One of the main concerns of many is “how to know if my business is profitable” o “How to ensure that the business I want to start will be profitable”. And it is not surprising since nobody wants Start a company that does not offer future and personal fulfillment.
First of all, we must be clear about what profitability is.. And to define it in a simple way we will say that it is the ability of a business to produce profits that supply the entrepreneur's expectations.
Suppose the following example: You have in mind the idea of setting up a car wash business and you want know if this business is profitable.
Now is when we analyze a series of factors.
A business can be profitable for you but not for me; For a business to be considered profitable, So we have to see it based on the budget of who is planning the company.
Suppose this business can generate some $1000 of net earnings per month removing all costs. They are those $1000 profitable for you ? That will depend on your budget.
It may be that someone considers that those $1000 They are perfect to meet their basic needs and continue with the construction of the business. But on the contrary for another person those same $1000 maybe they do not represent gain and this may be due to a thousand reasons.
A business can be profitable depending on the time invested; We assume that $1000 From the example they cover your personal or family budget and that this amount of money is a good motivator to continue in the business. What about time ? Suppose that to generate those profits you need to invest 10 o 12 daily hours including Saturdays and Sundays, Would it be the same feeling of profitability ?
Would you consider that a business that you invest a long time is profitable ? If you have clear the Entrepreneurial vision You surely know that at the beginning you must invest a lot and win “bit” While you can build your company. But if you are not really willing to invest that kind of time and effort, Surely this project for you is not profitable.
Then profitability is also measured based on the effort and resources that will be invested to generate economic profits.
The profitability of a business is also measured by its geography or region, The success of a business has to do with the market, With customers. A business model can be accepted and successful in Costa Rica but it is not necessarily in Japan because markets are different. The same principle applies to regions in the same country and even for areas in the same city.
Hence, business profitability also lies in the ability to create the appropriate models for each market. The business you have in mind, It is suitable for the market where you plan to work ? Have you done a basic market study to ensure that there will be customers for your business ?
Finally, we must mention a fundamental factor and not for being the last one is the least important: Business administration. The profitability of a business has to do with leadership capacity, vision and self-government of the person who directs it.
So you already know, Profitability is in your hands and that is why setting up a business is an experience that requires an entrepreneurial spirit with a lot of courage and intelligence.
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