Sales revenue can be impacted by many factors, both internal and external. Internal factors may include marketing campaigns, quality salespeople and management practices. On the other hand, external factors may include economic circumstances, industry performance and competitor saturation.
So how do you improve your sales revenue? It may be easier said than done, but… you need to increase your sales!
With that as your goal, it is vital to put in place a long-term strategy instead of thinking short-term. A quick-fix sales increase is not sustainable — think Pokémon Go and Fidget Spinners. It never lasts!
This metric shows how much money your company makes per one dollar of revenue. To work out the margin left over after paying the COGS, subtract the cost of the goods sold from your total sales revenue, then divide that by your total sales revenue again.
For example, let’s say a business reports $5 million in total revenue for the year, and their COGS was $2 million. That business’s formula would look like this:
(5,000,000-2,000,000)/5,000,000=0.6 (or 60%).
This gross profit margin shows that this business has 60% of its revenue remaining from a sale after paying the costs of providing their product.
It is widely accepted that businesses often do not make a profit in their first year or two. Following the initial start-up period, net profit can be a good predictor of long-term growth potential, especially when the data is compared with previous years.