In any business, managing costs is as crucial as driving sales. Two types of costs play a pivotal role in your financial planning: variable and fixed costs. Understanding the distinction between these is essential for making strategic decisions that impact profitability, pricing, and long-term growth. The Difference between Variable and Fixed Costs and Why It Matters 1. What Are Variable Costs? Variable costs fluctuate with production or sales volume. Examples include raw materials, merchant card fees, Pay-Per-Click (PPC) ads, production…

For many businesses, especially those in growth phases, being profitable doesn’t necessarily mean having cash. This paradox can be confusing but is essential to understand, particularly for business owners taking their 7-figure business and turning it into 8 figures. How Can You Be Profitable and Not Have Cash? 1- You Need to Buy Inventory As businesses scale, they often need to invest heavily in inventory to meet growing customer demand. This situation can be misleading when looking at your income…

When it comes to running a business, it’s tempting to think all income is simply “money in the bank.” However, understanding the different types of revenue is essential for long-term business success. Revenue is the lifeblood of any business, but not all revenue is created equal. Some revenue streams offer stability and predictability, while others are unpredictable and require careful management. Knowing the nuances of revenue types—from recurring income to one-off sales—can empower business owners to make smarter decisions, optimize…