Real Profit

For an owner of any business, given the number of hours, stress, and personal commitment an owner has to make, anything less than $100,000 a year in profit or earnings is not worth the risk associated with the running a business.

Profit

Profit refers the earnings from the business operations.  It customarily means the bottom line of the business income statement or its profit and loss statement.  For many business owners, it refers to the amount earned before income taxes are paid.  However, this is not correct.  It really means the amount earned for the owners of …

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Fixed Costs – Explanation and Examples

‘Fixed costs’ is a business term used mostly in cost accounting.  It has several meanings based on its usage.  The most common definition associated with fixed costs is expenses that must be paid regardless of production or sales volume.  The best example is rent for a company.  It doesn’t matter whether you produce or sell …

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How Much is a Fair Profit? Part III of V – Risk

A third factor in determining a fair profit percentage is risk.  Risk is divided into two types.  The first is insurable and the second is uninsurable risks.  Insurable risks are mitigated and have very little to no effect on the profit formula due to transferring the risk to a third party known as the insurance underwriter.  …

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What is a Reasonable Profit in Construction?

For any company, profit is based on the risk reward concept.  So in construction, what should be the profit (reward) given the risk?  What is a reasonable expectation given the industry and the particular business?  There is no single correct answer.  The construction industry is divided into several significant branches.  This article is focused on …

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Food Service – An Introduction to Owning a Restaurant

I have always been impressed by those that provide this product and service to our society.  Overall, I don’t think they charge enough, but that is just my opinion.  It also comes out in the numbers.  I have reviewed the books for over 40 different types of food service operations.   From franchise based to the …

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