Published by MBA Skool Team, Published on July 12, 2016
Entrepreneurship is difficult path for success. Still, why everyone is moving towards entrepreneurship? Entrepreneurship not only increases wealth and visibility but also helps in generating employment. As the number of graduates coming out of college every year is increasing and very less job opportunities are available to these people, entrepreneurship has an important role in the growth and development of each country.
An entrepreneur can be classified as:
• Risk seeker
• Profit lover
Every business motive is to become profitable, but start-ups face much more challenges compared to well established companies in terms of revenue generation and profitability. The ways of which entrepreneur makes profit is completely different from other business, as the levers and operational parameters are different.
Few of the ways which entrepreneurs could make the business profitable are:
a) Identify your customer- The first thing an entrepreneur should do is to identify the right set of customers whom he/she want to serve. Because it is necessary to know what they like. If you are able to fulfill their need, this ensures that you are in the right track.
b) Talk to your customers- Once you identify the right set of customers, it is important to know their choices. It is always better if you can converse with the customers to know what they really like. So this will give you the idea of what business you should start. Most of the entrepreneurs fail in their business because they fail to understand their customers need.
c) Create customer files- Creating a customer database always help you run the business smooth as you will be able to target the customers directly. Keep on monitoring this database and identify the inactive customers. Try bringing back the inactive customers by giving them attractive offers thereby maintaining past relationships.
d) Be open to ideas- The customers are good resource to get new ideas. They will be able to help entrepreneurs modify their product/service offering by coming up with new ideas after they use the product. So try to communicate with customers once they start using the product. You will get to know where your product lacks and what can be done to meet the requirements of the customers.
e) Seek referrals- Customers are the integral part of every business. They can grow business as well ruin it. Project yourself as customer centric. Communicate to customers how much you value their satisfaction and if they are satisfied with your service seek for referrals from them. Tell them that you cannot grow without them. Ask them to give feedback if they are not satisfied with your business so that you can improve those areas.
f) Catch up with customers- After the sales, usually the relationship with the customer ends. What if you can make a difference there? Try to contact your customers once in a while to enquire about how the product is working and whether they are finding any difficulties with the product. The customers will feel happy and this will prompt them to purchase from you again. This also ensures that they become our primary marketers.
a) Presell your product- Always try to include customers in your business. Suggest them to do payment in advance for the product if they are interested and tell them that they have the option of customizing as well. Try reaching out to customers because this might interest them. It is not advisable to go with the notion that customers will pay once the product/service is ready. SO make sure that they pay well in advance.
b) Wait till you accumulate sufficient funds- Always wait for the right time to launch your product. Keep check whether sufficient fund is there to launch the product. There should not arise a situation where you will fall short of cash.
c) Take it to next level- It is time for you to take it to the next level. You have a product which was made for your target customers and you had their inputs as well. It is advisable to invest other areas like social media marketing to bring in brand awareness. Try to accumulate extra funds to improve the nature of your business. Make sure you do it in the right way.
3. Operations (Discipline)
a) Seal money leaks- Analyze the business periodically and identify areas where too much expense occurs. Try to minimize this by finding alternatives. You know your business better.
b) Budget everything- It is advisable to budget all the expenses. This will reduce your chance of getting financially drained even before you know it.
c) Analyze the necessity before purchase- Stop making unnecessary purchases if your business is not profiting from that. Analyze how the new purchase is going to benefit your business and whether it is going to increase your profit.
d) Discipline comes first- Make sure to maintain discipline at your work place. Never shut your eyes towards indiscipline because you do not want to waste your time on that. It might have an indirect impact on your revenue which will affect your profit.
a) Keep check on profit- Keep a scale to measure the profit. You can check profit by analyzing per hour, per fifteen days or per month. Set your target and see whether you are able to achieve that. If you are unable to achieve the target find out ways to improve that. Consult your employees because they will be able to give you an insight on areas to increase revenue.
b) Keep emergency fund- Try to save a portion of the profit generated in savings account. You can use the rest of the amount to scale up your business but it is advisable to have an emergency fund in case if you fall short of money.
c) Analyze financial statements- It is advisable to spend some time analyzing the financial statements of your business monthly. If you are ready to spend some time, this accurate information will help you to come up with best decisions for your business.
This article has been authored by Ann Ushus Mathew from IIM Raipur