Incremental Profit: Calculate It (U.S. Guide)

For businesses operating within the U.S. market, understanding incremental profit is crucial for informed decision-making. Incremental analysis, a core concept in managerial accounting, focuses on the change in profit resulting from a specific decision, such as introducing a new product line or expanding into a new territory; the Small Business Administration (SBA) emphasizes the importance of such financial acumen for sustainable growth. At its core, incremental is incremental revenues minus incremental costs, offering a clear view of the true profitability of a particular opportunity, a principle often utilized in cost-volume-profit (CVP) analysis to assess the financial impact of varying production or sales levels.

This section lays the groundwork for understanding incremental profit, a crucial tool for effective business decision-making. We will define its core components, explore its relationship with marginal analysis, and differentiate it from traditional accounting metrics. Understanding these distinctions is key to unlocking the power of incremental profit analysis.

Defining Incremental Revenue and Incremental Cost

At its core, incremental profit analysis revolves around two key elements: incremental revenue and incremental cost.

Incremental revenue is the additional revenue generated as a direct result of a specific business decision or action.

It represents the change in total revenue arising from implementing a particular strategy or project. For example, the extra sales generated from a new marketing campaign would be considered incremental revenue.

Incremental cost, conversely, represents the additional cost incurred due to that same specific decision or action.

This includes all variable costs directly attributable to the change, as well as any fixed costs that increase solely because of the decision.

For example, if a company decides to increase production, the costs of the extra materials and labor would be the incremental costs.

Illustrative Examples

Consider a coffee shop contemplating extending its opening hours.

The incremental revenue would be the extra sales generated during those extended hours.

The incremental cost would include the wages paid to the staff working the extra hours, the cost of additional utilities used, and any increase in supplies needed.

Another example: A software company considering developing a new feature for its existing product.

The incremental revenue would be the anticipated additional subscription revenue from existing and new customers attracted by the feature.

The incremental cost would encompass the salaries of the development team, software licenses, and any additional infrastructure costs.

The Role of Marginal Revenue and Marginal Cost in Profit Optimization

Marginal revenue and marginal cost are closely related to incremental profit, providing a more granular view. They help pinpoint optimal decision points.

Marginal revenue is the additional revenue earned by producing and selling one more unit.

Marginal cost is the additional cost incurred by producing that one more unit.

Businesses use these concepts to optimize production levels and pricing strategies. The profit-maximizing point generally occurs where marginal revenue equals marginal cost.

Up to this point, each additional unit sold contributes more revenue than cost, increasing profit. Beyond this point, each additional unit costs more to produce than it generates in revenue, decreasing profit.

Imagine a bakery. If producing one more cake generates $15 in revenue (marginal revenue) and costs $10 (marginal cost), the bakery should produce that cake.

However, if producing another cake generates $12 in revenue but costs $14, the bakery should not produce that additional cake.

By analyzing these marginal changes, businesses can fine-tune their operations to maximize profitability.

Contrasting Incremental Profit with Traditional Accounting Metrics

Incremental profit analysis differs significantly from traditional accounting metrics like net income, making it more relevant for specific decision-making contexts.

Traditional accounting provides a comprehensive overview of a company’s financial performance over a specific period. It follows strict accounting standards and aims to provide a standardized view of financial health.

However, traditional accounting often includes sunk costs and allocates overhead in ways that can obscure the true impact of specific decisions.

Incremental analysis, on the other hand, focuses solely on the changes in revenue and costs resulting from a particular decision.

It ignores sunk costs (costs already incurred and unrecoverable) and concentrates on relevant costs – those that will change as a result of the decision.

For instance, when deciding whether to accept a special order, a company should focus on the incremental revenue from the order and the incremental costs of fulfilling it.

Existing overhead costs allocated to the order are irrelevant unless they actually increase as a result of accepting the order.

By focusing solely on the relevant changes, incremental analysis provides a clearer picture of the profitability of specific decisions, empowering managers to make more informed choices that improve the bottom line.

This targeted approach makes it an invaluable tool for evaluating investments, pricing strategies, and production levels.

Key Concepts Related to Incremental Profit Analysis

This section lays the groundwork for understanding incremental profit, a crucial tool for effective business decision-making. We will define its core components, explore its relationship with marginal analysis, and differentiate it from traditional accounting metrics. Understanding these distinctions is key to unlocking the power of incremental profit analysis in making sound financial decisions.

