Question
can anyone explain what oint #3 means in the article below:
Regardless of the size of your company, every business owner needs to know three numbers, Lemonis says:
1. Your annual sales revenue, "based on a trailing 12 months, not the calendar."
2. Your gross profit margins.
3. And your expenses as a percentage of your gross profit — "not a percentage of your sales. You pay your bills with gross profit — not with revenue."
Answer
Well, revenues are the return that you have from your investment. If for example, you have a flat and you rent it you are going to have the monthly payment as a revenue. But you have to pay, let say the common expenses. the garbage recollection or the repair of the refrigerator. Then you are going to have the gross profit A.K.A "income before taxes"
Then you have to pay your food, your electricity bill, etc , this is not to be invested in your property but in your personal comsuption, are are "expenses".
