What is Profit? - Explained



All the business organizations in the world does something to keep the business running. Apart from the capital what a business owner or a investor invests in to the business, business does trades to achieve a target of sales to keep the business sustainable.


Why Profits?

There are business organization which are profit oriented and non profit oriented. Among those two types of businesses, there are organizations which are running a business which is oriented on profits and which are not oriented on profits. Profit oriented or non profit oriented businesses needs to make a profit to sustain in the business rather going bankrupt.

The business itself can't sustain by paying the office rent, salary for the staffs and settling other utility bills from the business owner's or the investor's capital amount what they invested into the business.

Business needs to make sales the products or the services what the business intended to sell as the core business model.

Capital is only for a limited time period and the capital is not enough for a business to be sustainable in the long-term. To operate the business and pay rent or to hire new staff members, profits are important for a business.

How to Profit?

Every business does have a business model. A product or a service that the business manufactures and planning to sell to a consumer, business or to a government. At the initial stage of the business model, the business owners needs to make the business strategy and how the business needs to operate.

If the business is a product oriented organization, what sort of product that the business manufacturing and what sort of target market audience that a business needs to focus is the key point to analyze.

The business needs to identify the true demand of the target market audience and the true possible supply that the business can generate with the assets which are in-hand of the business.

Making sales is the only way to profit in a business. To make more profits, the business needs to make more sales. To make profits, the business owners and the staff members do have a responsibility of developing a good product, good customer relationship and a good after sales service to the end customer whether the it's a product or a service that the business is selling.