Business Survival and Growth

BTEC Business

Where’s the Profit?

• Profit is one of the rewards of setting up in business

• It pays back the business owner for taking an entrepreneurial risk

• Profit is the money that’s left after you’ve taken away your costs from your sales revenue

Profit = Sales - Costs

Costs and Revenues 1

Even before you sell anything, your business will have costs:

• Developing your product or service• Researching your market• Buying raw materials• Finding premises • Recruiting staff

Costs and Revenues 2

• You calculate revenue by multiplying the number of items sold by their price

• Once you deduct all your costs from your revenue, you have the profit you have made

• More on this can be found at:

http://www.bized.ac.uk/learn/business/accounting/busaccounts/notes/oprof-ex.htm

Overview of Profit

Profit is:The difference between costs and revenues• The reward to the entrepreneur for taking

a risk• The ‘return’ on the money used to run a

business• A sign that people want to buy the

product/service

Objectives over Time

• Survival • Financial security • Market growth • Image • Meeting the aims of stakeholders

(see http://www.bized.ac.uk/glossary/glossary.htm to search for a definition and follow URL links)

Market ShareGrowing businesses usually take a greater share of their market. This may give them:

• More security• More profit (?)• Greater control in their market… but also,• More demands on their time and resources• Additional activity?