Tuesday, May 20, 2008

Adding up other people’s money…

Everybody does it. You know what I’m talking about…..You’re sitting in a restaurant and you start adding up how much your bill will be and then you divide it by the number of people in your party and then you multiply by the number of people in the room. But you’re not done yet, now you figure out how many “turns” of the tables there will be that night, maybe 2 or 3 and then you’ve figured it all out, you know how much the owners made. There is some small talk and then everyone at your table thinks about how glamorous it would be to open your own restaurant and make all that money. Don’t take that thought too far!

You did figure out what the restaurant brought in (gross), but not what they made (net). There is a big difference between the two.

Look at your own small business, what percentage of your gross is going to pay your expenses? If you look at restaurants more than 50% of their cost is typically food and drink and put in another 40% or so for employees and when you add rent, utilities plus some other expenses you don’t have a whole lot left over.

The grass isn’t always as green as your quick calculations would have you think! It’s fun to play with numbers but make sure you focus on growing your revenues and keeping your expenses under control while calculating how much YOUR business makes. Make it happen!
© 2008 eMarketing 4 Business LLC

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