Holistic Increase of Earnings in a Crisis

Increasing earnings is a broader task than increasing sales and revenue. Sales and revenue naturally have an impact on earnings. However, earnings only result from the difference between sales and expenses. This difference is not necessarily linear as sales increase. Causes for non-linear behavior of earnings can be expenses that are fixed by jumps. But it is also possible that an increase in revenue only leads to income when the scale is sufficient to cover fixed expenses.

Example 1: You need to buy a machine to run a business, which leads to monthly fixed expenses. The machine must be sufficiently utilized so that the revenue generated by the work of the machine is sufficient to cover the expenses for the machine. Only at this level of utilization does the machine become profitable and contribute something to positive earnings.

Example 2: The same applies to the development of a new market. You have to make an advance outlay in order to generate sales in the new market. The expenditure for marketing and sales only pays off when a certain additional sales volume is reached. Below this additional critical sales size, the return would be greater without the commitment in this new market.

Earnings always come from the difference between sales and costs. Earnings also have to do with a good understanding of meaningful innovations. Without good investments, it will hardly be possible to generate sustainable earnings.  


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