There are four reasons why you can lose business if you only pay attention to the profits of the company. It is wrong to think that profit is the main objective business.

The misconception that profit is the main goal of business has ruined more than one company. Svyatoslav Biryulin, the author of the book "How to ruin everything and ruin a business", explains why in entrepreneurial activity cannot be based solely on this indicator.

The owner faces profit regularly, as the company submits financial statements. And since many entrepreneurs do not have economic education, other data are ephemeral for them. And profits are converted into symbols of success: cars, real estate. Therefore, profit growth is considered important. There are four reasons why the pursuit of net profit is detrimental to a business.

Profit is a paper value. The income and expenses of the company for the reporting period do not directly correlate with the movement of money. For example, you delivered a product to a client, but you have not received money for it yet. It's easy to overlook bloated accounts receivable and poor inventory management behind paper profits.

Example. Owner regional company boasted that profits had grown by 25% in a year. Entrepreneur any new activity– store opening, product development – ​​designed as a project. Project costs were not treated as expenses, but as investments. The projects were handled by staff members. So, the company attributed to investments 20% of the salary of the legal department and 30% of the salary of the personnel department. Moreover, the bonuses of top managers grew if they attributed costs to investments.

Such manipulations increased the "paper" profit. Although the company has done nothing to increase labor productivity, optimize processes, etc.

Profits are easily misunderstood. Depreciation affects earnings. Example. The management of the Moscow region production was delighted with the growth in net profit for the year. The fact is that equipment purchased eight years ago was no longer depreciated. The equipment was expensive, which affected the profit margin. This reason for the growth of profits is not a reason for fun. It is wiser to pay attention to the fact that the company works on worn-out equipment.

Profit speaks of the past. Even if the company collects data quickly, you will receive a report on what has already happened. The number in the "profit" line does not tell you what the business expects in the future. Example. In 2015, the company made money on a new product. Net income was high. The owner had big plans. In 2016, the product went out of fashion. The company did not catch the trend in time, did not prepare for such a development of events.

Profit does not motivate long-term success. If you tie the manager's income to the growth of net profit, the company will not live long. Management will focus on achieving short-term results.

Example. The hired director of the company had a plan for annual net profit lowered. The director's annual bonus was tied to this indicator. By August, the manager realized that the plan could not be fulfilled. He decided to cut costs: he zeroed out the budget for equipment maintenance, fired engineers, reduced sales bonuses, stopped recruiting for a new production site, delayed payments for new machines, and raised prices in November. The enterprise began to produce more marriage, but it was allowed for processing, and this did not apply to direct losses. The departure of the sellers did not affect sales immediately, as the contracts were long-term.

For the same reason, after the price increase, customers bought goods for another month and a half. The director fulfilled the plan for annual net profit and received a bonus. And immediately quit, citing poor health. The owner who took operational management, restored the company for several years.

To win, you need to focus on the actions of the opponent. A similar strategy will lead to success in business. Ask yourself: Is the company creating value for the customer? Can competitors create the same value?

What tools to use to assess the success of a business

Indicator	What does	How to evaluate
ROE (Return on Equity)	Relative indicator performance, quotient from dividing the net profit received for the period by the equity of the organization. One of the financial ratios shows the return on shareholders' investment in terms of accounting profit.	To evaluate the return on equity, you need to compare your ROE with the industry average. If this is not possible, we compare it with a deposit in a state bank. For example, money invested in a business brings 9%, and the rate on long-term deposits is 12%. In this case, the business is built inefficiently.
ROCE (Return on Capital Employed)	The indicator of return on the organization's own capital involved in commercial activities and long-term funds attracted (long-term loans, loans).	The return that the company derives from borrowed capital must exceed the cost of the loan.
EBITDA (Earnings before interest, taxes and depreciation)	Shows the financial performance of a company, excluding the effects of the capital structure (i.e., interest paid on borrowings), tax rates, and the organization's depreciation policy.	EBITDA = Profit (loss) before tax + (Interest payable + Depreciation of fixed assets and intangible assets) There is a misconception that this indicator is calculated on the balance sheet of the organization. In fact, the EBITDA indicator can be calculated according to the Profit and Loss Statement, however, the amount of depreciation of fixed assets and intangible assets is additionally needed, which is not contained in this reporting form. Negative EBITDA indicates that the organization's activities are unprofitable already at the operating stage, even before paying for the use of borrowed capital, taxes, and depreciation.

By the nature of my activity, I had to communicate for a long time with representatives of small businesses: they were also ordinary market traders with a turnover of 150 tr. per month, and companies that can be classified as "small" rather conditionally (revenue of more than 10 million rubles per month). I have always been interested in who these people are, how they managed to achieve success, how they live and where they draw inspiration from.

Moreover, they are all different: someone boasted of their wealth (but there were only a few of them), someone, on the contrary, wore a T-shirt and jeans bought 5 years ago at a sale, while collecting more than 1 million rubles daily. revenue. Everyone had different education: someone has several higher ones, someone has just a technical school or vocational school.

