Business can be your bread and butter or your passion but at the end of the day, the bottom line is the thing that truly matters. The profit you make from your operations and sales is the fuel that drives future production and development, whether you're running a multi-national car manufacturing firm or a corner lemonade stand.
During the tough times of recession and with the economy not looking up any time soon, it's a great idea to brush up on fundamentals to make sure that your business is still on solid ground.
- Know how much you're worth. Make sure you know the cash movement in your company. Re-assess how much money you're spending on expenses and compare it to your revenue from mark-up and gross sales. Sometimes, businesses fail due to inability to maintain up-to-date books and accounts. It would also be helpful to know ballpark figures regarding your assets' market worth should you need to liquidate them for future expansion.
- Know your company. Sometimes, a simple assessment like a SWOT analysis can help. For those not in the know, SWOT stands for strengths, weaknesses, opportunities and threats. Listing these details enable you and your team to identify the company's strong points and problem areas as well as foresee any emerging problems. Most importantly, it gives your company the ability to react to future conditions that could either help or endanger your current standing in the market. Management consultants always use this technique in identifying the baseline for each company. If you can't hire a consultant, you can always do it yourself. Just trust your business gut to make the proper adjustments.
- Know your market. It's literally a jungle out there and your position in the game is never assured. Aside from knowing your company's strengths and inner workings, it's also advantageous to know about what the competition is doing and how the rest of the market is reacting to it. It's a chess match. Sometimes, having the better product is not enough. Enough effort should also be used to promote the product to make sure that people actually know what you're offering.
- Invest. When and if you make money, armed with the information gained from all the other items above, invest the sum on equipment, training or other things that could better improve your company. As the business adage goes, you need money to make money. Knowing how to use your money is key if you want to make your company profitable.
- Cut the fat. This is probably the hardest thing to do. Sometimes, cutting expenses is the only way to increase profit. Do you have an extra machine lying around? Can you canvas for cheaper raw materials for your products? Maybe you have redundant positions on your payroll that could easily be done by one person. Though these decisions may not be favorable and popular, these are the things that a businessman has to do to ensure success in the game.
Success in business doesn't come easy, but with these simple and memorable guidelines, you can easily get rolling to the right direction.