Some companies measure the profitability of each order. Some companies measure the profitability of each product. Some companies measure the profitability of each customer. Some companies do none of these three, but at their own peril.

Why is it important for an advertising specialty firm to measure profitability? This can actually be answered by looking at the meaning of the word "profit". Profit, in its simplest terms, is:

        Profit = Total Revenues - Total Expenses

When a firm measures its revenues and expenses regularly, they will be able to get a better understanding of where the money is coming from (revenues) and where it is going (expenses). The act of measuring forces your attention to the details that comprise how your business operates. Without a deep understanding of where your profits are coming from, you're taking almost random guesses at your company strategies.

Typically, distributorships in our industry focus...