#Business Diagnosis Series 101- Venturing into business for profit (Part 1)
For many people who claim to be in business, they usually say they are in business for selfless reasons. So one finds a lot of so called philanthropic businesses around who claim to be adding value to the society but in actual sense the reality shows that the main goal is to make money by attracting visibility to themselves through their noble acts.
What am trying to get at is that ‘every business is actually pursuing one goal- “to make money”. Regardless of what type of business it is, if it is not making money it will not be able to sustain itself.
So let’s assume I was a voluntary not for profit business, I will need to have a source of income to sustain my operations otherwise the venture will end up not being sustainable. Having stated this fact lets then take a look at it from another perspective, making money.
So assuming as an entrepreneur, my ultimate business goal is to make profit then I should have answers to these two questions; First, how much money should I be making? Second, how will I be able to make the kind of money I want from my business?
So the obvious answer to this question will be that I will have to set up my business in such a way that I can make as much money as I can. So here comes another question. What kind of business should I venture into that will yield for me the type of business that I require to sustain the business and still give the huge profits that I desire?
Thinking hard about it, will I need to develop a product or service that allows me charge as much as possible to earn as much as I want? Not sure!!!!
Well, this is the dilemma many new business owners face. If we were to take it from the phrase above, charging high for your product or service is not a valid answer as every business person is aware that one cannot charge as much as you will like to no matter what type of product you are presenting. Why?
First, there is a limit to what people are willing to pay for a product or service and even if you could charge as you like [assuming you were a monopoly], you cannot charge beyond what people are able to pay, and it is just a matter of time before someone else will enter the market and give you a price competition. So the only way to make money is to be better at ‘doing business’.
One of the traditionally known ways of doing business better is to offer something new to the market. An offering which though may be in existence but has never solved a pain point in the manner in which you will be presenting it. Offering something differently [in a positive way] significantly leads to you becoming ‘the’ preferred supplier.
Becoming a preferred supplier is different from becoming a monopoly? When you are a monopoly in a market, you are the only person doing or supplying the goods or services and it is easy to make money when you are in this position.
However, the down sides of being a monopoly is that except there is a government policy that restricts entry into this market or the policy only allows one person to run as the sole provider it becomes quite difficult to sustain this position for very long. Eventually someone will come and compete with you within the space once they know you are making loads of profit.
Don’t get me wrong, there are lots of new start ups who go into existing markets make enviable profit. However, differentiating yourself through your offering will increase your market value. In other words, it’s either you beat competition or find a market with no competition….[To be continued]
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