Smart Emmanuel: Tips on Building a Profitable Business
Entrepreneurs venture into businesses for many reasons, one of which is to make money. However, when a business fails to yield profit and generates negative net income, it becomes unprofitable. Unprofitable businesses torture the passionate entrepreneurs that founded them, turning months and years of passionate hard work into a waste of time. Let me share some tips on how to build a profitable business with you:
Decide
It’s astonishing that numerous business leaders have yet to reach a stage where they commit to achieving profitability. Although there are several other measures to attain profitability, making an intelligent decision about the direction of your business is a crucial step towards it. This decision must be accompanied by a timeline and a readiness to undertake all legally permissible actions that will help your business evolve into a highly profitable one.
Value Over Price
It’s unwise to pay the price game even if you’re in a price-sensitive market. The lower the price, the lower the margins and the less money you have for research and development. It’s true that customers always go for the lowest price but unless your price strategy is a well-calculated Trojan horse to dominate the market and later raise the price to the point of profitability, you will end up becoming a market leader among unprofitable competitors like yourself.
Price is important and while it is important to consider your customer’s financial level, you shouldn’t price yourself lower. That would lead to bankruptcy. If customers will easily pay N1 for the service or product, why price your business at a lower cost because a competitor priced themselves at N0.80? The smart approach should be what scalable and cost-effective value you can give to your customers to make them happy to pay N1.
Reduce Cost, Increase Productivity
There are several ways to increase the productivity angle of a business without hanging the process on the cost. For the most part, technology has helped in aiding this angle that meetings that might previously require physical engagements can now be done via video calling applications. Apart from the cost saved, there’s also a partial amount of time that has been saved.
Make What a Lot of Customers Want
In my book, Make What Customers Want, I focused on many steps entrepreneurs can create the kind of products customers are happy to pay for. But you cannot build a profitable company if only a handful of customers desire your product or service. Therefore, you have to increase your level of advertisement to increase your customers. Afterwards, always make your product available for them. Many businesses run out of customers pretty fast when they can’t make their products available. And while trying to secure new customers, they end up reducing their prices.
Minimal Losses
It’s possible to make a lot of money and lose a lot of money too. Many entrepreneurs have segments of their business that bring money and other segments that make losses. They absorb these losses because of the future potential of the loss segment of business but this is very dangerous. In his book, Great by Choice, Jim Collins explains how to smartly work on big projects without risking the future of your company. The fewer losses your business makes, the more likely it is to be profitable.
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