Hello & Welcome!
It’s 1st February today, congrats – we have moved passed the year’s darkest month and slowest sales period and can start looking forward to spring and summer!
Today I’m starting a weekly, 4 part blog post series covering the most common and important terminology used in the online selling world.
Today we’ll start with General Business terms and in the following weeks we’ll cover:
- Importing & Shipping
- eBay & Amazon
So in total there will be 4 posts that should cover most of the terms you need to know about.
It may be geared towards people who are totally new to selling online but still – even experienced sellers sometimes mix up important stuff so it’s not a bad idea to go over the basics every now and then. And as we all know from Dragons’ Den – there is no bigger problem than not knowing your numbers, right?
So let’s get started with a list of the most common business terms that every entrepreneur should know about!
Sales/Revenue – amount of money you have received for the sale of goods. Example: if you sell an item for £10 and you sell 100 items, your sales would be £1000. Usually, when showing sales, you don’t take off ANY expenses associated with these sales. For example, this means that you wouldn’t take off PayPal fees from this number.
Turnover – basically the same thing as Sales but the term “Turnover” is usually used to show sales in a certain period of time. So if someone asks you what your turnover was for the last 12 months, you would give your total sales number for that period.
Gross profit – this is one of those numbers every Dragon is looking for! Gross profit means your Sales minus Cost of Goods. So for example, if you buy an item for £50 and sell it for £80, your gross profit is £30 (£80 – £50).
However you do not deduct any further expenses associated with sales, like taxes, salaries, rent etc. Only the cost of goods.
Net Profit – this is the REAL profit as we speak – money you make after ALL expenses are paid. This includes cost of goods, salaries, shipping costs, rent, utility bills etc. This essentially means the money you take home, after paying tax (if taxes are applicable). [Read more…]