Why Profit Not Sales is the Key To Building a Successful Wedding Business
You’ve heard the saying “turnover is vanity, profit is sanity”, but what does it actually mean? And why is profit, not sales, the key to building your successful wedding business?
As a successful wedding planner who has trained over 850+ wedding planners too, I understand how to build a sustainable, thriving business that can adapt and evolve in a competitive market so that you can thrive year after year.
So what’s the secret to running a profitable wedding business? Lets explore further
What is profit?
First of all we need to understand the difference between ‘turnover’ and ‘profit’. Turnover is the income brought into your business over a period of time; the number of services or goods sold multiplied by the sale price. So if you book 5 weddings at £5,000 each, your turnover will be £25,000.
Profit is the amount of money you have left over from your sales, after all costs and expenses.
To calculate profit you need to deduct fixed costs (things like insurance, hosting, software, memberships and training that your business needs to exist) and cost of sales (the actual costs incurred to run your weddings and events like freelance staff wages, travel, food & drink etc.)
Let’s take the example above; if each wedding has around £500 in costs and your business expenses are £5000 a year, the overall business profit would be £17,500 to be paid in salaries, dividends or reinvested in training, development and growing your business.
Secure your business future
Your business cannot survive if it spends more than it brings in, so securing a healthy profit in your business is crucial. Generating a profit also has a large part to play in managing cashflow (how much cash is in the bank) which you’ll need to pay costs, suppliers and wages.
Profit goes hand in hand with growth, enabling you to invest in the things you need to support your business as it expands. From training and coaching to improve your skills and knowledge, to automation and outsourcing needed to free up your time to focus on revenue generating tasks, to systems that will help to manage your business as it grows.
Profit is also part of the calculations a bank, lender or investor will use to decide whether to loan or invest in your business, providing evidence that you will be able to make your repayments or generate a return on investment for your partners.
The salary and dividends (for Limited Company Directors) you are able to pay yourself comes directly from profit – you can’t pay yourself what isn’t there. As a business owner paying yourself should be top priority, you need to eat after all!
I think paying yourself (however small the amount at first) should be a priority. Receiving a financial reward for your work is a great incentive, it makes you feel good about what you are doing and motivates you to focus on sales and profit as they benefit you personally.
Investors and lenders look favourably on business owners who pay themselves a salary too, it shows that you are serious and committed to your business and not running a passion project.
Increase your business value
At some point you may decide that weddings is no longer for you. Running a profitable business over a number of years means that your business has a tangible value, giving you the opportunity to sell your business in the future.
The amount a potential buyer can earn from your business is one of the deciding factors in what they would be willing to pay for it, usually a multiple of profit over a certain number of years.
So, if you weren’t sure before why profit is so important to your business, I hope you have a better understanding now.
Helping wedding business owners run profitable businesses is one of the core ambitions of the UKAWP. If you’re setting up or just getting started with your wedding planning business then our Business of Wedding Planning course will give you the tools you need to launch a successful business, gain clients AND make a profit.
Or to understand a little more how to calculate profit in your business purchase my low cost training “Profit with Ease” for just £29