
One goal of any business is to increase its profit, but increased profit doesn’t always lead to increased profit margins. Whether running a tattoo shop or an auto repair shop, a business owner needs to understand the difference between profit and profit margin and realize which one serves you as a better measurement for understanding costs. Profit is Total Revenue Minus Total Expenses This can help anyone better understand profit: sales-expenses=profit. This is a formula that is outdated and lazy, that we should be getting away from and is keeping you from being successful in your business. From now on I want you to think of Profit as: Sales-Profit=Expenses, but more on that later. For example, let's say an auto repair shop sells $500,000 worth of parts and labor a year and its total expenses to operate the store (rent, utilities, labor, advertising, licenses, merchandise etc.) totals $400,000. Take the $500,000 in revenue and subtract the $400,000 in expe ... read more