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How to Start Your Own Business for Entrepreneurs, 2nd Edition by Robert Ashton

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Chapter Twenty-one

How to make your profits bigger

A popular adage used by business advisers is to say that ‘turnover is vanity and profit is sanity’. The saying is popular because, too often, people starting and growing a business focus on increasing their sales turnover without paying due regard to profitability.

Of course, you need a level of turnover to cover your overhead costs, but in nine out of ten businesses, the best way to make more money is to improve the profitability, not increase the turnover. This is because more sales mean more production, which means more overheads and more costs. If you can increase the profitability of your existing turnover, nothing changes apart from the bottom line.

Naturally, your customers will not simply ...

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