Revenue Plan of a Firm

953 Words4 Pages
Introduction How a firm plans to earn a profit is one of the most important considerations in the business plan. Profit is defined as total revenue less total expenses (Investopedia, 2013) and there are basically three levels of profit. The first level is the gross profit, which subtracts only the cost of sales; the second is the operating profit which subtracts fixed costs as well. The final profit is the net profit, which subtracts all costs of doing business, including taxes and financing costs like interest. Revenue Streams There are going to be two forms of payment for the customers. They can either pay cash or with a credit card, but cash will be encouraged because the credit card company is going to charge to use a card, cutting into our margins. Checks and other forms of payment will not be allowed. The reason for this is that we want to reduce the risk of payments being rejected or bounced, since the service will have already been provided. One cannot take back a haircut for non-payment. Thus, the revenues that we earn will be very closely related to our cash flows, and this will allow the company to turn over the income quickly. It is expected that 90% of the money earned in a given week will be received by the company that week. This makes it easy to pay expenses such as wages and supplies as they occur or are needed. Cost Structure The cost structure of an organization is "the identification of how costs associated with the production of a good or service
Open Document