GENERATING SMALL PROFITS
Regardless of whether or not you currently own and operate a business of any kind, any individual who desires to attain financial freedom can do so, through the profitable exchange of goods. The buying and selling of merchandise is an age old art. However, newcomers who involve themselves in business often underestimate the importance of setting the proper profit margins to keep the flow of selling consistent.
Any merchandise must necessarily come with a price label for two reasons; 1.To stay in business 2. To generate a profit. You do not have to be a professional business person, with advanced business degrees and knowledge to realize that the vast majority of people generally aim to save money on their purchases. Many people, shop around repeatedly in different areas and stores simply to find the best values and deals for their money. The broad mindset of the majority think; the cheaper the better. This is mainly, and usually, due to the restrictions of their limited budget. With these factors in mind, you must remember that people will compare the price your offerings, to the price of your competitor. In this discussion, the quality of your goods is not the focus. Instead, the price of your goods is the focus. The ideal is to keep your prices reasonable, and, manage to generate profits.
There are three different approaches, which one can utilize. Only one of them will generate consistent and profitable results.
- Sell your merchandise to make a 10% net return on your investment.
- Sell your merchandise to to break even and make no profits.
- Sell your merchandise at high profit percentage, and make a few or no sales.
Of the three examples above, the first example is the most practical example. When you can create a situation that is profitable for both sides (the buyer and the seller), you are essentially creating a good business deal which creates recurring customers for your business. As an example; if the total cost of your product is $150 (after taxes, handling, labor, and along with other possible costs) then in a business sense, reselling your product for $165 would be a reasonable price. This will generate $15 in profits which equals to 10% of your original $150 investment.
A net profit of $15 does not seem like much money. However, when you multiply the same investment by 10x your profit margin would amount to $150. Or if you make one wholesale investment of $1,500 your profit margin would automatically amount to $150 in gains.
When starting a business and attempting to gain a profound understanding of product pricing and profit margins, the primary concern is not about starting large, and making big profits. The focus is; learning how to invest your money, and make a return on your initial investment. The goal is to grow your understanding of the proper approach, and method to do good business. Of course, this will take action; energy, and time. But in return, you will gain life skills that will support you financially in the long term, and help you create financial freedom.
As you make these novice business decisions, remember to keep your emotions in check. Business is impersonal. It is solely a matter of exchanging transactions. Volatile emotions will not help you think logically, and support the making of practical business decisions. The ultimate aim is to create a situation that is beneficial and profitable, for both, the buyer and the seller. You are not in business to please everyone (that would be unrealistic), you are in business to create a fair exchange between two parties, the consumer and the merchant (you).
Remember, it’s important to avoid becoming greedy, and unreasonably increase profit margins. This can drive certainly drive many potential customers away, and impact your business in a negative way. On the same token,do not be fearful to the extent of lowering your prices to break even at the end of the trading day. Because your business requires reasonable profits, to exist, continue to grow, and support you. Again, you can generate profits, and earn a good return on investment by exchanging needed products or services while maintaining reasonable and fair market prices.
Executing successful business transactions with customers, is no more difficult than working a regular job. If you previously have worked, or may currently be working for a company which supply merchandise of any kind to consumers you are already and the business of executing successful transactions with customers. When you go into business for yourself, it is no different. You become the supplier of products or services to the public, and, execute your own successful business transactions. Throughout time, the expansion of your operation, and contribution of creating jobs for other people through your business will naturally occur as the operation continues to develop and branch out.
Truthfully, no matter what you do for living, it will have some level of difficulty. Whether working for others, or working for yourself. We are all employees of some sort, however some employees “work for companies,” and some employees “create their own company,” and work for themselves.
As you carry out your small/large business transactions, and begin to build some experience in the field of interest, creative growth will slowly take place. You’ll adopt new methodologies, and approaches, to conduct your business and operated more effectively. Once more, it is most important that you keep moving forward through all of the ups and downs of business (which are inevitably faced and conquered by every successful individual). You will not be excused from disappointments and hardships, they are simply a part of any venture that any person chooses to undertake.
All sorts of people, from all walks of life, succeed. There are people who can not write or read, and yet, manage to become financially wealthy. Some people are not scholastically or intellectually bright, and yet, through persistence and time, became wealthy. Others are simply blockheads, and have successfully managed to build financial wealth.
It is a matter of determination, combined with repetitive actions, and a systematic way of doing things. If you build yourself a system of any kind, and you continue to provide needed and useful; talent, products, or services of any sort, there will be people who want to deal with you. A transaction will then take place, technically known in business as; Point of Sale (POS).
As a reminder, the decision of going into business for yourself, is no different than the decision of going to work for others. Both decisions are yours to make, and they will both be equally yours to live by. In many cases, it is easier to work for an established business operation. Primarily because they have already created, and organized the system which requires no thinking on your part. The only requirement of you will be; your time and physical energy, to help run the business. However, you will always receive less than what you deserve for the exchange of your valuable time and work. Conversely, the decision to create and establish your own business operation, and continue to expand it, will be a worthwhile and a profitable decision in the short and long term run.
As you may already know, many of the major businesses we see and deal with today had their small beginnings somewhere in a private garage, or small shops, which expanded and became the type of large operations they are today. Your goal may not necessarily be to establish a large operation. You may simply want to establish a small operation, that is fairly manageable. Regardless, it is important to establish an operation to create the machinery of exchange and generate revenues. Keep moving through it all.