picture of how your business is performing. You can see where you need to cut expenses and/or increase revenue so that your business actually retains more money.
When you compare your profit margins you can see where sales are coming in and where costs are growing. I also suggest you look at each product and service you offer to see which are the highest profit margin items or services you sell – focus on those.
Take a look at your profitability and see if you need an increase in prices or an increase in sales to create more income. Look at your costs and see what you can cut down or out to increase profits kept.
If you aren’t keeping enough income then your margins may need to be decreased by either creating a lot more sales or decreasing the costs of providing your services and products.
Take a look at your profitability now. How can you increase sales? What expenses can you decrease?
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