Assessing your business model
What Your Business Model?
How Does Your Company Make Its Money?
All businesses make money in certain ways!
When you are selling products or if you are the middleman you try to increase your volume as much as possible! On the other hand if you are providing highly specialised services you could inflate your fees exponentially to your volume. Whatever the case all business needs to be fed! The lower the operational costs such as wages and rent expenses the more room is available for profits which is what the entrepreneurs and business owners take home!
Understanding Your Business Model
Only an experienced accountant can assist you truly understand your business model. This is because the financials of the company must be prepared in order for the business consultant usually a chartered accountant who will read them and analyze them in order to fully understand how your business survives, makes money and keeps growing.
Business Model vs Business Plan
The business plan captures the big picture before the company is set up taking into consideration a market analysis, forecasts, projections, cash flows to mention a few and also covers the business model which is effectively how the company makes its money.
What do we mean how a business makes its money?
We mean what are the drivers that increase the net profits and how we should emphasise on those drivers and business segments to keep increasing our profitability!
It is a known fact that all businesses have several products or services which are simply not profitable, but they need to have them. It is like going to the supermarket which always has some offers on display just to get you into the shop. Business owners need to understand how much each product / service is costing them and how much profit them make out of it.
Also they must understand taxes, operational costs, cash flow to secure a profitable business which is not shocked by the market waves.
What about your business
? Do you understand how it works?
? Do you know which are the profit generating drivers / units?
? Do you have a 5 year plan (ahead)?
Get assistance from our regulated, experienced service providers today!