TOURISM PLAYS
IMPORTANT ROLE IN
FLORIDA’S ECONOMY
March was a record breaking month
for tourism in Lakeland and Polk
County! The tourist tax collections
for the month of March in Polk County
exceeded more than $1.1 million in
revenue on rooms rented. That set a
record for monthly collections and
represented the first time ever since
the tax began that revenue exceeded
$1 million for any particular month.
As reported in The Ledger, "Of course
I knew March was good because I
lived it," said John Loute, the general
manager of LaQuinta Inn and Suites –
Lakeland West. "The first four months
of the year will make you or break
you," he said. "So far, so good!"
Tax revenues have risen 15 percent
compared to the prior year period
said Mark Jackson, director of
Central Florida Tourism and Sports
Marketing. That puts the agency on
pace to beat the previous record $7.7
million in tax revenue collects in its
fiscal year 2014. Strong attendance at
Detroit Tiger Spring Training games
in Lakeland, two major league college
sporting events, major events at The
Lakealnd Center, and the extremely
cold winter up north combined with
lower gasoline prices and a general
improvement in the economy are a
few of the major factors that led to a
record month.
"Tourism has been strong and
growing in Florida—especially Polk
County for the past couple of years,"
said Jackie Johnson, Senior Vice
President of the Lakeland Convention
and Visitors Bureau at The Lakeland
Chamber of Commerce. "Our diverse
approach to marketing and the
emphasis on sporting events plays
an important factor. In addition,
Legoland has helped put us on
the "tourism map" along with new
resorts such as Streamsong with
internationally known recognition.
The good news, we are expecting
record breaking months ahead!"
6 | FORUM FOR BUSINESS
My B usin ess is Profita b leW h y D o I N e ed t o Un d e rsta n d Margi n
a n d M a rkup?
JAVIER MARIN
CGBP CONSULTANT
FSBDC at the
University of South
Florida
C
] O N N E C T
sbdctampabay.com
Business owners
may have a hard time
trying to determine
their profitability.
Javier Marin, a
consultant with the
Florida SBDC at
USF, says clients are
normally misguided
by the balance in
their bank account,
assuming that as long
as there is money
in the bank, the
business is profitable.
“Profitability,” he says,
“is not a theoretical
concept. Profitability is
a quantifiable concept,
and as business owners
we need to be able to
define numerically how
profitable our business
is.”
The first step
to determine
profitability is to
know the relevance
of a company’s
pricing structure in
the current market.
This can be achieved
by understanding
markup and margin.
Marin emphasizes
the importance of
understanding your
business’ financial
statements as a means
to knowing how
revenues, cost of goods
sold, and expenses
come together to
show whether your
business is profitable.
He uses the illustration
below to describe the
difference between
markup and margin
as they relate to gross
profit.
Gross profit is the
difference between the
sales price (revenue)
and your cost. In the
example, revenue is $2 and the cost is $1.25, so
gross profit is $0.75. Markup is gross profit as a
percentage of sales. If gross profit is $0.75, divided
by the cost: $1.25, then we get a 60% markup.
Margin is the gross profit: $0.75 as a percentage
of revenue: $2, which is 37.50% in the example.
Marin clarifies that while a business owner uses
markup to determine the sales price for products,
the financial professionals advising the business
would look at the gross profit margin to determine
the profitability of the business as a whole.
He maintains that this type of analysis is even
more important when your business has several
different products or services (lines of business).
Can you quantify each line of business to
determine its profitability?
IF THE ANSWER IS "NO," THEN HERE IS
WHERE HE RECOMMENDS
YOU START:
u Use a bookkeeping product that will allow
you to use some type of classification system.
It’s called "classes" in QuickBooks.
u Make a list of each of your lines of
businesses.
u Categorize (as much as possible) each
expense and revenue as they relate to each
line of business with your bookkeeping entries.
u Presenting your profit and loss (P&L) report
by classes will show your profit for each line of
business.
Classifying your P&L will help you determine
whether the products or services under each
line of business are profitable. In fact, you will
understand what actions to take in order to
develop a marketing plan to increase profitability
even further.
In some cases a business may want to sacrifice
profitability on a specific product or service
because it opens the door to cross-sell more
profitable ones.
Marin cautions that any and all pricing
decisions need to be made with full
understanding of the actual bottom line for each
of these activities or products. “Remember, you
can’t make up a loss in volume,” Marin says.
"Any decision to sacrifice profitability in a line
of business has to be made consciously and in a
measurable way. Only then will you know when to
discontinue an unprofitable service or product.”