Every business has costs.
Some costs are unavoidable. A business needs employees, equipment, technology, premises, materials, marketing and professional services to operate. The challenge is not to eliminate costs altogether, but to make sure that...
A business can generate impressive sales and still struggle to make money.
This is one of the most important lessons in business finance. Revenue is not the same as profit. A company might increase sales by 30% while its profit barely changes because costs have increased at the same time.
Improving profitability is therefore not simply about “selling more.” It is about creating a business model in which the money generated from customers produces an attractive return after all the costs of operating the business have been considered.
You are trying to understand why it happened, whether it is healthy, and what you should do about it.
And that makes financial analysis one of the most valuable skills a business owner can develop.
Sales has an unfortunate reputation.
Mention the word sales and many people picture a smooth-talking salesperson in a shiny suit, pressuring an unsuspecting customer into buying something they do not really want.
Thankfully, that is not...