Many business people love to talk about turnover.
Companies will advertise that they are a $1,000,000 a year business (or more!)
However turnover is one thing but what about profit? There are many companies that are currently international leaders in their field when it comes to turnover but are actually making huge losses. An example of this would be British Airways that according to reports in May this year had lost £531 million pounds. This company has a huge turnover and is a major world airline but how long can they trade losing such vast amount s of money?
When you look at your business accounts are you aware of the amount of money you are making? Profit is not just the selling price of the goods minus the cost of the them. Other costs have to be factored in. Advertising, premises, equipment, wages, insurance, utilities and the list goes on and on.
It is therefore essential that a business knows the true cost of sales so that it charges sufficiently to make a real profit. There is a saying that is well worth memorising. “Turnover is Vanity – Profit is Sanity!”
Log this saying into your mind because no business can continue for long if it is losing money. You need to make a profit! Profit is sanity and it is insane to think otherwise from a business perspective.
The Entrepreneur Club
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