The ultimate goal of every small or large business is to achieve its revenue targets and grow in the process. Every function in the organisation is directed at the accomplishment of this objective. Entrepreneurs work relentlessly to identify the factors that aid in the generation of revenue and attaining a positive bottom-line. If you are an aspiring business owner who intends to acquire an established business for sale in Sydney, you must be aware of the elements that can make an impact on the profits.
There are a variety of decisions that can affect the success of the business, and thus, should be made after thorough research and meticulous planning. It is vital to survive in the competitive marketplace and stay profitable. Here are the seven crucial decisions that must be made with utmost care and deliberation.
1. Pricing of the Products
The revenue generated by an entity is calculated by multiplying the selling price of the product with the number of goods sold. Thus, it is directly affected by the pricing policy. If the cost of production stays the same, an increase in the pricing can enhance the profits. However, the price cannot be too high as it can push away the buyers and make them opt for the reasonably priced goods available in the marketplace.
Conversely, the price should not be lowered too much in the attempt of finding more customers as it can lead to losses. Therefore, the price should be higher than the cost of the goods sold, so that you can make profits. Consumers are willing to pay a slightly higher price if they get a good quality product in that range. So, make sure that you offer products that meet the expectations of the buyers and satisfy their needs.
2. Monthly/Quarterly Expenditure
Profits are dependent on the amount that is left behind after subtracting expenses from the revenue. Expenses include overheads, salaries, stock, supplies, etc., and if you spend more on these operational costs, you will be reducing the profits. Thus, cost-cutting measures help in improving the profits. However, as an entrepreneur, you must ensure that reducing the expenditure does not affect the quality of the goods offered by the organisation.
You need to analyse which costs are redundant and which ones are necessary to avoid compromising on quality. For example, if you are paying higher rent for massive office space, but most of your employees are working remotely, then you are adding to the overheads unnecessarily. Similarly, identify the areas where you can reduce the redundant expenses and minimise them to increase the profits.
3. Competitive Strategy
With several market players in your domain, the market share is divided among various businesses, and it can be challenging to dominate it. If most of the competitors are selling their products in the same price range, the race to the top spot becomes dependent on the offering. Thus, to make sure that you stay profitable in a fiercely competitive market, you must work on developing a unique selling proposition that allows you to acquire customers and retain them.
The key is to sell excellent products that are differentiated and enjoy a competitive edge. Work on customer relationship management and make the experience of shopping joyful and gratifying for the buyers so that they keep coming back to you.
4. Brand Building
All businesses can work on creating the best pricing strategy and distinction in terms of product features. However, if they do not have a solid presence, they cannot achieve the required growth. Thus, the brand building plays an important part in the development of a business. A wide customer base of loyalists can help in improving sales and profits. Experts believe that most of the future profits come from loyal buyers. Therefore, it is imperative to build a reputation that cannot be upstaged.
Well-known brands bring higher shareholder returns and help in attracting the best talent that enhances productivity. It aids in building rapport with customers through better engagement and connectivity with the brand. If you are able to position yourself as the market leader, you can improve the brand equity and value and gain an advantage over other brands.
5. Marketing Communication
Every business must have an effective marketing strategy that enables sales and acquisition of a broader market share. Advertising is the most important tool in the arsenal of the marketer that helps in swaying consumer sentiment. Whether they are print, radio, TV, or digital ads, these are helpful in persuading the buyers to act.
In times of an economic downturn, many businesses have to cut back on their advertising budget. However, smart entrepreneurs continue to stay profitable by offering discounts and incentives to increase sales and revenue. Loyalty programs and referrals further reduce the cost of finding new customers and enhance the cash flow. These efforts help in developing the business with time and gaining a substantial market share.
6. Adoption of Technology
With automation becoming the need of the hour post the COVID-19 pandemic, entrepreneurs have understood the value of technology. The recent crisis and the lockdown have made businesses adopt the best technology that reduces dependency on manual labour and enhances productivity. From utilising cloud-based accounting software to project management software and AI-enabled machines, automation helps in reducing costs and improving return on investment.
Going paperless and using big data storage has helped in reducing expenses exponentially. In addition, social media marketing has helped in reducing advertising costs. Thus, it makes more sense to adopt the latest developments as soon as they are out rather than waiting for a suitable time.
7. Hiring the Best People
Employees are the biggest asset of an organisation. When you have the best team on board, it helps in getting the best minds to work for you. With better efficiency comes exceptional results within the desired timelines that build the trust of the clients and help in attracting more customers. The increase in the number of projects and customers eventually aids in soaring profits.
In addition, the business should also focus on training its employees and helping them achieve their personal goals. Happy employees help in strengthening the positioning of the brand as a congenial workplace. They are willing to go above and beyond to get results and achieve the objectives.
An entrepreneur has to make a variety of decisions, but there are some which directly affect the sustainability of the entity. Thus, if you are planning to purchase a business for sale in Sydney, you need to be aware of these decisions and make them effectively.