Profit | Numbers Knowhow

10 Tips For Creating A Sustainable Creative Business

Mahmood Reza — Tue, 02 Jan 2024 08:25:01 +0000

It can be challenging to build a sustainable creative business. Every year, I see more and more businesses in the Arts struggling to remain profitable. It’s a fine line between doing what you love creatively and balancing the books. It can be done – but you’ll need to invest some time and energy into the support functions in your business. Here are 10 tips for maintaining your creativity AND your profitability. 1: Establish a clear vision for your creative business Artistic and creative business owners go into business to do the thing they love doing whether that’s photography, sculpture, expressive arts such as dance, music and so on. It’s a passion business which can often mean that the support tasks can get overlooked. Without a clear vision and plan, you can get caught up in the creative side of your business. You forget to give enough time to manage your numbers. Develop a long-term vision that incorporates both creative aspirations and financial sustainability. It’s wonderful to create stunning pieces of art or music. But if you can’t pay your bills on time, your business won’t survive no matter how talented you are. Regularly revisit and refine your business vision. Adapt […]

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Sales vs Profit: Know The Difference

Mahmood Reza — Mon, 04 Dec 2023 11:11:53 +0000

Any business that strives towards success should be making money, or in business terminology, generating profit. One of the main reasons that businesses go under is because of the confusion between two seemingly similar, but in reality quite different aspects. It’s about the famous duo: sales vs profit. What do we mean by cash? How about profit? How are they related to each other? Which one of the two is more important for business growth? I will cover these points in this blog and bring you closer to understanding what really keeps your business going forward. So, let’s start bit by bit. Sales vs Profit: What is the difference? Whatever your business type is, there are products and/or services that you are offering to the end customers. Hopefully, they will recognise your worth and buy from you, not just now, but in the future as well. Now, whenever someone buys your product, you are generating sales. You are piling up the cash you receive from your customers. However, and here is the tricky part, the amount of sales is not actually your end profit. We now come to the sales vs profit part. So, yes, you have received the […]

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Pricing For Profit: 5 Key Numbers

Mahmood Reza — Mon, 23 Oct 2023 10:47:16 +0000

Wondering how to price your products or services so you can make a profit? It’s not as simple as it seems because it involves several things to consider. That’s why figuring out the right price is one of the biggest challenges business owners face. There are two main financial outcomes of pricing and it’s so important to understand them. And to know how to calculate them. Once you know what those two outcomes are, the next step is to consider five key factors that will help you set a price for your product or service that meets your business objectives. And finally, I’ll show you a FREE online pricing calculator that makes it easy to do all this math for yourself. Watch this video now and learn how to price your products or services for success! How to price your products or services so you can make a profit You need to make sure you’re covering your costs and making a profit. In this video, I’ll explain the two main financial outcomes you need to meet: Time availability, and Quantity of time. These two are essential to take into consideration because nobody can devote all of their time to […]

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Achieving Success In Your Business

Mahmood Reza — Mon, 16 Oct 2023 10:30:17 +0000

Feeling like you’re not achieving success in your business? You’re not alone. You’d be surprised to hear that many people feel this way at some point in their lives. But don’t worry, I can help. Once you’ve learned what success actually is, you can start to work on achieving it in your own business. However it won’t be easy, but it will be worth it. I promise. Here are some tips and examples of how you can achieve success. Watch my video on business success and find out how to achieve it for yourself! A few words on success Certainly we all have our own definition of success, but there are some commonalities that we can all agree on. To clarify success is not a destination, it’s a journey. It takes hard work, dedication and lots of perseverance. But most importantly, it takes learning from your mistakes and continuously progressing forward. There are so many resources out there to help you achieve success in your business. All you need is the desire and willingness to learn and put in the effort required. Stay focused on your goals, don’t compare yourself to others, and always keep moving forward. You can […]

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Knowing Your Costs – The Key To Any Business

Mahmood Reza — Mon, 25 Sep 2023 10:46:37 +0000

Running a business means setting clear goals that you would like to achieve as a business owner. Whether that is to provide services or manufacture products, you must have a defined target and strive to reach it. Certainly, one of your goals should be making money i.e making a profit, since there is no future in a business that is repetitively not profitable. Focusing merely on the sales you are generating won’t give you the full picture. Hence, the way to success and money is through knowing your costs. In this blog, I am going to explain the different types of costs and how they behave in different circumstances. The importance of knowing your costs The sales that you make are not your profit in the business precisely because of the costs you have. Once the end customer has paid you for the product or service that you offer, the money you receive needs to cover the expenses that you encountered in the process of production. Now, these expenses are what I call costs. By knowing your costs, you will know what you are left with from the sales. In other words, you will know how much of your […]

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Using Target Costing For Pricing

Mahmood Reza — Mon, 31 Jul 2023 10:29:30 +0000

Do you want to reduce your costs by 25% to 30%? If so, then target costing is the right choice for you. Therefore pricing using target costing can help you cut costs without sacrificing quality. Traditional and target costing – differences The two methods share things in common but also have differences. You choose the method most appropriate for your target customers and product mix. Traditional costing (or cost-plus costing) is the most used method for pricing goods and services. It’s based on adding an average overhead rate to the costs of manufacturing products. The focus of target costing is reducing waste from the start of production. Don’t wait until products are made. Moreover, this means that every step of the process is designed with cost-cutting in mind. You gain better prices and margins for your business. Target costing was developed by Toyota Motor Corporation to reduce costs while increasing the quality of its products. It’s now widely used throughout many industries from automotive to consumer electronics. Target costing has been around for many decades, much longer than cost-plus costing. Listen now to find out more about how target costing works! Conclusion If you’re interested in dealing with pricing and […]

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Gross Profit & Net Profit: What Is The Difference?

