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Measuring the profitability of your business is an important aspect that every entrepreneur should consider. Measuring these metrics differs from person to person, depending on the mode of measurement used. In most cases, charts and graphs are deployed into the game to help business owners evaluate the profit made within a given duration. 

A profit chart is strictly designed to help you depict the profit made by your business. Remember that profitability refers to the ability of a given company to generate maximum profits as well as incur minimal costs daily. In simple terms, the profit increases when sales skyrockets or costs reduce. 

Making a good profit chart is not an easy task as it may sound. You need to have a unique approach that will enable you to create something presentable that outlines almost everything you need to understand. This blog post covers all the key aspects you need to consider when creating a profit chart and how you can maximize profits in business. 

  1. Evaluate and Reduce the Cost of Operation

When running a business, there are daily operational costs that you incur. They are also known as OPEX. These expenses include things such as utilities, rent, inventory, marketing and advertising, equipment, and many more. Note that the operational costs are not directly linked to product production. They are only accounted for in the goods that are sold. 

Anytime you need to cut costs within the company, always begin with OPEX. This is because these types of costs are not directly linked to the production of goods and services. However, you need to be keen on how to cut your operational costs since they can have a negative impact when not done well.  

  1. Adjust the Costs of the Goods Sold 

The costs of the goods sold, also known as Cogs, refer to the costs associated with the production of the goods. To get better profits when using a profit chart, you need to ensure that the costs of the goods sold are calculated accurately. Also, it should be kept consistent throughout. 

The best way to monitor this is by ensuring that companies have a system tracking the price, time, and material needed to complete the process. The goal is to standardize the production process to aid in anticipating the true costs. 

  1. Evaluate Your Product Portfolio and Pricing

In business, you need to ensure that you understand the exact unit margin of every product within your business portfolio. Ensure that you update this data on frequent occasions to collect the right information to feed into your profit chart and graph. Use the rule of thumb every time before you add a new product to your portfolio! 

Evaluate any instances of underperforming products to ensure that you are dealing with the right products. Check whether you are having any problems producing certain products in your business. Do not be afraid to discontinue any products that are performing poorly! 

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  1. Invest in Up-Selling, Cross-Selling, and Reselling 

Acquiring new customers is considered an expensive exercise. The best way to cut short all these expenses is to increase sales is to introduce the current customers to new products. This can easily be done through Up-Selling, Cross-Selling, and reselling. Before diving into this strategy, you should ensure that all your sales representatives understand the up-selling strategy.

The sales representatives should understand the best way to approach customers without being pushy. They should also understand how to use premium and educational features to help customers understand how they can benefit from the newly established products. 

  1. Lower the Overhead 

Negotiating better terms in business is one of the best ways to increase the profit margin. When getting a single product from more than one supplier, you need to consider the art of economies of scale. You can increase your order increment in one supply and reduce the other to evaluate whether you can maximize the price break. 

Evaluate your entire business portfolio if you have already begun sourcing products from an incumbent supplier. You can check if you have already negotiated the price in every step and asked for discounts. 

  1. Streamline the Demand Forecasts

In case you have raw materials in the inventory compared to the demand, you will realize that you are spending much on storing them. Sometimes, it’s likely to expire, and you will have no choice but to acquire it again. If you do not have enough raw materials, you are likely to pay more for rush orders. 

If you can easily streamline your mode of demand forecast, you are likely to secure a better chance of evaluating what you need to have within the business. It also gives you a glimpse of all the necessary aspects that you need to have based on the market situation and understand where to invest. 

  1. Sell Off the Old Inventory

When you make a promotional or seasonal product, and it does not sell as you expected, you need to change your approach. You can choose to sell off the old inventory which is in your warehouse occupying space. Remember that you can use this space to sell other goods that are high in demand and make good profits. 

The immediate thing you can do is to try and sell the absolute inventory at your disposal. You can try this on different platforms such as Amazon, reverse-logistic vendors, eBay, and many more. Before you sell the inventory, consider factors such as cost, transportation, inventory, and many others. 

  1. Motivate Your Team Members

Always remember that your employees are the face of your company. By investing in the right team, you create an impeccable face for your business. Your employees are the experts in matters of using business resources. To be on the safe side, you can collect insights from your team members and incorporate them into your business plan. 

This strategy is meant to make your team members feel appreciated within the business. It will also intrigue them to perform much better and elevate the company to the next level. As a result, you will be capable of increasing productivity and making better returns in the long run, courtesy of your team members. 

  1. Increase the Order Efficiency

Once a consumer places their order, it’s their responsibility to ensure that they receive the right product at the right time. This is one way of increasing profit and customer satisfaction. Also this approach can intrigue customers to make additional orders regularly, provided that you prove to be a reliable source. 

Also, ensure that you ask your customers to clarify how they want to receive the product. This is a great way to enhance efficiency and ensure that your customers get exactly what they want. 

  1. Use KPIs to Benchmark Business Performance

Evaluating the business performance is not simple, especially if you do not understand what needs to be measured. When composing a profit chart, you need to incorporate different types of KPIs to get accurate results. When measuring your business performance, you need to make use of different key performance indicators to evaluate the areas dragging you behind. 

This will give you accurate results and ideas about the areas you are falling short and how to increase the profit margin. 


Making a profit chart requires you to deal with accurate values that will enhance the efficiency of the final output. When creating the chart, you need to have a clear goal to help you move in the right direction. Since the chart is meant to help you detect the profitability of your business, you need to ensure that you are feeding in the right values that reciprocate the nature of your business. 

Understanding the best practices when creating a profit chart increases efficiency in your work. Charts and graphs offer a simple way of evaluating the business’s progress based on its current performance. If you struggle to compose your profit and make it much better, this article has everything you need! 

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10 Tips for Making a Good Profit Chart Even Better