What’s more important – sales or gross profit?

sale soldes uitverkoop
(Photo credit: Gerard Stolk (vers l’Avent))

Small business consultants and advisors are hammering home the message that sales are vital in this economy. You can still rescue your small business with that one crucial sale, they say. But is sales the most important thing for your business in this economy?

It might seem an almost stupid question to ask. Sales drive everything in a business. But a handful of real-world, hands-on consultants and advisors to new small businesses point out that gross profit has a more important role to play because it pays for your overheads. If your business has more gross profit it is easier for you to pay for your overheads and your net profit should be higher. It’s also true that small changes in gross profit can have a large impact on your profitability.

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