The majority of us don't really think or know about how the numbers work in business before you start one.
Yes, you are buying and selling, but are you making a profit on your sales?
At one point in time, we made lots of sales with a product, but where we didn't fully understand the numbers, we didn't end up making a lot of money with it.
To understand thing like balance sheets and profitability within a business, you need to start at the top and look at income.
Not your personal income, but the businesses income, in the form of sales, turnover. how much money is coming in...
Then you look at the cost of goods sold, you consider all of the expenses that took place to get your product into the market. Like, shipping costs, referral fees, FBA fees etc.
Then before you get to your Net profit, how much the business has made in profit total, you must work out the Gross profit minus any Overheads or Operating expenses.
An Overhead or Operating Expense are things like storage costs, PPC costs, software subscriptions and accountancy fees.
Anything that doesn't relate to one particular sale.
"Imagine the journey a product has to go on, what are all of the touchpoints that the product has to go through, from supply to the customer's hand. Think about what each of the costs would be for each of those points on the product's journey."
"PPC is advertising, so yes it could have helped make a sale, but it could have also hindered it instead."
Work on the top-level stuff, stop wasting time shredding paper.
Don't be the caretaker of your business, be the owner.
Running a business is like owning a car. You didn't need to know the ins and outs of how the engine works to be able to drive the car. But, if you know how to maintain the simple stuff, like checking the oil, you will be able to keep it running.
It doesn't matter what business you are in you will need to know a bit about the Language of Money or you will have a hard lesson to learn later on.