Mahmood Reza — Fri, 19 May 2023 09:33:22 +0000

Making as many sales as possible is the goal of every business. Whichever service you offer to your customers, that is going to be what you’re aiming for. However, what really lies behind a successful business story is the profit generated from these sales. In this week’s blog, we will go one step further and look at two types of profit you would typically encounter, gross profit and net profit. What exactly does gross and net profit mean? What’s that all about? Gross profit Gross profit in business terms is the profit made once you deduce the costs the business has incurred for manufacturing the goods and/or providing the services. An easy way to grasp the meaning of it is through examples. For example, Maggie sells homemade biscuits outside her house at 50 pence a biscuit. Now, if she sells a hundred of those, then she ends up with £50. Those £50 are her sales, but it’s not her profit. Maggie needs to spend £10 first for flour, eggs, and sugar. She reckons this will be enough to make a hundred biscuits all in all. This means that she gets a £40 profit. Those £40 are her gross profit. Here […]

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What Is Operating Profit?

Mahmood Reza — Fri, 28 Apr 2023 10:13:25 +0000

Business is all about making a profit, isn’t it? But in accounting, there are several terms used to express different kinds of profit. Ultimately, what should interest you is your operating profit. There are multiple names for operating profit. You might hear people refer to it as EBIT which is the acronym for earnings before interest and tax. It can also be called PBIT which stands for profit before interest and tax. Another name for it is net profit. Definition Operating profit is the profit you make after you’ve deducted your costs for making the goods you sell and also the costs for running your business. Furthermore, it’s your total revenue minus costs of sales along with operating costs. How to calculate operating profit The easiest way to show you how to calculate your operating profit is to use an example. That way you can translate it to your business and make your own calculations. Let’s take an artist as our example. Say you’re an independent artist who sells their art and you’ve got your own company. The moment you sell a piece, you’ve made revenue. As per our definition of operating profit, you now need to deduct the costs for creating that artwork. […]

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How To Price Your Products

Mahmood Reza — Mon, 17 Apr 2023 07:33:09 +0000

Are you sure that you’ve priced your products well? Or maybe you’re at the beginning of your business journey and you’re wondering what the best way to do it is. This blog will teach you how to price your products based on different pricing strategies so that you can avoid making a mistake from the early days. In addition, you need to know how to price your products when developing pricing strategies for your business. If your business sells things (if you are a retailer or a manufacturer), there is a different approach to pricing services. Overall, some things stay the same. Pricing must play its part in: meeting your business and marketing goals, and making a profit on a sustainable and long-term basis. Whatever model you choose to price your products will not be a one size fits all. You will have different pricing approaches to use within your business toolbox. Purpose and objectives drive the approach. Things to consider before setting prices Determine an accurate costing for the product or project. Estimate the target profit required for the product, project, or year to make the business feasible. This can be determined by a percentage – such as […]

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Profit In Business

Mahmood Reza — Mon, 17 Apr 2023 07:31:00 +0000

What is profit? We can define profit as “a financial gain, the difference between the amount earned and the amount spent”. Making a profit is essential for any business. There are several important elements that make up your business story – some more important than others. However, I think it would be safe to say that ‘profit’ is one of, if not, the most important element. Without profit where is your business going? Nowhere. Making a profit enables you to invest in growth. But, it also allows you to be resilient as a business when unforeseen circumstances occur. Profit can also act as a motivating factor or incentive. Finally, it can be a source of finance for your day-to-day operations within your business. When all is said and done understanding profit and how to calculate it is what you want and what you need to keep on top of your business story. How to calculate it The standard equation is: PROFIT = TOTAL SALES – TOTAL COSTS Once your total sales exceed that of the total cost then you are in profit. Firstly, you have to consider the various choices on your hands. You may decide to withdraw the profit […]

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What Is Break Even In Business?

Mahmood Reza — Fri, 14 Apr 2023 09:07:45 +0000

To understand break even, you first need to know the components involved with business activity. But how do you find out what your business requires to break even? What is break even in business? Your business breaks even when your sales cover all your costs – when neither a profit nor a loss is made. To be able to work this out in more detail, there are numbers that you can analyse. These include ‘sales revenue’, ‘fixed and variable costs’, and the ‘contribution margin’. Break even is the point where the total revenue generated equals the total cost incurred. To put it simply, this is achieved when all the money spent on production, marketing, distribution and administration is covered by the sales of the product. It is not uncommon for businesses to spend more than they earn, so knowing how much you need to sell to cover your expenses is crucial. Why break even is important Knowing and understanding your break-even point gives you better insight into your business, accountability and enables you to make important business decisions that will improve your profit margins and company success. You can pat yourself on the back when reaching that financial milestone! […]

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How To Use Your Financial Plan Effectively

Mahmood Reza — Tue, 11 Apr 2023 09:40:37 +0000

Creating and following a financial plan (your financial story) is an important step to taking control of your finances. If you’re like most business owners, you know that it’s important to have a financial plan in place. But do you know how to effectively use your financial plan? Keep reading for steps on how to put your financial plan into action! In this blog (and vlog), I’ll share four tips on how to effectively use your financial story. It doesn’t matter if you’re just starting out or have been working on your financial plan for a while. It’s always good to learn something useful or brush up on something you’ve perhaps not paid much attention to up till now. How to use your financial story effectively Here are my four golden rules to follow when it comes to using your financial plan. You’ll see that it all really has to do with being familiar with your numbers and continually going back to them to check if you’re doing a good job realising your business targets. So, let’s see what the four tips are. It’s about setting targets and sticking to them Use and access your data Decide how often […]

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