If sales are increasing but profit is decreasing, what should an entrepreneur check first?

Correct answer: Costs, pricing, and cost per unit

Sales measure the value or volume of revenue, whereas profit depends on revenue minus costs. Profit can fall when raw material, wages, delivery, discounts, overheads, or cost per unit rise faster than sales, or when prices are set too low. The entrepreneur should therefore review costs and pricing before unrelated matters such as decoration or colour.