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Revenue vs. Profit vs. Cash Flow
Blaine Bertsch - Founder, Dryrun.com
Revenue vs. Profit vs.
Cash Flow
Well,ifanyofthethreeareoutofwhack,your
businessisintrouble.Beforewegetintothedangers,
let...
Revenue
Revenue is the total amount of the sale of
goods and services.
Mayalsoincludemoneyearnedfromothersources
suchasint...
Example
A service company invoiced* $100,000
in March
Thebusinesshasearnedrevenueof$100,000for
thatmonth.
*Inthiscase,theb...
The Top Line
Your revenue appears in the top line* of
your Income Statement
*Intheexample,ifyouwerereferringtotheIncomeSta...
Talking ‘Revenue’
Theterm‘revenue’iscommonlyusedinother
businesssituations
Forinstance,whendiscussing:
•revenuefromaspecif...
Profit is your revenue minus your expenses.
Profitsimplymeansthatyoumakemoremoneythanit
coststodeliverthegoodsorservices.
...
Gross Profit
Calculatestherevenuefromyourgoodsorservices
minusthecostofthosegoodsorservices(COGS).
It’simportanttonotethat...
Net Profit
Calculatestherevenuefromyourgoodsorservices
minusthecostofthosegoodsorservices(COGS)
andallotherbusinessexpense...
The amount and timing of the payments
you receive and the expenses that you pay.
Ifyou’repaidintwostagesof$25,000dollarsea...
Revenue, Profit
and Cash Flow
Conundrum
Itcanbeeasytofocusonasinglecoremetricto
evaluatethehealthofyourbusinessbutthatcan
...
Cash Flow
Many businesses have been caught in a
cash flow crunch.
Focus on understanding when the cash will land
in your b...
Profit margins can become very slim when:
• thelowestpriceoftenwinsacontract
• marginsaretight
• productivitydips
• expens...
Revenue
Companiesmaybelievetheyarefinanciallyhealthy
whentheircashflowisstrongandprojectsare
profitable...
...butiftheyhav...
Trackyourexpectedsalesrevenue,profitmarginand
maintaincashflowprojectionsonanongoingbasis.
All three are critical for a he...
Sign up for a 30 day free trialofDryrunandgaininsightinto
yourbusinesswithasimplewaytopicturerevenue,profitand
cash flowsc...
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Revenue, Profit & Cash Flow

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So what’s the difference between revenue, profit and cash flow and why should you care?

This presentation will explain the difference between the these three, vital metrics that make up the foundation of your business. The slides also cover the dangers of having any of the three out of sync.

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Revenue, Profit & Cash Flow

  1. 1. Revenue vs. Profit vs. Cash Flow Blaine Bertsch - Founder, Dryrun.com
  2. 2. Revenue vs. Profit vs. Cash Flow Well,ifanyofthethreeareoutofwhack,your businessisintrouble.Beforewegetintothedangers, let’stakealookatthedifferencebetweenthethree. So what’s the difference between revenue, profit and cash flow and why should you care?
  3. 3. Revenue Revenue is the total amount of the sale of goods and services. Mayalsoincludemoneyearnedfromothersources suchasinterest,feesandroyalties. Revenueisgenerallydescribedintermsofa specifictimeperiod. ie.aparticularmonth,quarteroryear
  4. 4. Example A service company invoiced* $100,000 in March Thebusinesshasearnedrevenueof$100,000for thatmonth. *Inthiscase,thebusinessisnotreceivingpaymentinactualcash, ratheritis‘owed’$100,000.Oncethey’veinvoicedacustomer, thatamountisconsideredrevenue. Revenueinagiventimeperiodcanincludeinvoicedmoney,aswell ascashpaymentsthathavebeenmadeatthetimeofapurchase.
  5. 5. The Top Line Your revenue appears in the top line* of your Income Statement *Intheexample,ifyouwerereferringtotheIncomeStatement fromthemonthofMarch,thetoplineofthatstatementwould containthe$100,000inrevenue. Take my FREE MINI-COURSE for more detail on calculating profit margins and discover how to put the knowledge to use in your business! Get Started in minutes! >>
  6. 6. Talking ‘Revenue’ Theterm‘revenue’iscommonlyusedinother businesssituations Forinstance,whendiscussing: •revenuefromaspecificproductvs.another •revenueearnedfromaparticularcontract ...orfromaspecificcustomer. Inthesecases,revenuereferstotheincomeorearningsineach situationbutmaynotrefertoaparticulartimeframe. ‘Revenue’neveraccountsforexpensesandcosts.Itsimply describestotalmoneyearnedbythebusiness.
  7. 7. Profit is your revenue minus your expenses. Profitsimplymeansthatyoumakemoremoneythanit coststodeliverthegoodsorservices. So,ifyourexpensesare$40,000on$50,000revenue, youhavea$10,000profit. Revenue - expenses = profit Profit
  8. 8. Gross Profit Calculatestherevenuefromyourgoodsorservices minusthecostofthosegoodsorservices(COGS). It’simportanttonotethatyourgrossprofitonlyaccountsfor expensesdirectlyrelatedtothecreationofthosespecificgoods andservices. Revenue - COGS = Gross Profit Two Types of Profit
  9. 9. Net Profit Calculatestherevenuefromyourgoodsorservices minusthecostofthosegoodsorservices(COGS) andallotherbusinessexpenses. Yournetprofitdiffersfromgrossprofitinthatitincludesall otherbusinessexpenses,notjustthedirectcosts.Theadditional expensesincludecosts,suchaspayroll,utilitiesandtaxes. Revenue - COGS - Other Business Expenses Net Profit
  10. 10. The amount and timing of the payments you receive and the expenses that you pay. Ifyou’repaidintwostagesof$25,000dollarseach 1.$25,000at30days* 2.$25,000at60days** *Soyouneedtopayallofyourexpensesforthefirstmonth beforeyouget$25,000toworkwith. **Youthenneedtowaitanadditionalmonthtogettherest ofyourcashoutoftheproject. Cash Flow
  11. 11. Revenue, Profit and Cash Flow Conundrum Itcanbeeasytofocusonasinglecoremetricto evaluatethehealthofyourbusinessbutthatcan bedangerous. Ifanyoneofthethreecornerstonesisoutofline, itmaykillyourbusiness.
  12. 12. Cash Flow Many businesses have been caught in a cash flow crunch. Focus on understanding when the cash will land in your bank account and become available for paying expenses.
  13. 13. Profit margins can become very slim when: • thelowestpriceoftenwinsacontract • marginsaretight • productivitydips • expensesarehigherthanpredicted Whenitcostsmorethanexpectedtodeliver, companiesenduptakingaloss.Toomany unprofitable saleswillsinkacompany. Profit
  14. 14. Revenue Companiesmaybelievetheyarefinanciallyhealthy whentheircashflowisstrongandprojectsare profitable... ...butiftheyhaven’tkepttheirsalespipelinefullwith newrevenuetheywon’thaveenoughmoneyover thelongtermtostayinbusiness.
  15. 15. Trackyourexpectedsalesrevenue,profitmarginand maintaincashflowprojectionsonanongoingbasis. All three are critical for a healthy, growing business. Track Your Three Cornerstone Metrics Revenue, Profit & Cash Flow
  16. 16. Sign up for a 30 day free trialofDryrunandgaininsightinto yourbusinesswithasimplewaytopicturerevenue,profitand cash flowscenarios. Blaine Bertsch Founder Dryrun.com Take my FREE MINI-COURSE for more detail on calculating profit margins and discover how to put the knowledge to use in your business! Get Started in minutes! >>

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