Many people who are starting a small business are unfamiliar with business language and may use the words “revenue” and “profit” interchangeably.
It’s important that anyone who is starting a small business or even a non-profit agency learns the difference between the two sooner rather than later.
Let’s look closely at revenue and profit, as well as how they differ.First, let’s examine what “revenue” truly means.
Simply put, revenue is the amount of money earned before the total operating expenses are subtracted.
Business owners are not able to pocket 100% of their revenue because they have expenses associated with running their businesses.Now, let’s look at profits.
Examples of such expenses are as follows: marketing, advertising, utilities, cost of goods sold, staff salaries, website maintenance, research and development, office supplies and administration.Therefore, $ 100,000 in revenue only tells you a very small part of the story.