Entrepreneurs invest in order to make profits. Profits are income for them. Some amount they use for their personal needs, and the rest of the amount they re-invest or use it to pay- off loans they may have borrowed. A business venture is considered to be successful when profits pour in. Incase the investor is not able to get more than what he has invested in the venture and ends up losing out money, then he faces losses. Losses means the business venture may have to be closed down.
Why Profits?
- Profits are a must in a business venture. They are additional income for the investor, who requires the amount to meet his or her personal needs as well other needs of the business such as paying the salaries of the employees, the loans borrowed, maintenance expenditure etc.
- In case one does not make any profit, it does not appear right to run a business venture. After all, merely running the business for the sake of running does not make any sense.
- A business venture grows big through profits. The profits made are reinvested, which in turn fetches more income. Many large industrial houses such as Sears Roebuck and Company began as small ventures.
- A businessman prefers to take risks in doing business unlike a salaried person who settles for a fixed income. In business, if you do well then you can earn a lot. In case you are unable to make profits then you face closure and end up in heavy debts.
How to make Profits?
- One has to have the acumen to do business. One should be familiar with the nitty-gritty of business, the investment procedures and how to maximize the finances that have been invested into the business.
- Risks have to be taken. Once one is willing to do that, then he or she is in better position to invest more and thus make profit.
- The money, usually borrowed in the forms of loans, must be invested well. One needs to be sure of what one is doing. There is no point in undertaking something that one is not very familiar with. The business you undertake must be something that you are well versed with since there is risk involved. Naturally, if one adheres to this approach then one can maximize one’s profits.
- One must ensure that the personnel are well skilled and equipped to manage affairs. One must not compromise on the quality of the staff. A dedicated staff can do wonders. Total commitment is required on their part. The employer should also meet their demands; provide them with good salaries and other benefits etc. Their motivation levels to give their best performance will be high. They will be able to deliver goods well. The end result will be higher profits.
- Wasteful expenditure should be avoided. The money invested should be well utilized for the product being produced. With the minimum amount, one should get the maximum that should be the motto.
Businessmen want to make a success of their business venture. They depend upon the income derived. Their sole purpose in investing is to make profits. The success of a business venture is judged by the profit it makes.
