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Forum nameStartup Stew
Topic subjectRE: how long until my new business sees a profit?
Topic URLhttps://www.businessownersideacafe.com/forums/dcboard.php?az=show_topic&forum=119&topic_id=2115&mesg_id=2116
2116, RE: how long until my new business sees a profit?
Posted by LochWulf, Mon Jun-21-10 07:31 AM
The biz will become profitable when total revenues consistently exceed total expenses. OK, not trying to be facetious here....the point is that there's no 'formula' for determining the date on which a business moves into black-ink territory.

A decision to stay with it should be based on something you can see, tangible or intangible, that indicates a reasonable probability that at some near-term point, revenues will indeed exceed costs, and remain so.

I'd imagine you've already scrutinized your cost structure pretty thoroughly, and have reduced your expenses whereever feasible. That leaves the Revenue side of the equation, and in most small-biz cases, that's really where the answer is--as costs are already about as lean as they can be without impairing the ability to generate sales.

There must therefore be something that says that Revenues are going to head significantly northward, enough so such that an attractive profit will result. It might be something internal, like a new marketing strategy; it might be an external influence such as new businesses moving into the neighborhood (full of employees needing a nice deli at which to have lunch). You've got to see that sales are going to increase, either as a result of something you do, or as a consequence of external factor(s).

Get with your accountant and knock out a cash flow budget. See what levels your Revenues need to attain in order to produce various levels of net profit. Then figure out what must be done to attain such Sales levels. "Making a profit" isn't something that you just wait on, and then one day it begins happening to you. You've got to know your numbers, and what kind of Revenue numbers you'll need to hit your specific profit targets. If such sales level(s) are do-able, you then figure out how to make 'em happen.

Investigate delis similar to yours; figure out their traffic and sales volumes. This 'homegrown' market research will help you ascertain if the Revenue level you need is attainable.

Best of luck!