Title: Why Are Cost, Revenue & Profit Important? | Small Business - Chron.com
Headings: Why Are Cost, Revenue & Profit Important?
Why Are Cost, Revenue & Profit Important?
Definition of Terms
Revenues vs. Profit
Cost Reduction
Profit Measurement
References
Writer Bio

Content: Sometimes, however, an entrepreneur may be able to personally succeed if he can sell his business while it is unprofitable, if investors believe the chance of future profitability is high. In most cases, however, only profitable businesses can be sold at reasonable prices to new owners. Cost Reduction
Everything a business spends money on is a cost, and many businesses attempt to increase their profitability by reducing costs. There are many sound ways to do this; for example, a retail business can expand by starting additional stores or can take the much cheaper option of starting an online business to complement its brick-and-mortar operation. However, some methods of reducing costs will be damaging to the business: Pay your employees too little or reduce your staff too much, and you will be unable to handle enough sales to generate future profits. Profit Measurement
Good entrepreneurs measure their profitability very frequently, perhaps on a daily basis. All goods sold must be priced high enough above cost to pay for the direct costs spent to acquire or create the good, as well as their share of overall indirect costs. When costs of goods increase, their price must increase as well, or the product must be dropped from the product line.