A Profitable Business Idea and Marketing Research

The task of coming up with a profitable business idea can be very daunting. Setting up your own business requires you to think rationally and thoroughly so as to plan and make key financial decisions. You should have a written business plan. There are many already existing business opportunities that you can choose from. Therefore, being an entrepreneur doesn’t necessarily imply that you Must come up with a new unique business idea.

There are many advantages of choosing an already existing business to start your business from. The main advantage is that the existing business opportunity has been already in the market therefore its products are already selling. You’ll not need to spend a lot of money in marketing the products because they have customers who already exist. Your task is to find the best strategic location where you’ll locate your business and also raising the amount of capital required to start and run the business.

You must ensure that you meet all the requirements including legal procedures before you start operating your own business to avoid breaking the law and being penalized. You should bear in mind that starting a business by using or improving an already existing business doesn’t imply that it will be profitable. It is either that it will be making profits each year or hardly making any profits.

It is upon you to make a decision whether to start from scratch by coming up with your new profitable business idea or look for an existing business idea to adopt. It takes a great idea for one to come up with a new business idea that is profitable. However, a business idea that is profitable in the present time cannot remain to be profitable throughout. It will reach a time that it will face stiff competition as a result of new technology, new superior substitute products or other factors that will make its profits to decline.

As an entrepreneur, you have to be aggressive and innovative. Innovation of entrepreneurs doesn’t necessarily imply invention of a product but it also implies coming up with new ways of reducing costs and improving the existing products. You should take risks by investing in profitable business opportunities you come across.

Do not focus on profits alone if you want your business to succeed but you should be customer oriented. When you’re customer oriented you’ll satisfy the tastes, preferences and expectations of the customers. You should not operate the same business throughout without improving the quality of your products and finding out from customers what they want your products to do for them.

What You Should Know About Making Profits

You should have a clear view when it comes to making profits before you start your business. Your business will fail if you miss to apply the objective of earning profits. Entrepreneurs are not supposed to focus on the objective of maximizing profits only. Focusing solely to maximize profits will lead an entrepreneur to charge a higher price for his products, exploit employees or produce products that are of low quality. An entrepreneur who solely wants to maximize profits will never make his business to be successful.

The enterprise that is coldly and solely motivated by the making of money seldom fares well in the long run~By Apply.

However, this is not to say that entrepreneurs should not make profits. Entrepreneurs should focus in satisfying customers and making adequate profits to cover all costs incurred i.e. making adequate profit to enable the survival of the business.

The problem of any business is not maximization of profit but the achievement of sufficient profit to cover the risks of economic activity and thus to avoid loss. But whether it is the motive of business to maximize profit is debatable. However, it is an absolute necessary for the business enterprise to earn at least the profit required to cover its own future risks and enable it to stay in business and maintain intact the wealth producing capacity of its resources~By Prof. Peter Ferdinand Drucker, the world-renowned consultant of management.

Marketing Research

Many upcoming entrepreneurs face the problem of product failure. You should keep on changing your marketing strategies and improving your products so as to satisfy your customers fully. You should not guesswork that the products you’re intending to sell will be purchased. You should find out facts in the market if your products will be purchased.

Nowadays, marketing research is vital. Why? It is because consumers know what they need and want thus you should find out from them by conducting a marketing survey. Marketing research will also help you to know if the business you want to start will be profitable. To avoid the risk of your business failing, you should find out;

1.) If the products you’re intending to sell are needed in the market.

2.) The place where most potential customers are in order to locate your business near them.

3.) The expectations of potential buyers. Find out from potential buyers what they want your products to do for them.

4.) The purchasing power of the customers so as to make your products affordable. This will help you to know the quantities you should pack your products. Customers with a higher purchasing power will have the option of buying the products that are packed in large quantities e.g. 1Kg, 5kgs, 10kgs, 20kgs etc. On the other hand, customers with low purchasing power will have the option of purchasing your products that are packed in small quantities e.g. 50gm, 100gm, 200gm, 500gm.

5.) If the business you intend to start has competition so as to find your own unique selling proposition to beat your competitors.

6.) The size of the market for your product so as to know how much products you’ll produce and the amount of capital to invest.

You should take a step in widening your horizons and in taking your time to search for business opportunities. Read widely business magazines, business management books and other business publications. You should make your business to be the best choice in the market by satisfying your customers, gain loyalty of your customers.

