Gross profit is revenue minus the direct costs of delivering your product or service. A massage therapist's sheets and oils, a product's raw materials and shipping: these are direct costs. If gross profit is too low, you'll burn out. Raise prices or cut expenses now.
Let's see, know your numbers. So one of the other things that I, I teach a class, Know Your Numbers and Grow Your Business. One of the things that people don't often understand, so I teach people how to read their financial statements, but if you look at the gross profit for your, the goods or services that you're doing, so you take the, the revenue that you bring in and you subtract the costs directly related to what you're selling. Okay, that's your gross profit. So if you are, um, if my friend is a massage therapist, so that would be like the sheets and the oils and whatever she needs to do in order to be able to deliver a massage for a client. If it's, um, a product, it's what everything that it— the materials to the raw materials and what you need to, to make the product and then to send it out. If that number is not a high enough number, then you need to take some action right away. Either raise your prices or cut the expenses, because so many people will churn and burn. Like, oh, I made a sale. Just because you're making a sale doesn't mean that you're profitable. So to really look and see, because if you're not making a good enough profit on what you're selling, then it's just an exercise to keep you busy. You're never gonna grow, and your business is not gonna thrive.
