What is the difference between revenue and profit?

Описание: Finance Learning Lab: https://financelearninglab.com/
What is the difference between revenue and profit? Simple, easy to understand explanations for small business owners and startups

What is the difference between revenue and profit look if you've made it through high school whether you did an undergraduate degree or not we actually have an education curriculum that never teaches business owners what is revenue and what is profit and how are they different so we're gonna tackle that in this video and you're gonna walk away actually feeling like okay i get it it makes sense [Music] so revenue and profit are both concepts that live on a piece of paper that we call an income statement all right it's literally one piece of paper that has caused fear and trauma in people where they're like haha numbers keep them away they're so scared but you don't have to be scared of it okay so it is a single piece of paper we call it an income statement some people call it a profit and loss statement some people call it your p l some people call it your earnings literally it's one piece of paper and on that piece of paper there are two types of data there's data about your money coming in from your customers and there's data about money leaving your company expenses that you are paying out those are the two pieces of data that are captured on any income statement and then you've got a whole series of what we would call subtotals okay the subtotals is what ultimately ends up throwing people off because we in accounting land sometimes make things a little bit more complicated so we invent subtotals like gross margin or or um cost of goods sold or all of these different terms that we come up with or we'll kind of say like operating profit all of those things are nothing more than subtotals they're nothing more than revenue less expenses equals bottom line so you might also have heard this kind of expression about top line and bottom line if you've ever wondered why there's no really good rhyme or reason other than historical convention so on this piece of paper the accountants of the world just kind of had a habit of always putting revenue at the very top it just kind of morphed across time it's just the way everyone has always been doing it that you put revenue which is the sales from your customers it's the money you made providing your actual business we put that revenue on the very top and then below that we start listing all of these different expenses and we categorize the expenses in all different ways but we start listing all these expenses afterwards so what you end up with is top line revenue less all these various different expenses when you remove all the expenses at the very bottom you have your net profit and that's pretty much the only distinction between revenue and profit and you can think of profit as your bottom line end of the day meaning that number is always going to be lower than your top line revenue so one of the things you want to be careful of as a business owner is there is no sense in growing your top line revenue you know seeing your sales going up if your expenses are growing faster than your sales because guess what will happen if your revenue is growing really fast but your expenses are growing faster what's going to happen to your bottom line profit it's going to be worse off so you need to pay attention to both revenue and expenses so that ultimately you get profit at the end of the day that you can keep for your business for your family for you know for the overall mission that you're trying to accomplish through your business okay got it revenue profit top line bottom line.

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