Contribution Margin: Gauging Product Profitability

Contribution margin is a fundamental concept in incremental profit analysis. It represents the revenue remaining after deducting variable costs directly attributable to a product or service.

This metric helps businesses understand the profitability of individual offerings and their impact on overall profit. The formula for contribution margin is:

Contribution Margin = Sales Revenue – Variable Costs

Understanding contribution margin is essential for assessing which products or services contribute the most to covering fixed costs and generating profit.

Sales Volume and Incremental Profit

Changes in sales volume directly affect incremental profit through the contribution margin. If a company sells additional units, the incremental profit increases by the contribution margin per unit.

Conversely, a decrease in sales volume reduces incremental profit by the same amount. Analyzing the contribution margin allows businesses to determine the profitability impact of fluctuations in sales.

Cost-Benefit Analysis: Weighing Options with Incremental Profit

Cost-benefit analysis (CBA) is a systematic approach to evaluating the pros and cons of different options. When applying incremental profit analysis in CBA, the focus is on the incremental costs and incremental benefits associated with each option.

This involves comparing the incremental profit generated by each alternative to its respective incremental costs. The option with the highest positive incremental profit is typically the most financially attractive.

Real-World Scenarios

For example, consider a company deciding whether to launch a new product. CBA would involve estimating the incremental revenue from the product launch and comparing it to the incremental costs, such as production, marketing, and distribution.

Another scenario could be a decision to automate a process. The incremental costs might include the cost of the automation equipment and implementation, while the incremental benefits would be the cost savings from reduced labor and increased efficiency.

Break-Even Analysis: Finding the Profitability Threshold

Break-even analysis determines the sales volume required to cover all costs, both fixed and variable. It’s a critical tool for understanding the profitability threshold and making informed decisions about pricing and production.

Using incremental data, break-even analysis helps identify how changes in fixed and variable costs impact the point at which a project or product becomes profitable.

Impact of Cost Changes

Changes in fixed costs or variable costs directly affect the break-even point. An increase in fixed costs raises the break-even point, requiring more sales to cover those costs.

Conversely, a decrease in variable costs lowers the break-even point, making it easier to achieve profitability. Understanding these dynamics is crucial for effective financial planning.

Opportunity Cost: Recognizing Foregone Benefits

Opportunity cost represents the potential benefits that are foregone when choosing one alternative over another. It’s the value of the next best alternative.

When making incremental decisions, it’s essential to consider the opportunity costs associated with each option. By accounting for foregone benefits, businesses can make more informed decisions that maximize overall value.

Business Scenarios

For instance, a company might choose to invest in a new marketing campaign. The opportunity cost could be the potential return from investing that same capital in research and development.

Another example is a manufacturer deciding to use its production capacity for one product instead of another. The opportunity cost is the profit they could have earned from producing the alternative product.

Sunk Costs: Ignoring Irrelevant Expenses

Sunk costs are expenses that have already been incurred and cannot be recovered, regardless of future decisions. These costs are irrelevant in incremental analysis and should be ignored.

Focusing on sunk costs can lead to poor decision-making, as it may cause businesses to continue investing in unprofitable projects simply because they’ve already invested a significant amount.

Avoiding the Sunk Cost Fallacy

A common mistake is the sunk cost fallacy, where businesses continue investing in a failing project because of the amount already spent.

For example, a company may have invested heavily in a product that is no longer viable. Continuing to invest in the product based on the sunk costs would be a mistake. The decision should be based on the potential future incremental profit.

Relevant Costs: Focusing on What Matters

Relevant costs are those that are pertinent to a specific decision and impact incremental profit. These costs are avoidable and differ between the alternatives being considered.

Relevant costs are the key inputs in incremental analysis, as they directly affect the profitability of different options. Identifying relevant costs is crucial for making informed decisions.

Examples in Different Contexts

In a make-or-buy decision, the relevant costs are the incremental costs of producing the item internally versus the cost of purchasing it from an external supplier.

For a pricing decision, the relevant costs are the variable costs of production and any incremental fixed costs associated with increasing production.

Return on Investment (ROI): Measuring Investment Efficiency

Return on Investment (ROI) measures the efficiency of an investment by comparing the incremental profit generated to the cost of the investment. ROI is typically expressed as a percentage, providing a clear indication of the profitability of the investment.

