Turnover is: understanding, how to increase it, to the difference with profit

Turnover is – Everyone who runs a business will certainly have the goal of making a profit or what is commonly referred to as profit. Where to be able to get a profit there is an amount of money that is obtained through the process of selling goods or merchandise in a certain period or period.

Turnover itself is the total amount of money that will get from the process of selling goods. Meanwhile, profit will be obtained from turnover which is reduced from the capital spent to be able to get these goods.

From this explanation it can be seen the difference between turnover and profit. Even so, not all business actors understand these terms, so they often give rise to different perceptions. So, so that you are no longer wrong in interpreting various terms in the business world such as turnover and profit, then you can read the explanation here in more detail.

Definition of Turnover

Turnover is the total value of product sales in a certain period. You can equate turnover with the term gross income. This is because turnover has not been reduced by costs incurred as capital costs such as production costs, employee salaries and other operational costs.

The turnover value of a company is often used as a benchmark to provide an assessment of this group of companies. Does the company enter on a small scale, or a large scale company. Even so, the figures that appear in the turnover are still in the form of rough calculations, so they cannot yet show the net profit that the company has earned.

Definition of Profit

Meanwhile, profit is the selling price of a product that has been reduced by the cost of capital. A value can be called a profit if the value is net or deducted by various types of costs incurred by the company in the production process or product marketing.

Some of these cost components are production costs, employee salaries, shipping costs and required marketing costs. Profit can provide information about the profits earned by the company, so you can equate the term profit with the term net income.

The difference between Turnover and Profit

In the field of business, be it turnover or profit, it is always closely related. In addition, turnover and profit are also often used as a measure of success in a business that is being run by business actors.

According to the Big Indonesian Dictionary or KBBI, profit means profit, gain or benefit. While the notion of other profits is about the income generated from the business exceeding expenses, costs and taxes.

From the previous explanation, we can see the difference between turnover and profit. Even so, below there are several points of explanation regarding the difference between turnover and profit.

So that you don’t misinterpret it, here are the differences between turnover and profit.

1. Differences in how to calculate

From the method of calculation, both turnover and profit both have different ways. Turnover is calculated by adding up all the income in a certain period.

Meanwhile, profit will be calculated with all income which will later be reduced by the cost of goods sold or the cost of production which is commonly referred to as HPP.

HPP itself can be interpreted as the amount of expenses and expenses incurred, either directly or indirectly to be able to produce a product or service.

2. Position Differences in the Company’s Profit and Loss Report

Writing a position on the company’s profit and loss report, both turnover and profit will have a different place. Where the writing of turnover will be placed at the very top because it still has to be reduced by operational costs or credit (receivables). As for writing the profit itself, it will be placed in the far left column because the resulting value is already clean.

3. Differences in Benefits

Turnover will be used to determine the scale of the business and the company’s ability to process product sales, which will ultimately be used to make a better sales strategy. Meanwhile, profit is used to show the company’s ability to generate profits in the product sales process in a certain period.

The existence of profit also greatly affects investors who will enter. Where the greater the profit obtained from the business processes carried out, the more likely investors are to invest in the company.

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How to Increase Business Turnover

In the business world, getting a large turnover is also one of the goals. Even though basically the turnover still has to be reduced by the production costs of the product to finally produce results, it is also necessary to obtain an increasing amount of turnover.

The problem is that business people in the same field are not just you. There are still many competitors out there who have decided to engage in the same business as you.

Of course, in the business market, there will be competition for buyers. This can also affect turnover and profit conditions in the business that you are running. Therefore, it is very important for business people to be able to always make various efforts to increase business turnover.

However, not all business people know what methods are needed to increase business turnover. So, so that you can also continue to increase business turnover, here are tips that you can do.

1. Setting Sales Goals

The first thing you can do to increase sales turnover is to set sales goals to measure. That way, you will be able to decide how the steps taken for sales turnover can approach the goals to be achieved.

You can apply several methods to make sales results close to or even more than the set goals. In simple terms, you can realize these goals as motivation to be able to achieve predetermined goals or as a benchmark for the progress of the business that you are doing.

2. Target Repeat Customers

After setting goals, you can also target regular customers as an effort to increase sales turnover. In this case, you can develop relationships with customers in order to gain customer loyalty.

Customers who have high loyalty to your brand can provide such a strong incentive to make repeat purchase transactions for the products you sell. In addition, they also won’t think twice about using the new product that you put out.

3. Develop Reach

The next way to increase sales turnover is to develop the range of the business that is being run. Both online and offline can be done to provide support for increasing sales turnover.

Offline can be done by opening a new store in a new location as well. Meanwhile, the online method can be done by opening an online store on various e-commerce media platforms or other social media that are tailored to the target audience of your product.

4. Evaluate the selling price

After selling products within a certain period, you can evaluate the set selling price. Is the selling price that has been set in accordance with the target market and competitors.

