How to calculate the turnover

An entrepreneur, organizing a new business, must have a completely clear idea of ​​what will be the profit of the enterprise and what expenses it will incur, and, therefore, what should be its financial or commodity circulation. Without this hypothetical information, starting a business is risky.

Instruction manual

1

In order to plan the expected turnover of the enterprise, or, in other words, the estimated number of goods or services that can be realized, it is advisable to take into account the existing experience gained in similar (similar in profile) enterprises.

2

After calculating the commodity or financial turnover for a certain period of time and determining what costs will arise to ensure this turnover, calculating the difference between the first and second, you thereby indicate the profit that will bring the company.

3

For more detailed calculations, use the classical scheme: subtract the amount of funds needed to purchase goods for this period from the estimated annual (monthly, quarterly, anyone’s convenience) turnover (this is usually 60-70%). Do not forget to include in the list of regular expenses the payment of salaries to employees, rent of premises, transportation costs, insurance, communications (fax, telephone, etc.), depreciation and repair of equipment, payment of taxes, legal advice. The result resulting from all the main deductions is the profit.

4

If preliminary calculations show insufficient profit or cost superiority over turnover, it is necessary to take measures to reduce costs or to find an additional source of income. As a means to increase the income of the company, we can recommend the behavior of an advertising campaign. As experience shows, financial and commodity circulation after its implementation significantly exceeds the expenditure of funds spent on these purposes.

5

The project should be abandoned if measures to reduce costs in the event that they prevail over the turnover turn out to be impossible for the enterprise.

• An example of the calculation of trade in economics and statistics
• The concept of turnover