ROI = (Incremental Profit / Cost of Investment) x 100%

Calculating ROI with Incremental Data

To calculate ROI using incremental data, focus on the incremental profit generated by the investment and the incremental cost of the investment. This provides a more accurate measure of the investment’s profitability than using traditional accounting metrics.

For example, if a marketing campaign costs $10,000 and generates $15,000 in incremental profit, the ROI is 50%.

Net Present Value (NPV): Evaluating Investment Viability

Net Present Value (NPV) is a method used to evaluate the viability of an investment by discounting future incremental cash flows to their present value. NPV considers the time value of money, recognizing that a dollar today is worth more than a dollar in the future.

A positive NPV indicates that the investment is expected to be profitable, while a negative NPV suggests that it is likely to result in a loss.

Understanding the NPV Calculation

The basic formula for NPV is:

NPV = Σ (Cash Flow / (1 + Discount Rate)^Time Period) – Initial Investment

Where:

• Cash Flow = Incremental cash flow in each period
• Discount Rate = The rate used to discount future cash flows (often the cost of capital)
• Time Period = The period in which the cash flow occurs

Understanding and applying these key concepts is essential for effectively using incremental profit analysis to make sound financial decisions and drive business success.

Organizations Supporting Incremental Profit Decision-Making

Having a solid understanding of incremental profit is essential; knowing where to find the data and resources to apply this concept effectively is equally critical. Several organizations play a vital role in supporting businesses, particularly small and medium-sized enterprises (SMEs), in their incremental profit decision-making processes. These entities offer a range of services, from financial planning assistance to industry-specific data that can significantly enhance the accuracy and relevance of incremental analysis.

Small Business Administration (SBA) Resources

The U.S. Small Business Administration (SBA) is a cornerstone resource for entrepreneurs and small business owners. The SBA provides a wealth of information, tools, and support services designed to foster business growth and sustainability. This includes extensive resources relevant to financial planning and analysis.

SBA’s Financial Planning Support

The SBA offers counseling and training programs that can help businesses develop sound financial strategies. These programs are invaluable for understanding and implementing incremental profit analysis.

• SCORE Mentors: SCORE, a resource partner of the SBA, provides access to experienced business mentors. They can offer guidance on financial management and planning.

• Small Business Development Centers (SBDCs): SBDCs offer training and consulting services, assisting businesses with financial analysis, budgeting, and forecasting.

• Online Resources: The SBA website hosts a vast library of articles, guides, and tools covering various financial topics. These resources are accessible to anyone, offering a convenient way to learn about incremental profit analysis.

Relevant SBA Programs for Incremental Analysis

Several SBA programs directly support the use of incremental analysis. They help businesses make informed decisions about investments, operations, and growth strategies.

• SBA Loans: While not directly related to analysis, securing an SBA loan often requires a detailed financial plan. This plan can leverage incremental profit analysis to demonstrate the viability of a project or business expansion.

• Export Assistance: For businesses engaged in international trade, the SBA offers export financing and counseling. This support helps companies evaluate the incremental profitability of export ventures.

• Government Contracting: The SBA assists small businesses in navigating government contracting opportunities. This includes evaluating the profitability of pursuing government contracts using incremental analysis.

Industry-Specific Trade Associations

Industry-specific trade associations are valuable sources of data and insights for businesses. These associations typically collect and disseminate information on industry trends, cost structures, and revenue benchmarks. These are critical for conducting accurate incremental analysis.

Data on Industry Cost and Revenue Structures

Trade associations often compile data on various aspects of the industry. These include average costs of goods sold, marketing expenses, and revenue per employee. This data serves as a baseline for comparison and helps businesses understand their own performance relative to industry standards.

• Benchmarking: By comparing a company’s cost and revenue structures to industry averages, businesses can identify areas for improvement and potential cost savings.

• Market Research: Trade associations frequently conduct market research studies that provide insights into consumer behavior, market trends, and competitive dynamics. This information is vital for forecasting incremental revenue.

• Best Practices: Many associations promote best practices in financial management and operational efficiency. They can provide valuable guidance on how to optimize processes and reduce costs.

The Value of Trade Association Data in Incremental Analysis

Using industry-specific data from trade associations can significantly enhance the accuracy and relevance of incremental analysis. This data provides a context for evaluating decisions and projects, making the analysis more meaningful.

