Would upgrading a piece of machinery allow you to drive down production costs? If so, would you be able to qualify for business financing for the new machine?.What are ways that you can cut down on expenses to meet additional customer demand?.Was there an event, such as a layoff, supplier problem, or machine breakdown, that caused you to incur additional expenses?. Did you expect the additional 10% increase in costs as a percentage of sales to generate the extra $25,000?.How does a 33.33% increase in annual sales compare to the performance of your direct competitors? Your industry?.In 2016, your total expenses were 55% of total sales, up from 45% in 2015.įrom this simple scenario, you can draw several useful business management questions: One potential culprit behind this lower than expected profit margin could be an inefficient management of resources. When accounting for the total expenses behind those sales, the impressive 33.33% increase in gross revenue is watered down to just a 9.09% increase in net profit before applicable taxes. A 33.33% increase in annual sales sounds great but you need to gather more details behind those numbers. Let’s imagine that your annual sales for this year were $100,000, up from $75,000 on the previous year. A Small Business Budget Tells You The Whole Story Estimating the revenue and expenses of your small business over a specific future period of time is a crucial step not only to maintain a sustainable operation, but also to be better prepared for the inevitable seasonal highs and lows. “How’s business? Booming!” You may like the sound of that, but by only focusing on an ever-increasing number of sales you won’t have a full picture of your company.
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