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Profit in Agri-Business
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What Does “Selling at a Profit” Mean?
It means that we have gained more money at the end of a set period of time by producing a crop, than we used in the same period of time.
A loss is when the business:
- Spends more money than it earns.
- There is a shortage because expenditure exceeds income.
- The business is going backwards and is starting to lose money.
- If a business continuously makes a loss; there is a chance that it can go bankrupt.
Break-even is when the business:
- Income equals the expenses.
- Stands still and does not move forward.
- If anything should happen that would cause the business to have unforeseen expenses, it might put the business at risk of making a loss.
Profit is when the business:
- Income is bigger than its expenses.
- More money comes in than is spent.
- The business can pay all its expenses and there is still money left over.
- The business is going forward and will keep growing.
How to Plan for a Profit
Good financial planning involves constant planning around the building and protection of your assets and cash flow, for every phase of the agri-business’ production cycle.
Financial planning revolves largely around when and where you spend your money, with the aim that you and your employees and shareholders will get the maximum long term benefits from your assets, and from operating this type of business.
Thorough planning is the only logical way to survive in today’s fast-moving world.
Financial planning entails thorough analysis and revision of all aspects of a business’ financial affairs and the preparation of personalised and comprehensive plans for that same business to achieve long-term financial security and growth.
You can make your money stretch if you:
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You can make your money stretch if you: |
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Know what you want to do with your money. |
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Know where your money goes. |
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Know how to keep your money longer. |
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Plan your spending in advance. |
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Know and keep within your credit limits. |
To Know When You are Making Profit
To calculate whether you are making a profit or loss:
MONEY AT THE BEGINNING - EXPENSES
+ THE INCOME THAT YOU MADE FROM SELLING YOUR PRODUCE
= PROFIT (IF YOU END UP WITH A POSITIVE FIGURE)
OR
= LOSS (IF YOU END UP WITH A NEGATIVE FIGURE)
Click here to view a video that explains Nett vs. Gross income.