What Is Business Income?
Business income is earned income, that is, money received from business operations. Gross income is the total amount earned by the business minus the cost to produce the good being sold, whereas net income is the profit generated by the business. 14 Strategies To Increase Profits.
You will receive business income as you provide products and/or services to your customer base. Here are some ideas that will generate business income and create additional streams of income:
- Offer discounts on early payments
- Lease equipment and business offices
- Use inventory reduction strategies to avoid products sitting too long
- Use a high-interest savings account to gain better returns on your reserves
- Use shorter payment terms for invoices like due upon receipt, NET 10, 15 or 30
- Negotiate extended pay terms, such as NET 60, NET 90, or NET 120
- (Extended pay terms reduce cash flow so be mindful on this when planning for business expenses. Pay terms are an agreement where a company allows its customer to pay invoices over a period longer than 30 days.)
- Focus on your target market, tailor marketing and ads to them
- (Make sure you narrow your marketing focus to a specific group of people. It is hard to focus on everyone. If you dedicate your resources and marketing to the group of people most likely to purchase your products/services, you are more likely to make money.)
- Follow up with existing customers by offering discounts on repeat purchases
As your business evolves, there will be more ways to build business income. You should be creative in your approach to business growth, and be sure to incorporate cost-effective ways to increase cash flow such as inventory management or creating new revenue streams.
The benefits of building business income are immeasurable.
1. Financial independence
2. Ability to grow your business
3. Freedom
These three benefits are just a few of the positive outcomes of increased business income. Keep in mind that increasing business income will require an increased level of focus on new and old business functions.
Sources:
1. ALICIA TUOVILA. 2022, Investopedia, Business income, https://www.investopedia.com/terms/b/businessincome.asp
2. Leyes Kevin. 2020, Forbes, https://www.forbes.com/sites/theyec/2020/02/25/five-benefits-of-having-multiple-sources- of-income-as-an-entrepreneur/amp/
Continue Reading – Business Payment Methods
