<p>Gross Profit and Net profit are two terms that a entrepreneur must understand very clearly.</p>
<p>Gross Profit = Sale(100) - Purchase(90)</p>
<p>In this case the Gross Profit is 10. But your gross profit is not your net profit, To ascertain your net profit you must deduct all rexpences from your Gross Profit. For example if you employ 2-3 people you must deduct their salary from the Gross Profit, Rent that you, Electricity Bill , Paper, Stationary, Internet Etc, basically every expense that you incur because of running your business must be deducted from your Gross Profit. After deducting your expenses from Gross Profit you arrive at your net profit.&nbsp;</p>
<p>Gross Profit = Sale - Purchase</p>
<p>Net Profit = Gross Profit - Expense.</p>
<p>A smart business man always knows what his net profit is and based upon that he modifies his lifestyle.</p>
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