The basic question.
THE CALCULATION
Income, less all costs, over a period.
WHAT PEOPLE GET WRONG
Omitting costs.
WHAT GETS OMITTED
Their own time Transport Data and airtime Bank and gateway fees Depreciation of equipment Costs paid personally Time spent on administration
THE OWN TIME POINT
If you pay yourself nothing, the business appears profitable while you earn nothing.
Include a realistic cost for your time.
WHAT TO CALCULATE
Profit per month Profit per product or service, where possible
THAT SECOND ONE
Frequently reveals that something you do a great deal of loses money.
WHAT TO REVIEW
Monthly.
WHAT TO COMPARE
Against the previous month and the same period last year.
WHAT A DECLINING MARGIN MEANS
Costs rising faster than prices.
WHAT TO DO ABOUT IT
Raise prices, reduce costs, or stop doing the unprofitable work.
WHAT NOT TO DO
Assume busy means profitable.
