3 Financial Measurements Poshers Need to Understand

Can you make any money selling clothing on Poshmark? Sure. People do it all the time. Can you make a full-time living? Perhaps. It is probably safe to say that most Poshers – that’s what Poshmark sellers are called – only sell part-time for some extra cash. Those who do it full-time are running full-scale businesses. They succeed partly because they understand fundamental business principles.

One of the most fundamental principles of all is measuring a business’s finances. Poshers need to keep track of every penny they spend. Likewise, they need to track every penny they take in. All their financials need to be measured against the amount of time they put into their businesses. Only with a proper measurement of financials is it possible to know whether selling on Poshmark is actually worthwhile from a business standpoint.

To that end, here are three financial measurements every Posher needs to understand:

1. Revenue

When corporations file their quarterly reports with the SEC, they disclose both revenues and profits. Why disclose both? Because they are two separate things. A company’s revenue is the total amount of money it takes in over a given amount of time. It is money taken in primarily from sales, but there can be other sources as well.

Revenue is separate from profit in the sense that it doesn’t account for expenditures. When you are measuring revenue, you’re only measuring the amount of money you receive from your customers. If you sell $500 worth of clothing through your Poshmark closet this month, $500 is your monthly revenue.

2. Profit

Profit is your revenue minus your expenses. Take your total revenue for the month, subtract all the money you spent on business expenses, and the amount remaining is your profit. You can measure profit on a weekly, monthly, quarterly, or annual basis. Most successful business owners measure both monthly and annually, at bare minimum.

The one thing to be careful about is how you account for your business expenses. Let’s say you want to measure your profit on a weekly basis. Let us also say you pay for a monthly PoshyVA subscription. By the way, PoshyVA is a Poshmark virtual assistant service. That notwithstanding, an accurate measurement of your weekly profit would require determining how much you pay per week for PoshyVA.

3. Margin

Of all three financial measurements, margin is the one that most influences whether selling on Poshmark is worth your time and effort. Margin is a measurement of the amount of your total revenue that constitutes profit and is measured as a percentage. The greater the percentage, the higher your margin.

For simplicity’s sake, let us deal with some simple numbers. Let’s say your total revenue this month is $100. Your total expenses equal $75. The percentages here are pretty easy. Your expenses consume 75% of your revenue. The remaining 25% constitutes your profit. Your margin is 25%. Likewise, expenses of $90 would reduce your margin to 10%.

Why does this matter? Because profit alone doesn’t justify conducting business. If you recorded $100 in sales and $99.99 in expenses, you would still have made a profit. But is it worth putting in all that time and effort to earn one penny per month? Probably not.

There is no standard margin you have to reach in order to make your business legitimate. You decide for yourself what an acceptable margin is. In order to know your margin, you also have to measure your revenue and profit. The three measurements combined tell you most of what you need to know about your Poshmark financials.

sudarsan

Sudarsan Chakraborty is a professional writer. He contributes to many high-quality blogs. He loves to write on various topics.