Business Btec

The importance of costs, revenue and profit for a business organisation

Dear Kevin,

Harrow On The Hill

Harrow

Middlesex

HA1 3PP

Dear Kevin Rudd

Costs is the amount of money you need to start up the business and to keep the business running once its operating. You must make sure you have enough money for start up costs and fixed costs or your business will get into debt in the long run.

Revenue means the income coming into the business. The revenue can come from many sources. This includes, sales. Sales is the main way for a business to recieve revenue. This is because the customers pay for goods and services and bring in income to the business with the money they pay. Another way the business brings in revenue is interest.

Calculating your profit is very importance once you are running a business. This is because if profit doesnt increase or you dont gain any profit your business will not be successful.

You have to make sure you calculate your gross profit which means the money left over after you pay all costs and make sure it is a good amount of money. Otherwise, there is no point in you running a business organisation if profit is not good.

It is very important to control all your costs and make sure you have enough money to cover the costs because if you do not cover costs it decreases revenue and this will result in no profit which will then mean your business will be unsuccessful and you will get into debt. As a result of not being able to keep up with fixed costs.