• Informed Decision-Making: Access to reliable industry data enables businesses to make more informed decisions about pricing, production, and marketing strategies.

• Competitive Advantage: By understanding industry trends and cost structures, businesses can identify opportunities to gain a competitive advantage and improve profitability.

• Risk Mitigation: Comprehensive industry data helps businesses assess the potential risks and rewards of various projects and initiatives, mitigating the risk of financial losses.

In conclusion, both the SBA and industry-specific trade associations are essential resources for businesses seeking to leverage incremental profit analysis effectively. The SBA provides foundational support and financial planning assistance, while trade associations offer industry-specific data and insights. By utilizing these resources, businesses can enhance the accuracy, relevance, and strategic value of their incremental analysis. Ultimately, this will drive better decision-making and improved financial outcomes.

Professionals Utilizing Incremental Profit Analysis

Understanding the principles of incremental profit analysis is one thing; applying them effectively requires the expertise of various professionals. From number-crunching accountants to strategy-minded consultants, a diverse range of experts rely on incremental profit insights to guide decision-making and drive business success. Let’s examine the key roles and contributions of these professionals.

Accountants: The Foundation of Financial Data

Accountants are the bedrock of any financial analysis, including incremental profit assessments. They meticulously track and report costs and revenues, ensuring the accuracy and reliability of the data used for decision-making.

Their primary role is to provide the essential financial data foundation upon which all subsequent analysis is built. They ensure compliance with accounting standards, maintain accurate records, and generate financial statements that reveal a company’s financial health.

Without reliable accounting data, incremental profit calculations would be meaningless. Accountants are the unsung heroes, ensuring the numbers are accurate and verifiable.

Financial Analysts: Recommending Strategic Investments

Financial analysts leverage incremental profit data to evaluate investment opportunities and recommend the most promising projects. They assess the financial viability of potential investments, considering factors like expected returns, risks, and cash flows.

They use techniques like discounted cash flow analysis to determine the net present value of projects and assess their potential profitability. Incremental profit analysis allows them to focus on the specific costs and revenues directly attributable to a particular investment, providing a clearer picture of its financial impact.

Their insights are vital for companies making decisions about capital expenditures, mergers and acquisitions, and other strategic investments.

Management Accountants: Strategic Financial Planning

Management accountants play a crucial role in providing financial information tailored for strategic planning purposes.

Unlike financial accountants who focus on external reporting, management accountants provide insights that are directly relevant to internal decision-making. They analyze cost structures, identify areas for improvement, and develop budgets and forecasts that support strategic goals.

Incremental profit analysis is a key tool in their arsenal, enabling them to assess the profitability of different strategic options and help businesses make informed choices. They work closely with management teams to align financial goals with overall business strategy.

Business Owners and Managers: Operational Decision-Making

Business owners and managers are on the front lines, making critical decisions every day that impact the bottom line. They leverage incremental profit analysis to inform their decisions on pricing, production, and marketing strategies.

For example, when considering a price change, they analyze the potential impact on sales volume and overall profitability, focusing on the incremental revenue and cost implications.

Similarly, they use incremental analysis to determine the optimal production levels, balancing production costs with potential revenue gains. Effective marketing campaign evaluation also relies heavily on incremental profit analysis, which allows managers to assess the return on investment and optimize marketing spend.

These real-world decisions rely heavily on the insights gained from incremental profit analysis.

Consultants: Financial and Business Strategy

Financial and business strategy consultants bring an objective perspective and specialized expertise to the table. They advise companies on strategies for financial improvement, often using incremental profit analysis as a core component of their recommendations.

Consultants help businesses identify opportunities to increase revenue, reduce costs, and improve overall profitability. They conduct in-depth financial assessments, develop comprehensive financial plans, and provide guidance on implementing strategic initiatives.

Their role often involves helping companies restructure their operations, optimize pricing strategies, and streamline their cost structures. Incremental profit analysis is invaluable in this process, allowing consultants to quantify the potential benefits of different strategic options.

Economists: Modeling and Analysis

Economists bring a broader economic perspective to financial decision-making. They develop and analyze economic models related to incremental revenue and incremental cost, providing valuable insights into market trends, consumer behavior, and industry dynamics.

