What is negative profit?
|Imagine your business has ten thousand dollars a week coming in.
A negative fifteen percent profit means that you are actually spending eleven thousand five hundred dollars.
One thousand five hundred more, than you should actually be spending.
One thousand five hundred dollars more than you have.
That’s what a negative profit percentage looks like.
Why is negative profit bad?
That’s one thousand five hundred dollars, because it is not coming from the business income, needs to come from outside sources.
Your days are numbered…
Let’s say you had access to $15,000 in reserves (savings, credit cards and loans etc)
And you’re spending fifteen hundred dollars a week more is coming in.
This means you only have ten weeks in business remaining before it’s game over.
How to turn a negative profit percentage, into a positive…
If you have a negative profit percentage chances are, you are spending more money on your operational expenses than you should be.
The way to fix a negative profit percentage is to start cutting expenses.
Got a burning question about cash flow and profit?
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