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Profits

Question from one of our subscribers:

We set up this existing business around 4 months ago and have seen a steady increase in profit month on month. I’m really pleased with how it’s progressing (£400 profit in month 1 and £850 in month 3) but the main issue we’re having is actually getting to use some of the profit! Stock runs out so quickly so we’re constantly having to replenish existing supplies and with only a range of 3 products we’re desperate to expand by getting in more related products.

At the moment, we’re having to use literally all our turnover in order to keep up with depleting stock levels but I’m sure there must be a better way? We’re not getting to keep any of the money; not only profit but also the cost of goods is going on ordering more inventory. So in theory, we might make £4k in sales with £1.2k on cost of goods and £850 profit… that should be £2k in our pocket but at the moment it’s all going on getting more stock.

Is there a better way to do this or do we just have to continue doing what we do and not get to see any profit for some time?

Answer:

Hi!

In the event that you NEED the profit to live on, then definitely the answer is simply purchase less stock (so purchase 1.2k again not 2k), you will need to renew more frequently however you won’t have as much trade tied up in for money stock and can take the 800 for benefit (keep in mind it will be liable to tax on the off chance that you haven’t ascertained that into your profit figure)

 

 
 
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