The Myth of the Bottom Line
Retail business owners are conditioned from day one to have a profit and improve their bottom line. Yet, sadly, most owners aren’t sure exactly why.
What is profit? Where does it go? Why is it important? Too many myths surround these good questions.
The first thing to learn is that most retail businesses are on the accrual accounting system and, therefore, profit is not the same as cash. Your profits—instead of going directly into your pocket—are more likely to help you grow your business by paying off debt, investing in store essentials and expanding your inventory.
Using The I. M Surviving (?!) Company as an example, let’s look at how profit is reinvested in your business. You’ll see how profit or loss affects your overall financial picture.