It's interesting that Jessica didn't distinguish between revenue and income when she talked about the problem she ran into with the business she started. "We thought we had lots of revenue but it turned out our margins weren't that great." Revenue = money in. Income = Money in minus money out.
Not understanding margins and/or cashflow is probably the number one reason why most small businesses go under. The book The Knack has an excellent explanation of this that I consider a must read:
It depends how you read it. She could have meant that they thought they were taking in a lot of money (revenue) but in reality they found they weren't keeping much of it (discovered their margins were thin, implying profits were lower than they expected because they just knew they were making lots of revenue).
Comments
It's interesting that Jessica didn't distinguish between revenue and income when she talked about the problem she ran into with the business she started. "We thought we had lots of revenue but it turned out our margins weren't that great." Revenue = money in. Income = Money in minus money out.
Revenue != Income.
Not understanding margins and/or cashflow is probably the number one reason why most small businesses go under. The book The Knack has an excellent explanation of this that I consider a must read:
http://www.amazon.com/Knack-Street-Smart-Entrepreneurs-Handl...
It depends how you read it. She could have meant that they thought they were taking in a lot of money (revenue) but in reality they found they weren't keeping much of it (discovered their margins were thin, implying profits were lower than they expected because they just knew they were making lots of revenue).
I really need to stop using brackets so much.
Brackets are great (when used correctly).