Revenue is a common accounting term you might hear when you start running a small business. While it might sound like jargon, revenue simply means the money you make by selling to your customers. Sometimes revenue is called top line or gross sales.
Revenue is best understood when you break it down for your small business in terms of units and prices. You sell a good (or provide a service) which you sell for a price. Your revenue is simply this unit price times the number of units sold. If you are a solopreneur offering consulting services, your revenue would be the hourly rate you bill times the number of hours you charge. If you are selling widgets, your revenue would be the number of widgets you sold times how many widgets your customers purchased.
Revenue is one of the many terms that we try to demystify at Finance Learning Lab.
Why it is important to know what is revenue
Understanding revenue is an important step in managing your small business. If you found this short explanation of revenue helpful, you might be interested in our Finance Fundamentals program where we take you through common questions entrepreneurs have about their numbers like:
What is revenue? What is cash flow? What is net profit?
Attend the Finance Learning Lab Bootcamp to find out explanations to all these questions and many more. We focus on helping you identify strategies to improve your revenue and manage your business expenses in a smarter way.
Another great resource that might help you better understand revenue is our free infographic book called “Everything you meant to ask about your business numbers”. Visit our Free Resources section (www.FinanceLearningLab.com) to get a free copy of this book so you can learn not only what revenue is but the answers to many other business finance questions you will have as you start and scale your business.