Being told to calculate profit is always a tricky scenario, especially for an analysts perspective. You want to be clear about the profit they actually want calculated. Remembering that profit, in base form, is going to represent anything after that break even point. Simply put, as the owner, your salary is going to be configured into the operating costs. So, let's say your operating cost is 100k a year and this includes your salary, then any dollar made after 100k is "profit". However, this does not totally detail other forms of profit, such as economic profit. This is where you are measuring and analyzing missed and made opportunities versus the profit you brought in. So, one issue you could foresee in your revenue stream is that carrying a 5th product may increase opportunity costs, but potentially the 5th item causes the 4th item to sell at a higher rate as they're often sold in conjunction. Studies show, for example, that a person that buys a beach volleyball is not likely to buy a volleyball net. But those that buy a beach volleyball are 3x as likely to buy a portable air pump. I don't mean to over think it, but you'll notice there's four items that are being sold. You own a business that is contingent about the seasons of the year, which there are also four. To me this speaks directly to the significance of weather in your business and this is not something the employer would want you to miss. Issues in revenue streams here would be a lack of product adjustment due to weather. To me, in an instance like this, if an employer asks you such a soft, information less question, you are doing yourself a disservice if you do not start asking them questions about what they want. Be sure to clarify if they're asking you to calculate profit or forecast profit.
From an analyst’s perspective, simply being told to calculate profit can be a tricky demand, especially in an interview setting. You want to be clear about the profit they actually want calculated. Remembering that profit, in base form, is going to represent anything after the break-even point. Simply put, as the owner, your salary is going to be configured into the operating costs. So, let's say your operating cost is 100k a year, and this includes your salary, then any dollar made after 100k is "profit". However, this does not totally detail other forms of profit, such as economic profit. This is where you are measuring and analyzing missed and made opportunities versus the profit you brought in. So, one issue you could foresee in your revenue stream is that carrying a 5th product may increase operating costs; but potentially, the 5th item causes the 4th item to sell at a higher rate as they're often sold in conjunction. Studies show, for example, that a person that buys a beach volleyball is not likely to buy a volleyball net. But those that buy a beach volleyball are 3x as likely to buy a portable air pump. I don't mean to over think it, but you'll notice there's four items being sold. You own a business that is contingent upon the seasons of the year (also four). To me this speaks directly to the significance of weather in your business and this is not something the employer would want you to miss. Issues in revenue streams here would be a lack of product adjustment due to weather. To me, in an instance like this, if an employer asks you such a soft, information less question, you are doing yourself a disservice if you do not start asking them questions about what they want. Be sure to clarify if they're asking you to calculate profit or forecast profit. Also, any time someone asks you what issues could arise in revenue streams, immediately think SWOT. Strength, Weaknesses, Opportunities, Threats. Always think SWOT when heading into any BA or PM position. It will quickly allow you to analyze almost any situation.
