It is not just enough that you increase your sales or area of operations. You need to know whether you are actually making a profit or not. If you do not do this exercise, you will not likely judge whether your business is successful or not. Moreover, keeping track of your profit is the best way to measure effectiveness of other functions like production planning, marketing, advertising, etc. There are many instances of businesses that did high volume, but lost their advantage because they ignored adequate profit planning. For small businesses especially keeping constant track of the profit plan is the best way to increase competitiveness. So, we repeat again that the gross revenue is not that critical as the net profit is. You need to know what eats into your profits and how you can plug it. The best way to keep track of your profits is to make a financial plan and measure actual performance on a periodic, preferably monthly basis. This allows you to detect pro...
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