Making Profits
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Transcript of Making Profits
Winning Job Hunting & Career Development tips from Malcolm Hornby
www.hornby.org
1
Making ProfitsMaking Profitsin in
BusinessBusiness
Winning Job Hunting & Career Development tips from Malcolm Hornby
www.hornby.org
2
What’s my line?What’s my line?
Complete the following sentence:
In commercial businesses The Chief Executive’s 2 most important priorities are:
1…………………………………………...2…………………………………………...
Winning Job Hunting & Career Development tips from Malcolm Hornby
www.hornby.org
3
What’s my line?What’s my line?
Answers
In commercial businesses The Chief Executive’s 2 most important priorities are:
1 To keep the business solvent / from going bankrupt
2 To make a profit
Winning Job Hunting & Career Development tips from Malcolm Hornby
www.hornby.org
4
Understanding profitsUnderstanding profits I run a business which sells Exercise books
I sell the books at 50p each.
Last month I sold 40,000 books (£20,000 sales).
I made £2,000 profit
I want to grow my business, so if I can increase sales to 50,000 books how much profit should I make?
Winning Job Hunting & Career Development tips from Malcolm Hornby
www.hornby.org
5
Understanding profitsUnderstanding profits
I have two sets of costsFixed costs – like the rent for my warehouse
and the lease on my vanVariable costs – like the cost of buying the
books, and the money I spend on diesel for the van; the more I buy / use the more I spend
My revenue comes from my salesMy profit = My sales – My costs
Winning Job Hunting & Career Development tips from Malcolm Hornby
www.hornby.org
6
Understanding profitsUnderstanding profits
It would be easy to think that if you increase sales by 25% then profits go up by the same amount
Actually something much more wonderful happens…. Take a look at the graph on the next page…..
Winning Job Hunting & Career Development tips from Malcolm Hornby
www.hornby.org
7
Costs / Sales / Profits RelationshipCosts / Sales / Profits Relationship
Winning Job Hunting & Career Development tips from Malcolm Hornby
www.hornby.org
8
Understanding ProfitsUnderstanding ProfitsSo if I increase sales by 25%
50p / book 40,000 sales = £2,000 profit50p / book 50,000 sales = £4,875 profit
If I increase the price by 50% and can achieve sales 75p / book 40,000 sales = £12,000 profit 75p / book 50,000 sales = £17,375 profit
And if I also double the price and achieve sales! £1.00 / book 40,000 sales = £22,000 profit £1.00 / book 50,000 sales = £29,875 profit
Winning Job Hunting & Career Development tips from Malcolm Hornby
www.hornby.org
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