Business and its Growth for your entrepreneurs
In this article I will lead you to understand about what is a new business, What are the factors and what you need to keep in mind.
On Several websites, Specifically on forums of several market places I have seen many post related to users complains about their branding, their business losses and many other factors.
Coming down to the point,
The most Important thing is the IDEA.
When you have the idea now it leads you to trade, But I would like you to stop here. There are certain formalities of business which you need to do before rushing in to the trade.
Following are the formalities :
1 Research & Development
Now these three point which are the main factors of your business. I will explain each of the point below.
Research & Development :
I will explain this concept with an example, If I am starting a trade of Clothing.
Now the first point is there are many variants which are been available,
Like wise Women Clothing, Man Clothing, baby Clothing
After I select one then Under it there are sub categories which requires my attention like if I selected women clothing then I have many options Like : Sarees, kurties, Dress materials, leggings, Gowns, lehengas etc
Now when I have selected the sub categories then I will go down with the materials and its specification.
Note : There are few of the Sub Categories will have more options available in it.
Then I will chose the material.
Now the next step will come is my Cost,
Now what is “Cost” ?
It is the purchase price of the product which is ready to use.
Once I have found the cost, Now there is the most important thing that I need to consider here is what is the current evaluation of the goods of same quality in the market.
That will be know as the competitive price.
Now you have this 2 things
- Competitive Price
This is the completion of your first equation, Now We will move on to the Second Point
What is planning ?
The development of the organization base.
Now here is what you need to calculate :
Office : In this section you need to mention all the office expenses which you need to use.
Like mentioned Below :
Office Rent :
Etc There are several expenses which you need to figure out and calculate it in for a monthly bases.
Now Here you will find the result and we will name it
- Monthly Expences
Now we will come to the part of projection,
Where in we will calculate Sales
We define that we can work on the process and get “N” Number of sales in one month, In certain cases the sales are considered to be per day or per hour too.
What will be the Growth Rate per month.
- Sales + Growth
Now we will calculate certain expenses which are variable.
Like in today market there are several online market places which acts as an agent between you and your customers do They charge certain amount of fees.
Then there is shipping cost and packaging cost applied to it.
Sum this both us you will receive a value which we will define as
- Variable Cost
And now your complete calculation is over, So what you will do is
Fist you will take
Add this with
E Variable Cost
You will get a new value which is Sales Cost, Which is what you need to keep in mind while implementing you business, Just because to secure your working capital.
Or else what it will happen is if your working capital is disturbed your production will get disturbed, If your production gets disturbed your sales will effect and later your profit descries and you face losses.
Now You have calculated the expenses which are been incurred monthly now you will need to divide it with your monthly sales figure, Not the monetary figure but your stock figure like how many number of pcs you will sell which you have defined in project.
I would sum up the figure of all 12 months which I have project and divide it with 12 so that I can get an average sales for one month.
Now What you need to do is
Your Monthly expenses / Average monthly sales figure
You will receive an amount which is know as final expense now you need to understand the below thing,
The above amount which you received is added to the sales cost which will lead you to the CTC
The CTC value will be your final price.
Now you need to understand while you launch your product in the market your price is not higher that the competitive price which we have already researched.
While in several companies what they prefer is the calculation below.
Sales Cost + Margin (25% of Final Price +25% ROI Terms + 50% Growth) = Selling price.
Note the figure may defer as the market and categories,
What happens here is What ever the margin is received first the complete sales cost is deducted.
Then they keep 25% of Final Price on side which covers up the monthly expenses.
25% is stored in the reserves so that it may makeup for the next year financial stores.
50% is invested in the growth, Where is as per the sales may increase the company will have dedicated funds to procure the product or purchase and for expansion.
In these cases the brand evaluation will always increase, You will have a stable growth in the market and your company backbone will always be strong enough to face the market.
In the first year you won’t find any marginal profit in your balance sheet, But you will find growth,
In the second year you will find expansion in our company to certain extent which will eat your profits.
In the third year balance sheet you will see the growth + Expansion and finally what you have awaited for is your profits.
I have this article was helpful.