If you're a business owner, you have a greater understanding of terminology than those on the outside looking in possess. For example, you know that "profit" and "revenue," despite what many people believe, aren't the same. Robert Jain, as well as other names in the world of finance, can illustrate the differences between the two. For those that are looking to get into business, regardless of the specific industry, here is how these terms differ.
For those that are unfamiliar with the term "profit," it's essentially the money that's made after putting in an initial investment. Let's say that, for the sake of argument, that you run social media ads to bring users to your company's website. These cost money, but it's determined that the initial expense will be made up by the additional ecommerce sales that you bring in. According to names like Bob Jain, between expenses and returns, profits will be determined.
Profit can be broken down into different subtypes, too. One of the most commonly cited is the gross profit margin, which is determined when revenue and variable costs are measured. How much money does a specific product make? How much does it cost to produce? These are just a few questions to ask so that a business owner will be able to determine what their profit margin is, before making necessary adjustments for the future.
Now that you know what a profit is, let's discuss revenue. By definition, revenue is the total amount of money that a company brings in, typically in regard to the products and services that they offer and sell. It can also include any royalties that are paid to them by third parties, though this doesn't always apply. In any event, revenue is determined before any deductions are made, which is one of the main reasons it cannot be interchanged with profit.
Revenue will vary depending on the specific business being looked at, too. For example, if you were to operate a restaurant, your revenue would be generated by the cost of food and drinks that you offer. For someone that works as a landlord, revenue would refer to utilities and parking fees. These are just a few examples, but understand that revenue refers to the collective amount of money that a business is able to bring in.
For those that are unfamiliar with the term "profit," it's essentially the money that's made after putting in an initial investment. Let's say that, for the sake of argument, that you run social media ads to bring users to your company's website. These cost money, but it's determined that the initial expense will be made up by the additional ecommerce sales that you bring in. According to names like Bob Jain, between expenses and returns, profits will be determined.
Profit can be broken down into different subtypes, too. One of the most commonly cited is the gross profit margin, which is determined when revenue and variable costs are measured. How much money does a specific product make? How much does it cost to produce? These are just a few questions to ask so that a business owner will be able to determine what their profit margin is, before making necessary adjustments for the future.
Now that you know what a profit is, let's discuss revenue. By definition, revenue is the total amount of money that a company brings in, typically in regard to the products and services that they offer and sell. It can also include any royalties that are paid to them by third parties, though this doesn't always apply. In any event, revenue is determined before any deductions are made, which is one of the main reasons it cannot be interchanged with profit.
Revenue will vary depending on the specific business being looked at, too. For example, if you were to operate a restaurant, your revenue would be generated by the cost of food and drinks that you offer. For someone that works as a landlord, revenue would refer to utilities and parking fees. These are just a few examples, but understand that revenue refers to the collective amount of money that a business is able to bring in.
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