Is Your Business Turning a Profit?

In a couple of weeks the children will be back in school and a few weeks after that mothers will start thinking more about what they want to do with their "free" time. So some start to look on the Internet in hopes of finding that perfect part-time job, that can be done while the children are at school or sleeping.

The only problem with this concept that I have come across is that a lot of mothers with businesses find that they have no idea whether or not their business is making any money.

Most "newbies" jump in with both feet and have no idea what it is they are suppose to do to make money. Or they simply do not have any cash flowing through to make money. At the end of the 6 months or even a year, they sometimes realize they have spent more than they have made. Then usually I hear the cries of "It is a scam!" I am here to tell you not everything on the Internet is a scam; they are quite a few legitimate work at home jobs or businesses.

If you don't know a lot about finances, and the vast majority of people don't, then how can you determine that your business is making money? If you don't' keep track of advertising and sales-then how do you know how to improve? And how do you plan on staying business? Here are some tips to help you answer these questions:

1.The Basics: You need to have more money coming in than going out. If you have ever done a budget for your household living expenses the same concept applies to a business. It is a simple, straight forward concept; however there are numerous "newbies" who think they can spend money they don't have and still make a profit each month.

2. Business Plan: Do you need one and why? Yes! Having some sort of plan written down will help with determine how much money you can safely invest in your business. It can help you decide where the best possible place is to put that money. Plus, if you have it right in front of you every time you turn on the computer, you will have a better idea what it is you are doing.

3, Keeping Track: If you don't balance your checking account regularly you will be overdrawn in no time. The same with your business accounts check them regularly to make sure more money is coming in than going out. That you are staying within your budget. Keep track of your sales and after a time if they are not improving ask yourself why. What can I do different to increase sales and still stay within my budget. Is your business plan still working and how can you improve it.

During this time you should have a pretty good idea how much you are spending on advertising, is there some way you can improve your results with the same advertising. Do you need to rework your ads to make them more noticeable?

If you have your own website are you getting the necessary traffic to your website to make a profit. In most cases, I have found that if I get somewhere between 300-400 clicks a day on my website, I am guaranteed a profit. This is not written in stone, it can vary. But this is my goal per day.

A really good program to use to track your income and expenses is Excel. You probably already have it on your computer. You can set this program up to keep track of your activity, and as you bring in more income you can then purchase an accounting program such as Quicken to track all income/expenses.

4. Know Your Profit Margin: What is a profit margin? If your costs are set at a certain amount, your advertising at a set amount, then how much do you need to make a profit. Let say you have a product that cost you $49.99 to purchase, you need to advertise that product. How much and how many sales are needed for you to start to make a profit on that one purchase? If you were to sale that same product for $59.99, you would make $10.00 profit on each product and it would take 5 sales for you to make your money back, without spending any money on advertising. If you spend money on advertising, then that too has to be factored in before you can determine your gross profit.

Once you know all this then you are at your "break-even point". This is when you have covered all your cost. If you cannot cover your cost then you are going to lose money and your business will fail.

Keeping track of these few things could make the difference between making money and losing money.

Let me give you an example: Doggie Heaven (fictitious) makes $6000 in sales per month (sounds good doesn't it?) Doggie Heaven's owner makes a guess that their costs are around $5,000 per month, this is before he checks his actual figures. So they assume that they will make $1000 per month. However, once all there costs are tallied, they soon realize that the cost of running their Doggie Heaven business is actually $6000 and they have made no money at all. So they have worked for nothing.

In having a business plan in front of them with approximate costs they could have adjusted expenditures and/or increased their sales. The point is that if you don't know how you are doing, how can you improve it and how will you stay in business?

Don't be afraid to start a business, just be informed. All of the information is at your fingertips you only need to ask questions, search for answers, and have a business plan, that can be adjusted, in front of you.