Friday, October 19, 2007

Sales Are Not Everything

Determining how much one earns can be a tedious work. This is especially so to people who are very new to business. This fact may be one of the major reasons why bookkeepers and accountants have jobs available for them almost anywhere.

It is imperative to know how much you earn in each period. Even if your business is only small or just starting you need to keep track of your finances. It has been a fact that there is a tendency especially of non-formal businesses to run out of capital because business owners usually tend to spend the business funds on personal use. This is not to say that one cannot get funds from the business but only to an extent where the business would still be able to continue to run smoothly. The funds he should get from the business should be limited to his salary and to cleared income only. He cannot just get funds when he feels like it.

To determine your income, always take note of your expenses and then record all sales. Now to arrive to your income figure, it’s simply a matter of finding the difference between the sales and the expenses. If your sales are larger then it means you have a profit. And then if your expenses are bigger, then you are at a loss. But remember that in computing these figures, you only include items that you have spent and sold on the same time period.

Sure it is not as easy as it sounds but if you want your to keep your business in continuous operations, always keep track of your income and your cash flow. Budding entrepreneurs should always bear in mind that this is very important even in small and very simple business ventures.

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