Can Non-Profits Be Profitable Businesses?

There continues to be confusion among non-profit organizations about what the term “not-for-profit” really means and how to best conduct the “business of the business.” It definitely does not mean that an organization has a license to go broke! Technically speaking, there are several different categories of non-profit organizations, but the one most commonly referenced is the community-based charitable non-profit, or 501(c)(3). The key word in the 501(c)(3) designation is “charitable.” This simply means that the organization is providing a service to the community that is considered to be worthwhile, within IRS guidelines, and therefore deemed tax-exempt. As I have mentioned many times previously, this exemption is a privilege and must be treated as such.

Also, remember that the organization must first be formed under the laws of whatever state it will operate. In other words, an organization (usually a non-stock corporation) is first incorporated and then it applies for a non-profit designation from the IRS. For the purposes of this article, we are talking about small to medium-sized community-based organizations in the Non-Profit Sector, not churches, hospitals, educational institutions, or government-funded agencies.

I am often asked if it is okay for a non-profit to make a profit. The answer is yes. I am also asked if a non-profit needs to be run like a business. The answer is yes again. But there are distinguishing features between the for-profit sector and the non-profit sector and it is important for the non-profit organization to understand the differences in order to remain in compliance with its IRS designation.

I work with a number of non-profits who are facing real financial difficulty, especially in the last few years, with the recession and the down economy. It is important to distinguish these uncontrollable economic setbacks from the philosophical and policy-driven directions that a non-profit has chosen within the guidelines of its mission. For example, if a rural community-based health clinic is not charging enough in fees to meet its expenses, then it must be subsidized by donations to offset the loss of revenue or, plain and simple, it will go broke. This should not be a difficult concept to grasp: if a non-profit does not have more money than expenses, then it is in financial trouble. Yes, just like a for-profit, a non-profit must cover its expenses. However, any push for a typical non-profit to greatly exceed its costs with revenues is likely to be perceived by its members as going against its charitable mission. Conversely, owners of a for-profit are extremely interested in maximizing their profits.

So, if you ask me if a non-profit should be run like a business, my answer must be yes and no. Yes, there are many basic aspects of the organization that must be run like a business; but, no, there are distinctions within a non-profit that must be viewed differently than a typical for-profit business. Using the rural health clinic example again, if the mission of the clinic is to provide health care to all individuals regardless of their ability to pay the full fees, then its services must be subsidized by other means, such as donations, which is probably exactly what its mission states and probably the key reason it was granted its charitable status by the IRS in the first place.

Over the years, I have consistently urged board members to take their non-profit responsibilities very seriously. However, caution must be exercised if a board begins to find no difference in operating like a for-profit business. This is potentially one of the most difficult facets of a non-profit board to grasp. Not every aspect of a non-profit can be run like a business – and most non-profit board members come from the for-profit sector – so it is understandable for the board member to attempt to apply the business skills they practice every day to the non-profit whom they have agreed to serve.

I do not have any problem with that frame of mind if it can be moderated. In fact, the majority of the “business” practices do, indeed, apply equally to non-profits and for-profits. Things like board responsibility, conflict of interest policy, the need for good record-keeping and proper accounting, adherence to human relations issues, rules, and regulations; the list goes on and on, but the point should be clear. Unfortunately, too many non-profits falter when it comes to running the business of the business. There are three immediate reasons that come to mind as common challenges among all non-profits:

1. Board members often leave the business of raising the funds to operate the non-profit to the executive director and other staff, but the expertise and interest of the executive director lies within the skills of implementing the actual mission of the organization. Fundraising becomes a major frustration.

2. Increasingly, board members do not have adequate time to provide the service that a proactive board requires and fundraising is not enjoyed by very many people, so it does not get done; nor does the board usually push for a business-like approach to running the organization.

3. Executive directors and non-profit staff excel in the mission of the organization and do not typically have strong business skills, nor anyone readily available to assist them. Disagreements on business issues often arise between an “all business” approach and a “not at all business” philosophy among the staff.

Whenever I look into the inner workings of a non-profit that is having trouble with the business of the business, I can almost always determine that the root cause falls into one of these three areas identified above.

