Key Terminolgy to Understand if You Want a Successful Business

There’s no doubt that running a successful and profitable business is a difficult job, but it is often made all the more complex with a plethora of business terms and definitions being bandied around by leaders and bosses. Make sure you are up on the lingo to understand what is being discussed throughout the day at your office and be in the know about key terms.

Revenue

Revenue is the total income from the sale of goods or services.

Turnover

The business turnover is often used to mean the same thing as revenue; it is the amount of money taken by a business in a set period. It is often measured annually, usually within one single tax year (April – April in the UK).

Gross and Net Profit

Gross profit is the company’s total income or sales minus the costs associated with producing and/or selling the products, or services.  Simply put, it is the difference in value between revenue and the costs of producing or making the product or service.  It doesn’t include all expenses such as rent, payroll or utility bills.  The net profit is a company’s total earnings minus ALL the expenses – not just the manufacturing costs, but admin, legal/accounting fees, payroll, rent etc. The net profit is also measured on a yearly basis.