Economists help businesses understand the external factors that can impact their profitability. They assess the potential impact of economic downturns, changes in interest rates, and shifts in consumer demand.

Their expertise is particularly valuable in industries that are highly sensitive to economic conditions. By providing a broader economic context, economists help businesses make more informed financial decisions.

Tools for Incremental Profit Calculation

Calculating incremental profit often requires more than just a basic understanding of the concept; it necessitates the right tools. Fortunately, a variety of options are available, ranging from simple spreadsheet software to sophisticated analytics platforms. Each offers unique capabilities for gathering, analyzing, and interpreting the data critical for informed decision-making. Choosing the right tool depends on the complexity of your business, the volume of data, and the specific analytical needs you face.

Spreadsheet Software: The Versatile Foundation

Spreadsheet software like Microsoft Excel and Google Sheets provides a fundamental platform for modeling and calculating incremental profit. Their flexibility allows users to create custom formulas and models tailored to their specific situations.

These tools are particularly useful for smaller businesses or for initial explorations of incremental profit opportunities.

Key Spreadsheet Functions for Incremental Analysis

Several spreadsheet functions are essential for incremental analysis. IF statements allow for conditional calculations, essential for scenarios with varying costs or revenues.

SUM and SUMIF functions enable quick aggregation of relevant data. VLOOKUP facilitates data retrieval from different tables, streamlining the analysis process.

Excel’s charting capabilities also provide basic visualizations, allowing for easy identification of trends and patterns in the data. However, remember that spreadsheets can become cumbersome with large datasets, and more advanced analytics may require dedicated software.

Accounting Software: Your Data Repository

Accounting software such as QuickBooks, Xero, and NetSuite serves as a central repository for the financial data needed for incremental profit calculations. These systems track costs and revenues in detail, providing a solid foundation for analysis.

Extracting Relevant Data

The key is knowing how to extract relevant data from these systems. Most accounting software allows for customized reports, enabling users to isolate the specific cost and revenue streams associated with a particular decision or project.

Features like tagging or classifying transactions can further refine data extraction.

Exporting data to a spreadsheet for further analysis is a common practice, although it’s crucial to ensure data integrity during the transfer.

Financial Planning Software: Budgeting and Forecasting Powerhouse

Financial planning software like Adaptive Insights and Anaplan takes incremental analysis a step further by integrating it into budgeting and forecasting processes. These tools are designed to handle complex scenarios and large datasets, providing a more robust platform for analysis.

Advantages of Dedicated Financial Planning Tools

Dedicated financial planning tools offer several advantages. They automate many of the calculations involved in incremental analysis, reducing the risk of error and saving time.

These tools also facilitate scenario planning, allowing businesses to explore the potential impact of different decisions on incremental profit.

Advanced features such as driver-based planning enable users to model the relationship between key business drivers and financial outcomes.

However, these tools often come with a higher price tag and require specialized training to use effectively.

Data Analytics Software: Uncovering Hidden Insights

Data analytics software, such as Tableau and Power BI, offers the most sophisticated approach to incremental profit analysis. These tools can identify trends and patterns in vast datasets that would be impossible to detect manually.

Visualizing Financial Data

The strength of data analytics software lies in its visualization capabilities. These tools allow users to create interactive dashboards and reports that provide a clear and concise view of financial data.

By visualizing trends in cost and revenue, businesses can gain valuable insights into the drivers of incremental profit.

Furthermore, advanced features such as predictive analytics can help forecast future performance based on historical data. However, data analytics software requires a higher level of technical expertise and may necessitate dedicated data analysts.

Practical Applications of Incremental Profit Analysis

Calculating incremental profit often requires more than just a basic understanding of the concept; it necessitates the right tools. Fortunately, a variety of options are available, ranging from simple spreadsheet software to sophisticated analytics platforms. Each offers unique capabilities for gathering, and…

Incremental profit analysis isn’t just a theoretical exercise confined to textbooks; it’s a practical tool with a wide array of real-world applications. From making informed investment decisions to optimizing pricing strategies and evaluating marketing campaigns, understanding incremental profit can significantly enhance business outcomes.

Capital Budgeting Decisions

One of the most critical applications of incremental profit analysis lies in capital budgeting. When considering a potential capital investment—whether it’s purchasing new equipment, expanding facilities, or acquiring another company—businesses need a clear understanding of the potential financial impact.

