SME Resources > Your Finance > Costs and business profitability

Costs and business profitability

Understand how to control your costs and manage your profit

Monitoring your profitablity

People often mistake high revenue and lots of money coming into a business for success. It’s easy to see the cash in the till or the bank and have a moment of glee. However, unless you have enough profit (the money left after you have paid out for everything) then your business needs some serious attention.

One of the easiest ways to check and monitor your profitability is to calculate your gross profit margin. This is the percentage of money left over compared with your revenue once you take out the costs associated with making your product or service.

Tip:

There are two main ways of increasing your business profitability: making your pricing more efficient and controlling your costs. An easy way of improving your cost control is through stock and supplier control and careful management of what you do have. For example, if someone in a family run pub is taking snacks from the kitchen every day after school, then your snack costs are going to go up if you are not taking that into account.

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Cost and profit measures

Make sure you have the most effective strategies in place that monitor and maximise your profits.

Gross margin Pricing strategies Stocktaking Purchasing efficiency Managing labour costs

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Learn direct business finance course

Business finance basics

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Costs of running a pub

British Beer & Pub Association guide to the costs of running a pub

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Food stocktake template

Download a free stocktaking template from spreadsheet123.com