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Net income is the difference between revenues and expenses. Revenues – expenses = net income We use net income to measure profitability.  (Net income and net profit are synonyms.)   A good basic goal for your business should be to maximize net income, the “bottom line.” Maximize your net income by increasing the difference between […]
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The proverb goes like this: “Don’t put all your eggs in one basket.” In stock-picking, they call it “diversification.”  You should own 6-10 different stocks, in different industries, rather than focusing on a single company, industry or sector. The same rule applies to running your own business.  To build and grow a secure business, diversify. […]
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This post explains how to determine the cost of your products.  Properly costing your products will help you set prices that maximize your profits.  If you are in a service business that doesn’t sell physical products (such as a law practice or a dog-walker), I will write a separate post for you sometime in the future. For […]
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I love Dropbox. Dropbox backs up all of my files and makes them available everywhere I work – on my iPad and on both my PC’s. No carrying around thumb drives, no forgetting to back up. Everything is everywhere all of the time. Sometimes I e-mail links to my files directly from my iPad. I’ve […]
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The income statement is a financial statement that measures a company’s profitability.  It is sometimes called: Statement of income Statement of earnings Statement of operations Profit and loss statement The basic formula for the income statement is: Revenues – expenses = net income Income statements are usually prepared using the accrual basis.  The largest expense […]
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People often confuse assets with expenses.  This is because both assets and expenses use up your funds – these are things you can spend money on. Assets provide a future benefit to your business.  They help bring in future revenues and profits.  Assets appear on the balance sheet. For example, inventory is an asset. Expenses […]
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Your online business must have an accounting system.  It can be sophisticated, or it can be very simple, but you need one.  Your accounting system will: keep track of critical tax information provide a scorecard of useful information to help you track your performance prevent errors and fraud. If I’ve not persuaded you so far, […]
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From Wikimedia Commons One of the most challenging aspects of running a business is managing inventory in a productive way. First of all, what is inventory?  These are the products that you have purchased which you plan to resell to customers. One new-wave approach to inventory management is “made-to-order.”  This means that you produce products […]
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