Incremental profit analysis provides a framework for evaluating these investments by focusing on the additional profits that the project is expected to generate.

Rather than relying solely on traditional accounting metrics, which can sometimes obscure the true picture, incremental analysis hones in on the specific costs and revenues directly attributable to the investment.

By comparing the incremental profit generated by the project with the initial investment, businesses can make more informed decisions about whether to proceed.

Assessing Profitability of Long-Term Projects

Long-term projects present unique challenges in capital budgeting, due to the uncertainty surrounding future costs and revenues. Incremental profit analysis can help mitigate this uncertainty by providing a structured approach to forecasting and evaluating potential outcomes.

By carefully considering the incremental costs and incremental revenues associated with the project over its entire lifespan, businesses can develop a more realistic assessment of its profitability.

This analysis should also incorporate factors such as the time value of money, which reflects the fact that a dollar received today is worth more than a dollar received in the future.

Techniques like Net Present Value (NPV), which discounts future cash flows to their present value, can be used in conjunction with incremental profit analysis to make sound investment decisions.

Pricing Strategies

Pricing is a delicate balancing act. Set prices too high, and you risk losing customers to competitors. Set them too low, and you may not generate enough profit to sustain your business.

Incremental profit analysis offers a powerful tool for informing pricing strategies by considering the impact of price changes on profitability.

By carefully analyzing the incremental costs associated with producing and selling each unit, businesses can determine the minimum price at which they can sell their products or services without losing money.

They can also use incremental analysis to assess the potential impact of price increases or decreases on sales volume and overall profitability.

Scenarios for Pricing Analysis

Consider a scenario where a company is considering lowering the price of one of its products to gain market share.

Incremental profit analysis can help the company determine whether the increased sales volume resulting from the price decrease will offset the reduction in profit margin per unit.

Alternatively, a company might consider raising the price of a product to increase profitability.

Incremental analysis can help the company assess the risk of losing customers due to the price increase, and determine whether the increased profit margin per unit will compensate for any potential decline in sales volume.

Production Level Optimization

Determining the optimal production level is a critical challenge for many businesses. Producing too little can lead to missed sales opportunities and dissatisfied customers.

Producing too much can result in excess inventory, storage costs, and potential obsolescence.

Incremental profit analysis provides a framework for finding the sweet spot—the production level that maximizes profit.

By analyzing the incremental costs and revenues associated with each additional unit produced, businesses can determine the point at which the marginal cost of production equals the marginal revenue generated.

This is the point at which profit is maximized.

Balancing Production Costs and Revenue

The key to optimizing production levels lies in balancing production costs with potential revenue.

Incremental profit analysis helps businesses achieve this balance by providing a clear understanding of the relationship between production volume and profitability.

For example, a manufacturer might use incremental analysis to determine whether it’s more profitable to operate its factory at full capacity, even if it means incurring overtime costs, or to reduce production levels and avoid those costs.

Similarly, a service provider might use incremental analysis to determine whether it’s more profitable to hire additional staff to meet increased demand, or to turn away some customers.

Marketing Campaign Evaluation

Marketing campaigns can be expensive, and it’s essential to know whether they’re generating a return on investment (ROI).

Incremental profit analysis offers a valuable tool for assessing the effectiveness of marketing campaigns and determining whether they’re contributing to the bottom line.

By tracking the incremental revenue generated by a marketing campaign and comparing it with the incremental costs associated with running the campaign, businesses can calculate the campaign’s ROI.

This information can then be used to make decisions about whether to continue the campaign, modify it, or discontinue it altogether.

Measuring Marketing ROI

Measuring the ROI of a marketing campaign can be challenging, as it’s not always easy to isolate the specific impact of the campaign on sales.

However, by carefully tracking key metrics such as website traffic, lead generation, and sales conversions, businesses can develop a reasonable estimate of the campaign’s incremental revenue.

This data, combined with information on the incremental costs of the campaign—including advertising expenses, marketing personnel costs, and other related expenses—can then be used to calculate the ROI.

By using incremental profit analysis to evaluate marketing campaigns, businesses can ensure that their marketing investments are generating a positive return.

So, there you have it! Figuring out incremental profit, which is incremental revenues minus incremental costs, doesn’t have to be a headache. With a little planning and careful tracking, you can see exactly how each new venture is impacting your bottom line. Now go forth and make some profitable decisions!