What is Profit and why is it important?

Profit is a very important concept for any beauty business. Profit is the financial return or reward that salons/ spas or entrepreneurs aim to achieve to reflect the risk that they take. Given the most entrepreneurs invest in order to make a return, the profit earned by a business can be used to measure the success of that investment.

Profit is also an important signal to other service providers of finance to a business. For example, banks, suppliers, leasing companies and other lenders are more likely to provide finance to a business that can demonstrate that it makes a profit  (or is very likely to do so in  the near future) and that it can pay debts if they fall due. Profit is also an important source of finance for a business. Profits earned which are kept in the business are known as retained profit.

Retained profits are an important source of finance for any business, especially for a start up or small business. The moment the product or services is sold for more than its cost of product, then the profit is earned which can be reinvested. 

Profit can be measured  and calculated - formula is: PROFIT = TOTAL SALES - TOTAL COSTS Remember the Phrase: Turnover is vanity, profit is sanity!

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