“Is my business making money” :
If you own a business or a start-up and you want to know if it is going well, ask yourself “is my business making money?” Many a times than not, the answer may not be a overwhelming YES. While there might be abundant information on SMEs that don’t profit, what ought to be done when that dull period really hits the business?
There are several things that one may want to consider in this case. For starters, whether the market for a specific SME has money to offer. Unless you are selling a stable product in the market with even and consistent demand under the present economical conditions, income to the company can be unpredictable, especially at times of economic crashes and crisis. Secondly, if the product or service offered is good enough and if alternative product to yours is available for free. Adhering to maintenance of quality is very important, but unless it is brought up through customer feedback, the next concern should be on the alternative products and services in the market and how they are faring. Are they selling better than my product? If so, where do they have the upper hand? This calls for thorough market research. Thirdly, the question of the pricing: Is my pricing at par with the market standards? Understanding the difference between production cost and net profit margin must be kept in mind here, while keeping a close balance. A simple example of this could be seen at the immediate migration of telecom users at the introduction of the heavily subsidised Jio prices by Reliance, on all services. It is good to aim for a high profit, but it is vital to have a plan to achieve the same. Finally, a quick assessment of the revenue model of the business is required to figure out whether or not it works for the company. Experts call it a ‘health check’ for the company to analyse its business approach and to figure out if it truly brings in more money than it exhausts. Factors that include this required ‘check up’ would cover everything from customer acquisition cost to cash flow to knowledge of current market and revenue v/s expenditure.