Where is the proper balance and how does a non-profit find it? Well, it depends a lot on the non-profit and its mission, but the staff and board need to work together to identify the nuances that best fit its operation in order for the organization to remain viable and sustainable. If agreement cannot be found, executive directors become very frustrated and will ultimately leave the organization. Likewise, hard-to-find board members become less and less engaged. Nobody enjoys volunteering to oversee an organization that is in constant financial challenge.

I recall my very first board meeting at one non-profit. I asked why there was no financial report on the agenda and if I could have a copy of the budget. Honest to goodness, the executive director told me that the organization did not have a budget and actually argued with me that it was not necessary. To make matters worse, the majority of the board members told me they agreed with the executive director! I remember considering getting up and walking out the door right then and there! Seriously. True story. I spent the next several months concerned and frustrated. I forced the board and the staff to act more like a business when, perhaps, I should have spent more time teaching the reasons why change was imperative. Ultimately, the executive director had to be terminated for lack of carrying out board directives, which is always a shame.

Somewhere along the line, an accountant friend on a non-profit board expressed an interesting line of thought to me: “money is good; no money is bad.” We all laughed at his comment but it is amazing how many times over the years I have remembered what he said. Obviously, it is true. If the non-profit has no money, the focus of the staff and board is thrown into crisis mode, the mission of the organization becomes secondary, and every day is a struggle. This is exactly the same for a non-profit as a for-profit, so if the very basics of the enterprise are analyzed, a non-profit is very much a business and it had better be acting like one or it will cease to exist.

To be fair to the naysayers, the nuances of the non-profit must be determined and guided by policy. Back to the example of the rural health clinic, if no subsidy in service fees for certain clients of the clinic were required, then there would be no need for the non-profit charitable status because the organization would be operating as a for-profit and definitely not providing a charitable community service. This distinction is not obtuse and must be clearly understood by the staff and the board.

In summary, every organization in the Non-Profit Sector must follow basic business practices or it will not be able to sustain its operation. And, importantly, every charitable organization must remain true to its mission or it will lose its non-tax designation. These are basic issues for boards and staff to figure out and implement. In the end, it will always be about running the business of the business.

Better Not Be a Non Profit Business

Non Profit organizations are often criticized for not being run “like a business”. What that means is pretty murky but seems to imply that the Non Profit is wasteful and could do better by following general business practices. This assertion has always amused me. Especially now as we see so many For Profit businesses closing or being bought by others for a small percentage of their worth a few weeks ago. It seems as if being run “like a business” isn’t all it’s cracked up to be!

Non Profit organizations are often run by people who aren’t business majors. They are former teachers, social workers, ministers, etc. Their primary interest in the Non Profit organization is that of providing services. Often the organization was started by volunteers who have a strong interest in a specific social concern such as homelessness, eradication of a disease (breast cancer, heart disease), services to people who have experienced a disaster (Katrina, 9.11.01). Their expertise lies in the direction of providing these services. The lack of business management training among the staff may lead certain observers to criticize the way business is done. In fact a few problems may arise if the staff does not pay sufficient attention to the legal and accounting standards associated with Non Profit management. However, many times these skills can be found in the person of volunteers such as attorneys and accountants. By using volunteer expertise, the Non Profit saves their meager income for the provision of the service which is the core of the mission of the organization.

The advantages which a Non Profit organization has include that it has fewer expenses of doing business. Many Non Profits have free or low cost housing provided by a benefactor. Supplies are often available at lower cost than For Profit business and may be donated. Some staff may be volunteers including fund raisers, officers of the Board of Directors, a speakers bureau who make presentations on behalf of the Non-Profit, and the professional volunteers mentioned above. It is important to hire staff who have expertise in the service which constitutes the core mission of the Non Profit. This means that the quality of the service provided will be top notch. Many Non Profits have a group of dedicated volunteers who have helped the organization for many years. Without these volunteers the organizations would not survive.

It is uninformed to imply that the many Non Profit organizations which are run very competently by a small, dedicated staff and loving volunteers could improve if they adopted the business standards which are rampant today. Perhaps business should consider imitating Non Profits. Being dedicated to a service which is provided could transform many businesses.

When businesses saw their role in the community as very important – important enough to consider the effect of closing the business on the town where it was located, for example – they received more respect and may have been more stable. The employees and town folk are more likely to support such businesses. This same spirit could transform our communities and businesses where profits are the only motive leading to the demise of both.

Imagine the country economy today if the standards of Non-Profits were combined with those of For Profit businesses to the betterment of all!