After all, a business that does not have good financial management cannot remain healthy for a long time and tends to fail – especially in an increasingly competitive market. When this management occurs, on the other hand, obstacles tend to be overcome and positive results appear.
One of the most important calculations for micro and small companies that seek to remain always organized from a financial point of view is the profit calculation. Many entrepreneurs, however, end up having difficulties in making this calculation.
If you still don’t know how to calculate the profit of a micro business or know someone who has difficulties in managing business finances, today’s article is worth following. Continue reading and find out how to calculate the profit of the micro company – thus avoiding putting your business at risk.
What is profit?
Profit is nothing more than the positive return on an investment made in a business – whatever it may be. When the return of the business is negative, there is a loss in a given operation.
Imagine, for example, that you bought a property for R$100,000 and that, five years later, you sold the same property for R$150,000. His profit in this operation was R$ 50 thousand. If you had sold your asset for R$90,000, you would have lost R$10,000 on this deal.
The same occurs with companies that sell services and products. If the accounts don’t close, the profit ceases to exist – exactly the opposite of what is expected of a business, isn’t it?
When we talk about profit – and, consequently, the financial health of a company, it is necessary to keep in mind, first of all, that a successful business needs to be profitable and profitable. Without these two characteristics, having your own company ends up not making much sense.
Not to mention that, when there is no profit generation, the business can end up making a loss and putting the entrepreneur in a difficult situation.
How to calculate the profit of the micro enterprise?
Calculating the profit of the micro company is not a seven-headed animal, as many entrepreneurs believe. However, for this calculation to be done correctly, it is essential that the administrator understands the difference between net profit and gross profit.
When calculating a company’s gross profit, it is necessary to subtract, from total revenue, the cost of products or services sold – such as inputs purchased to produce the product, costs for performing a service, among others.
Gross profit = sales for the period – cost of goods/services sold
To calculate the net profit, on the other hand, it is also necessary to consider all the fixed and variable expenses that the entrepreneur needs to pay for the business to remain in operation. Here, we can insert bills for electricity, water, internet, rent, employee expenses, purchases of various materials, payment of taxes, among others – whether fixed or variable expenses.
The formula for this calculation will therefore be:
Net profit = gross profit – expenses (fixed and variable)
See, therefore, that the results of gross profit and net profit tend to be different. However, roughly speaking, profit will always be equal to revenue minus expenses – whether it be for offering a service or product, in the case of gross profit, or also considering expenses for running the company as a whole, as in the case of net profit.
What is the importance of this calculation for the success of the business?
Efficient financial management – which includes calculating the micro-enterprise’s profit – is decisive for the success or failure of a business. There is no point, for example, in earning a lot of money if the profit does not exist due to excessive expenses not accounted for by the entrepreneur.
In addition, it is from the profit calculation that the entrepreneur is able to verify his profit margin and the profitability of his business over time. It is at this moment that the administrator can make changes, if necessary, or even see opportunities to optimize his business, invest in certain sectors of the company and make it grow as a whole.
Therefore, if you do not usually carry out financial control of your company or know someone who is not in the habit of calculating the profit of the micro company and all the indicators that involve the finances of the business, this may be the time to change your habits.
Get organized, plan and carry out good business financial management. You and your company will only benefit from this new attitude. Take a test and find out in a short time how this change will positively affect your business!