What Is Turnover In Business?

Aug 6, 2023 | Business, Business growth, Business planning, Cash flow, Financial projections, Money

What Is Turnover In Business

What is turnover in business? We’re here to answer that question for you.

If you’ve been looking to get a grasp of what turnover is, then it certainly doesn’t help that there are different terms for it. As a result, you’re left wondering what they mean when they use all that jargon.

By the end of this blog, we will clear all of that confusion. So, without further delay, here’s what this short blog (and vlog) covers:

  • Turnover definition
  • How to calculate turnover
  • Why turnover is important, and
  • Why turnover is not a key financial priority.

What is turnover in business (aka definition)

To begin with, it is the standard term used by UK limited companies and when accounts are filed. HMRC use it in for the self-employed, large and small, and also for partnerships, large and small. Turnover also comes up for the Fifth Self Employed Grant

First thing is first. Let’s define it.

What is turnover in business? It’s the amount of money received from sales for a given period of time. I know it doesn’t help that there are different terms for turnover – revenue, sales, and takings – but don’t worry, they all refer to the same thing. So, whenever you hear people talking about the company sales or revenue, they’re essentially talking about their turnover. One and the same thing!

Bear in mind that your turnover is not the same as your profit, and is not the same as money in your bank account.

How to calculate turnover?

As we’ve defined it as the total sales for a period of time, calculating turnover is very easy to do. Simply, add up all your sales, and voila! – you’ve got the number that represents your turnover.

Why is turnover important?

Understanding your turnover is not just important because it helps us understand our performance against other companies; it also tells us whether we’re making enough profit to stay in business, and or invest more into what we do.

Watch the video for easy-to-understand examples of the importance of turnover in business. And also why turnover is not a key financial priority.

Hopefully, we’ve cleared up any confusion connected to the question: What is turnover in business? 

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