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How To Keep Your Business Financially Strong!

Q: How much above the monthly overhead does a small retail business need to make a month to be considered worth staying in business? In other words, what should the ratio of overhead to profits be to be considered a healthy retail business?                        A.J. Lawson     Alberta, Canada

This is a very important question with a fairly strait forward answer. What you are talking about here is your profit margin. Any viable business should have a 35-50% profit margin. That means that your “net” receipts after all your expenses should be 35-50% of your total “gross” income. What that comes out to in dollars and cents is something you will have to figure out for yourself or with the help of your accountant. I would encourage you to break that down even further into weekly and daily amounts. This should give you an idea of what you need to bring in each day and week to be profitable.

You can then break it down even further to what each employee should be bringing in each shift. This is a good way to judge your highest revenue days, hours during the day,or if you have them, if your employees are in the best position for that individual to reach their highest potential (although this should only be one of several criteria when it comes to employee reviews). Please see Chapter 12 of Business Genesis.  

I hope this has given you a little guidance. If you need more in depth help please feel free to post your comments below or Contact Us Directly and send me your questions. I also have more Resources that you may find helpful. I would also recommend that you read chapter 10 and 11 of Business Genesis. It provides more detailed information than what I can go into here and will set you on a path to financial success and a strong business. If you think this post would be helpful to someone else please feel free to share it. 

 

Have a comment or question about this week’s post? Let us hear from you! Post your own success stories or ask a question about how to move your own business forward to success! We love hearing from you and read every post personally! You can join the fun on our Twitter Chat and share your own success tips! If you are looking for more practical hands-on help we have two other resources for you. First, we have created an actual Small Business Toolkit for small business owners just like you to help you start and grow your own successful business and meet today’s challenges head-on with confidence. You can find yours right here. 

If you scroll down just a bit further I also have a collection of more success tips. Just click on any of the links. If you have a question about your business please feel free to Contact Us and send a personal message. We love hearing from you and will respond just as quickly as we can.

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