How to start business? (2)

Having a sort of options, we need to think about profit. Most business is profit-driven and most people are not willing to see any losses. To do like that, we have to learn how to pick up a good product/service and start the very first business:

1. Demand and Growth

In some term, the demand is the market. If the demand for a product/service is very high, I don’t think the business will go down. However, it always has high competition too and that will definitely rise up a price war. Your profit margin will not be able to follow your target for a long way. Thus, a product/service has a low demand figure currently and a high growth rate is great.

2. Budget

Any business should have a budget, not only for profit, but also for expense. The most limited resource to people who just start to do business is money and unfortunately it is related to everything. So we need to make a budget first and try our best to get enough money into capital in one side, control all expenses in the other side.

To get a budgeted gross profit figure is not a difficult thing because once you correctly know the demand of your product/service and set your profit margin, it almost closes to you.

Well, the budgeted expense is a tough thing. However, you should make sure that the monthly expense is at least less than 1/3 of your initial capital so that you have a 3-month buffer period to promote and sell your product/service without serious financial issues.

Savings is always welcomed. You can order your goods in bulks to have some discounts and lower transport charges; you may only hire several guys, including yourself, to work on the business; you may rent a small unit as your office. To cut the words short, please maximize the value of your money at this particular time.

(To be continued…)

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