Maybe you have been in business for quite a while and have most things figured, but how much are you really making?
With so many variables, fixed costs, and “things that challenge your earnings” it can be hard to tell what the take home earnings are.
If you have fixed costs it pays to make sure you have those covered, and knowing how much you need to earn per day (min) to cover these. Recently I met a business person that was sure he was making a profit but in reality he had a surplus, and with added costs from variables he was actually only making a very small profit.
Your business requires you to know if you are making a profit so that longer term planning can take place, otherwise you may find yourself in a tricky business position and wonder how on earth it happened.
Take care to measure carefully what’s happening so you too can get ahead and explore the growth possibilities your business can offer.
#1 by Emma Rhoades on August 29, 2008 - 5:23 pm
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Steve, this is a very timely reminder, considering how much pressure small business owners are facing today. I also speak to many people who forget about a simple thing called ‘cashflow’ and until they do the figures as you have suggested, really have no idea what is going on in their business and wonder why they don’t make it!
#2 by Taylor on May 11, 2011 - 4:23 am
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Counting the beans is rarely anyone’s idea of a good time, and when things aren’t going well, its the last thing anyone wants to do as it puts failure right in your face.
That being said, understanding what you’re spending money on and if you’re making anything after costs is critical to any business success and growth.
Because bookkeeping in general is historical in nature, its not used as much as it could be for proactive purposes instead of just being used to describe the carnage
#3 by Ryan on July 2, 2011 - 11:07 pm
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This is definitely true. There are lots of people who just check their gross sales without considering their expenses. I think this is very important for anyone’s business…