Have you heard of businesses doing good with truck loads of customers, yet, all of a sudden they go bankrupt? Having high revenues alone does not make profitable business ideas. Competition determines your profits!
It is surprising that many people whom I meet don't know the difference between profits and income.
Well, that is because, in a job most of us are trained to look at our monthly income and our taxes are based on the the income. However, in business, profits are the key to survival.
What affects the profits of the business?
Well, it has a lot to do with the trends that we talked about earlier where competition is going to affect our profits. If we are operating in a low competitive market, our margins are kept high. Hence, profits are good.
Besides that, the profitability of business ideas also depends on how you deliver value to your customers. Even if you have products that competitors has you may still be able to have a good profit margin because of added value that you give your customers like better location, speedy service, better quality etc.
How profitable is the business you are considering and can you still remain competitive?