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Turnover Is: How To Calculate And How To Increase It

 Turnover Is: How To Calculate And How To Increase It - If you are developing a business, turnover is something you need to calculate in detail so that there is no loss to your business. Without proper calculations, any company or business of any size will not experience growth and even have the opportunity to go bankrupt.

In addition, turnover also has a broad scope even to determine what strategy you must do so that your business is able to grow. In order not to be mistaken, let's look at the explanation of what turnover is and its types and how to increase it!

What is Turnover?

Broadly speaking, the notion of turnover is the overall income that the company has obtained from the sale of a product or service in a certain period. This period includes a period of counting per day, per week, per month, up to a matter of years.

However, this amount of income is still gross or has not undergone the process of reducing certain payments and other costs in a business.

The costs that need to be paid in business include office rental fees, operational activity costs, salaries for employees, electricity costs, marketing promotion costs, to office cleaning retribution fees.

Because this is the meaning of turnover can be referred to as the gross income that the company gets from all business activities. In addition, turnover is a component that is often used by business people as a benchmark for profit figures or the level of success in a company, even though such a concept is a mistake.

Actually, the calculation of gross income alone cannot be a specific benchmark for determining business profits. This is because, turnover cannot provide a definite picture of the net income that the company has received.

3 Main Benefits of Turnover for a Business

As a business owner, of course you need to know how much income you have generated in a certain period. This is not without reason, there are several benefits that you will get, namely:

1. Understanding Business Production Quality

If your income tends to be high, this means that the quality and productivity of the business you manage is at a stable or even good point. However, if it turns out that your business income is still relatively low, there may be a problem in the quality or service of the business you run.

2. Adjusting Business Expenses

The second benefit of turnover is to adjust the business spending budget. By looking at business income data, from this you can determine what you need to set for your business expenses.

These expenses can include many things, such as operational activities, production activities, monthly bill payments, and so on. So, the meaning of turnover here can be a guideline for implementing a business budget.

3. Business Design and Innovation

After you know the ins and outs of the financial stability of the business you are running, of course you can arrange a strategic plan so that your business is growing.

Why is that? Because when the business financial system is stable, you can manage your business finances for additional budgets for branding and business innovation purposes.

How to Calculate Turnover

As you already know about what turnover is in the initial discussion, turnover is a nominal income that has not been reduced due to the overall operational costs of the business.

So, you can conclude that the formula for calculating gross income is the same as calculating the total product that has been sold and then multiplied by the selling price of the product.

Sales Turnover Formula = Total number of products sold x Selling price per product

Here is an example of how to calculate it:

The Wind Ribut shop, which sells Muslim clothing products, is able to sell 100 Muslim clothing products with a period of one month to be exact in August 2022. The selling price per Muslim clothing is Rp. 300,000.00. The way to calculate gross income is:

Number of Products sold x Selling Price of Products = Turnover

100 x IDR 300,000.00 = IDR 30,000,000.00

So, the sales revenue from the Wind Ribut Shop in August 2022 is IDR 30,000,000.00.