In this case, you need to carry out an analysis process and calculate who your target market is and what the selling price conditions are for their products. If there are competitors who dare to offer lower prices but the product quality is the same as yours, then you can evaluate the selling price that you set for the product.

5. Adding Products and Services

The next way that is considered capable of increasing sales turnover is by offering more products that customers need. In this case, you can consider products and services that are close together.

This will enable customers to buy products that are related to what they need. For example, when you sell sports shoes, you can offer clothes or other sports equipment.

6. Make Product Or Service Packages

One way to increase sales turnover is to create product bundling or sales packages. Where there are package options for the products being sold, it will encourage buyers to be able to choose these products.

The existence of a package will also make prospective buyers think that they will save more money by purchasing more than one product in one package. Where you can make packages containing several items and do marketing in the form of a set. Not only that, because you can apply discount promos for purchasing several products at once.

7. Changing Services Or Shipping Fees

Some customers may be willing to pay more for a product if the shipping and handling process does not involve additional costs. Therefore you may consider this way of incorporating shipping and handling costs into the cost of the items sold. This action is very profitable if you carry out the process of selling products online.

8. Offer Installment Packages

There is nothing wrong if you offer a product payment process in installments or installment packages. Some customers consider that the installment plan is much more attractive because it can provide convenience in paying quite low per month rather than making a one-time payment process with a large amount.

9. Offer Subscription Services

You will be able to get a lot of product sales when you offer a subscription service as well as increase more customers to make regular purchases of new products. In this case, you can try to consider providing discount offers for buyers who decide to subscribe to your products or services.

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That way, you can more easily automate sales and help customers to save more in terms of expenses made.

10. Offer Discounts Or Promotions

Offering discount promos is one way you can do to get an increase in turnover. Where this method has been carried out for quite a long time by business people and this method has also proven to be able to attract the interest of potential buyers to make purchasing transactions.

That way, your product sales turnover will also increase. There are many ways to promote discounts that you can do, starting by taking advantage of social media or even through email marketing or via short messages.

11. Offer a New Payment Method

The next way to increase turnover is to introduce new payment methods that can make customers feel more comfortable. Currently, there are many choices of payment methods that can be used for your business.

Therefore, you can also start adapting it to the trends and needs of customers. That way, customers will feel more comfortable and safer when making payments for their purchase transactions.

12. Improve Brand Reputation

The last way to increase turnover is to increase the brand reputation of the product to be of higher quality and closer to existing customers. In this case, you can increase interaction with customers, provide brand awareness and build excellent relationships with customers.

Where when the reputation of the product brand that you have has started to improve, the business that you do will also be more easily trusted by everyone. That way, potential buyers will no longer hesitate when making a purchase transaction for your product.

Causes of Declining Sales Turnover

As explained earlier, the main goal of business processes is to get turnover and profit. Until now, many business people have done it to increase their sales turnover. Whether it’s a gradual but stable improvement process or a significant increase over a certain period of time.

Basically, business people will avoid a decrease in sales turnover. A decline in sales turnover that declines not only disrupts the company’s operational processes as a whole, but can also threaten the sustainability of the business that is being run.

Actually, the decline in sales turnover did not just happen. The reason is, there are several initial causes that can lead to a decrease in turnover that becomes more serious, although some cases show that turnover can just happen, for example, such as the economic crisis and pandemic.

However, most of the causes of a decrease in sales turnover are small mistakes that are underestimated until they have a big impact. Well, some of the reasons for the decline in turnover are as follows.

1. The occurrence of decreased product quality

One of the causes of the decline in sales turnover is the decline in product quality. Declining product quality will make buyers lose their trust and not make the purchase process or repeat orders.

The decline in product quality can also be influenced by many things. It could be because the quality of the ingredients has indeed decreased, there has been a change in employees who were previously very good at product management and so on.

Indicators of product and service quality must always be owned by the company. In addition, companies must also always ensure that product and service quality indicators must always be met. Where when you have got a large number of customers, then the product quality factor must also be maintained so that customers do not move to other competitors.

2. Product Prices Are Less Affordable

Product prices that are difficult to reach by the target market make a product experience a decrease in purchasing power. If the company really has to increase the price of a product, try to increase it by a number that can be achieved by the target market.

Of course the process of increasing the price also without the need to reduce the quality of the product. Another alternative that companies can take is to provide discounted promos for other products. That way, even if you increase product prices, you still won’t lose business customers.

3. Less Creative Marketing Techniques

Not only in terms of products, marketing techniques that are monotonous or do not keep up with the times will also be able to reduce sales turnover. Currently, there are many media that can be used for promotional containers. Even so, promotional techniques must also be done creatively. The more creative you are in the promotion process, the more potential buyers will be curious about your product.

Well, those are some reviews about turnover. Starting from the difference between turnover and profit, tips on increasing turnover to several things that affect a decrease in sales turnover, have been explained above. Hopefully all the discussion above can add insight and also be useful for you.

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Author: Hendrik Nuryanto