Well It's not only about sales.

Well, It's not only about sales.





Businesses run to generate profit.


When you do business just have this framework in your mind - Box Model


Think of business as a box, it has taken in input, add value and generated output.


When you analyze business, everything should be in the same units - Monetary values


Therefore input will be called as 'Cost of running a business' and output will be called 'Revenue of business' and value addition would be 'Profit of business'


Profit = Revenue - Cost


Our aim should be to increase the revenue and decrease the cost as much as possible to get the full potential profit of any business.


Revenue is mostly from sales except MNC's which has investments, interests and other miscellaneous sources of revenue. But almost 95% of Indian businesses revenue mostly based on sales


Sales = Revenue


Therefore ,Profit = Sales - Cost.


Since sales can be taken from a single source(Total value of all invoices in the given period), we resort to sales increase to generate profit predominantly


But cost reduction is an altogether different ball game and requires our effort and understanding of business flow. It is dynamic and not from a single source and touches all possible operations in your business.


There are many strategies to improve Sales but very few on Cost-cutting. Therefore my next articles are based on Cost-cutting Strategies and mitigation plans.


I conclude this article by saying,


Profit != Sales rather Sales - Cost


Just apply your business in this box model and you will get a weird idea of how things are happening

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Disclaimer: This article is me speaking to me through this blog! Short Intro: If you want to innovate in a particular field, you need to understand how things work in the first place. Innovation is a