Enjoy Profit, Endure Loss in Your Business Pursuits.

Profit is the most important goal of most business pursuits.

 

Profit

 

Business is all about continually maximizing profit. All businesses, large or small have the same primary goal: consistent profits. 

In this blog post, we examine how to make a consistent profit and later share with you effective loss coping strategies, when the eventualities occur in the business world.

Profit is an easy concept to understand. Simply, it’s bringing in more money than you spend. It is the excess of what it costs you to make or buy your product and what you realize when you sell it.

An enterprise is said to be profitable when its revenues over time exceed, by an acceptable amount, its expenses.

A profitable customer is an individual, firm, or household that over time produces a stream of revenue that exceeds the company’s cost stream of attracting, selling, and serving such a customer.

A business can’t continue to exist if the total revenue it receives is far less than the total expenses it accumulates.

Profit is very essential for business survival, either in the short run or in the long, a business must make a profit to remain in business, or else it’ll cease operations, run out of resources, and eventually shut down.

Also, profit provides a buffer that enables an enterprise to weather the business storm.

The more profitable a venture, the better it will be able to handle inevitable business changes and uncertainties and the more options it’s to respond to the unpredictable.

Profit is a good performance yardstick for a business owner, it enables the owner of a company to keep the business running and make it worthwhile.

After all, profit is what we’re after in doing business.

To improve your profits, you can sell more, increase your prices, or reduce your overhead.

Below are some practical steps to improve profitability, explain in turn.

 

New Products & Line Extensions

A line extension is all about adding new products or services to your existing business. This is best done by focusing decision-making on the profitable areas of your business activities.

Also, make sure new products improve your profitability by complementing and expanding your existing offerings. Let the efforts be on products and services with the best profit margin.

 

Increase Prices

The optimal price to sell your products is the one that affords you maximum sales at the greatest profit.

If you offer excellent services, you can test a price increase on a few customers first. If they do not turn away, then you can set out your price increases across the board, and if customers do, you can always change your mind.

Your first price isn’t necessarily your last price, raise your prices and see what happens.

The worst that can happen is for you to lose some sales and have to drop your prices again. The nicest result would be that the extra revenue begins to flow inwards.

Many small business owners are scared of raising prices for fear of losing customers. That is probably a mistake. Inflation is real.

Occasionally, test new prices for old products. You never know, a hidden gold mine may be lying fallow in your store, simply awaiting your discovery.

 

Multiple profit

 

Think About New Market or New Location

As mentioned above, one way to improve your profitability is to add new products to your existing offers. Another interesting way to boost your profit is to target a new market entirely.

 

These markets may be virtual (an online store) or physical markets (more branches). You may consider opening a new location, a news outlet, or trying a new market by adapting existing markets, sales channels, products, brand recognition goodwill, and other resources to exploit new opportunities.

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Reduce Your Overhead

One of the surest ways to increase profit margin is to decrease production costs.

Figure out how to reduce your overhead, running, or operating costs, and more importantly, carry your employees along as regards keeping costs down, because they are the real actors who often hold the key to cost overruns.

 

reduce overhead

 

If your employees can cooperate with you and are committed to saving, then staying consistently profitable is much more likely guaranteed.

There are many other practical ways to reduce your overhead without affecting your core business essence.

You can cut back on available supplies, rent out space, share office or space with another small business, buy in bulk, buy used items, instead of new office equipment or furniture, for instance, buy used.

 

Turn Around a Poor Performing product

Decide how to treat the least profitable products. You may increase the effectiveness of marketing activities on it, altering the discounts or adding more attractive product features and benefits, or abandon it to prevent a drain on resources and reputation.

Consistent profit takes constant attention to detail. Keeping track of your margins and then increasing business or reducing costs as necessary is what is mostly required.

 

Loss

 

Endure Loss!

Intuitively, human beings do all they can to avoid losses, because losses lead to trauma and emotional stress.

Loss is inevitable in any business endeavor, business is never without risk, every business confronts several risks that may threaten not only the profitability of your venture but also its survival.

Loss is the exact opposite of profit, it occurs when the costs exceed the revenue.

Reducing the unanticipated loss in business activity is best achieved by applying the principles and techniques appropriate to the situation.

The key is to envisage what might likely happen and how you prepare to control or eliminate those losses if they eventually occur.

Here we mention some positive ways to deal with loss in business.

You Either Learn or Earn.

Let your subtle business mantra be either you learn a lesson or earn a profit.

One of the loss coping strategies is simply learning from your mistakes and striving to recoup the losses over time by taking calculated risks in the future.

Sincerely, there are no guarantees, you will hit a home run in your business pursuits, most especially, during your early days in business, but it makes sense to try.

When a loss occurs, make sure you learn from it.

 

Go Back to Drawing Board

Examine what went wrong critically and objectively. If the cause was as out of your control (natural disasters or pandemics), there is little that can be done. If you identify errors and misdoings, take full responsibility and pick up the lessons from them.

If you can’t figure out what went wrong, either due to your fault or something exogenous, a short break from such a business may be the next significant step.

 

Consult Business Expert or Mentor

One of the benefits of having a business mentor is having someone you can ask questions, seek guidance and get advice.

Your mentors can help you examine problems and situations from perspectives that you would not have thought of on your own and offer you effective solutions.

Have a Backup

Another effective means of managing business loss is to have a backup or a plan B. If you offer only products for sale, you may consider offering services as your plan B.

Also, you may have valuable assets in reserve or land banking as a backup that you can depend on when a business loss occurs. This could be a veritable means of raising another fund to keep running your business.

 

Seek Help From Partners, Suppliers & Distributors

Here, having a cordial mutual business relationship with suppliers and distributors matters most, your distributors and suppliers want your business to thrive, and they are quite aware that by offering you financial support, you may eventually become a long-term repeat customer.

During the loss moments, you may opt for supplier financing from them to keep your business going, you just need to maintain your creditworthiness and assure them they will get your continued business, come rain, come shine.

The bottom line is that loss is unavoidable in business and it becomes commendable when it provides opportunities to learn, develop, and compels us to improve and effectively overcome the challenge of change.

 

 

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