6 Things to Understand Before Starting a Business

businessletter

Entrepreneurship is the dream of many people. Many people have the urge to become their boss when they have little success from employment and insufficient savings. There is a general idea that after a few years of persistence, there will be a result. However, in many cases, it ends up with the business close down, gaining experience in doing business but losing time and money. In this article, we might as well discuss this topic together:

(1) Assess the Market

When doing a business, we must first calculate the local population or flow of people, potential purchasing power, and purchase volume; and calculate the possible turnover and gross profit based on this data. Thus, whether the business can afford rent and variable costs such as decoration, equipment, inventory, etc.  If the calculation looks well, how long will it take to return to the investment, and how to achieve it? Based on this hypothesis, we can conclude whether this business is feasible.

(2) Business Model

After passing the first assessment, the next thing to consider is the business model. Does this business rely solely on the boss or can we hire employees to manage it? If the business is successful, the boss will be busier or easier? When the first store market is saturated, how to expand its business? Should you use franchise, chain, online shopping, or open branch? Thinking from this point can give you a deeper understanding of the business model of the company. Should you make it simple or complex? Know the key to the business.

(3) Barrier of Entry

If the business is fruitful and others are jealous and copy your business method, how quickly can they cannibalize the market you open? For example, if you are engaged in stylish clothing, other people can get the same goods from your supplier. How do you prevent others from entering your market?

The higher the barrier to entry you establish, the harder it is for your competitors to copy your business model, and your profit will last longer. If the barrier of entry is low, try to raise it so that it is difficult for others to enter.

(4) Key Factors of Business

It could not be easier to describe this concept in terms of restaurants. If the business of a restaurant is profitable, but the owner is not the chef. Once the rival poached the chef, the restaurant will plummet soon, or even close.

Generally, first-time entrepreneurs do business together in the form of shareholders. If you have no expertise and are too lazy to manage the business, you end up letting other shareholders manage the main functions of your business. Major functions include suppliers, key employees, customer relationships, etc. As the saying goes: no pain no gain. It is difficult to shared adversity, it is even harder to share the wealth. So, the business is likely to end up at the end of dismantling and closing business.

(5) How to Make a Profit and Exit

Entrepreneurship is to start creating a business. Many people think about how to start and how to succeed. However, successful entrepreneurs should figure out how to exit at the beginning.

The exit strategy can include dividends, liquidation and settlement, full purchase by partners, sale, listing, the introduction of major shareholders, sale of assets, etc. After we establish an exit strategy, the direction of the entire business will be very comprehensive. There will be more alternatives when encountering difficulties in the middle. If we can withstand the pressure rushing over, the success rate is also higher.

(6) Profit model

Entrepreneurship is to stay a few years. This concept was strongly opposed by Rich Dad's book series. Doing business should make money immediately instead of keeping a few years to make money. This concept is worth promoting.

To understand this concept, we must first understand the difference between fixed cost and variable cost. Fixed costs are rent, chain patents, employee salaries, miscellaneous expenses, management fees, etc., regardless of whether there is a business or not. Variable cost is the cost to be paid for each additional business, such as raw materials, water, and electricity charges per unit of a finished product, postage, and transportation fees.

If the sales profit (sales) is more than the variable cost, we can get the gross profit per unit. By dividing the fixed cost by the gross profit, you can get how many units you need to sell for break-even point. Only a business that can sell more units than the break-even point is worth investing in. As the world’s top volleyball coach said: “It is impossible to play in 100% fitness, as long as 80% fitness is ideal !”

The above six entrepreneurial suggestions are some of the points we have provided to entrepreneurs for many years. Those who want to start a business may apply them as a reference.

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adila39

I am so not motivated on my business now..

andiduferense

Everyone's good morning. I want to train you on a great service, not simply to solve all of the company's problems. On this program, I would like a few words and have tried the call center outsource. We kept on engaging with our clients, but we invested more time on other items while we tried. Most of us have invested in growth this time and six months later our company almost doubled in size.

adila39

Please pm me to appeal , as i sense this is an ads.