At first glance, it is impossible to generalize and understand what unites businessmen who have managed to achieve success in their business. But still, after 7 years of working as a credit analyst for a small business lending program (the EBRD methodology is Foreva!!), I managed to identify several criteria that characterize successful entrepreneurs:

1) Energy. I talked with five businessmen who really from scratch, independently created companies with a turnover of more than 20 million rubles. per month (someone started with one KAMAZ, and he was a driver himself - now he has a fleet of more than 200 vehicles, someone went by train for building materials on weekends, and studied at the institute on weekdays - now he is the owner of several companies, someone then came from the army (after the first Chechen war), began to install gas equipment on cars, and now he has - gas station network). All these five successful entrepreneurs differ from each other, like heaven from earth, but they have one thing in common - the crazy energy that is guessed in every action. Constant movement, the desire to grow and develop - all this is necessary for business.

2) Ability to take risks. Risk is an integral part of entrepreneurial activity, but without it, business would not exist. And if the number of unruined businessmen exceeded 10%, then commercial activity would not be as profitable. Many of the many acquaintances have repeatedly gone bankrupt, or were close to it, but entrepreneurial flair, experience, and, probably, a certain amount of luck helped them to emerge victorious.

3) Full immersion in business. Successful businessmen they live their own business, they are always in it, they have no working hours, no days off and holidays, they always keep their finger on the pulse.

4) Thorough knowledge of business processes. To succeed in anything, you need to understand how all the mechanisms work, what the cost part is made up of, where and how employees can deceive you. Without this, it is practically impossible to achieve serious success in business. The businesswoman friend, who currently owns seven stores, is a regular replacement for her salespeople. This allows her to understand the real revenue of the point, to find out how the seller works. Often she works on March 8: it seems like a women's holiday, but the revenue from her stores during these days allows her to then leave to rest for a few days at some overseas resort.

It seems to be all. Look at these criteria again: as you can see, nothing complicated, the main thing is to really want to become an entrepreneur.

P.S. As part of this topic, I will publish from time to time interesting ideas for small businesses, their vision for certain business processes. Join now!

Answers

Yuliya nikolaenko2 4 years ago

4 years ago

You can’t argue with these words, but as Dale Carnegie and other big business luminaries have said, there is no universal recipe for success. And if he was, then each person could earn a million dollars - just by reproducing a proven chain.

Therefore, in my opinion, a few more important qualities are needed for success:

1) To be in right place- at the right time. When fell apart Soviet Union, and the usual trade relations collapsed, my father began to transport dairy products from Belarus to Russia: “in gray”, without accompanying documents and certificates. Store managers were happy to take goods, because customers needed something to feed. And there were thousands of such entrepreneurs: it was thanks to them that our country in those bad times Russia did not die of hunger. In just a few years, my father made a good capital, which opened a store selling building materials.

2) Bring your ideas to life. The best time- here and now, there will be no other good moment: it's time to work and achieve success. One of my acquaintances constantly tells me at a meeting that he is going to open a company, but something always interferes with him: either new laws, or political situation in Ukraine, then economic crisis. Remember: inspiring an idea lasts only 3 weeks, and during this time you can do more than whole year work "from under the stick". And earning big money during wars and cataclysms is much easier than in Peaceful time, because exactly emergencies release occupied niches.

3) Pick up reliable partners . All people cheat and betray - this is their nature, and nothing can be done about it. Doing business with friends means losing both business and friends. Even when I was a student, I organized my first small business: I became the official dealer of a well-known company in the city for the installation of decorative structures. As a partner (and an assistant) I took best friend, in which, as it seemed to me, I was one hundred percent sure. And as soon as things began to move uphill, and the number of orders grew, he simply started his own business, "privatizing" both common tools and common customers. Not allowed in your business random people even if they seem to be friends and swear by their

intentions.

4) Never give up. The stories of all successful personalities demonstrate that a person can go broke dozens of times until he finds his niche, until he finds the ideal business model for current conditions. This does not mean that you need to get into deep debts, mortgage an apartment, a car and children - not at all: you need to act carefully and consistently. But if you have lost everything, this is not a reason to settle scores with your partners, and even more so with life. It is necessary to start anew, perhaps to give up luxury and frills for a while, but not from a dream.

Nadejda lvkina 4 years ago

I would like to supplement the already stated points with my observations, which are taking place.

1) Delegation of duties. For some reason, everyone believes that only they can solve the problem in the right way. Others will definitely "screw up". As a result, a mountain of cases simply eats up a businessman who, in best case, falls into depression, at worst - drowning in debt.

2) "Potryuha-fly". So teased in childhood, and I figured out a long time ago that it is very useful to study and even take as a basis, successful models of building a business, time-tested, proving their “survivability. When there are no millions in your pocket, and you risk literally everything - it's better not to be considered a super creative bankrupt, but a talented and successful imitator. Time will put everything in its place, there will still be an opportunity to introduce innovations with less risk. Of course, as part of the "repetition" don't forget to follow copyright law

3 ) In the beginning was the word. No matter how philologists fight for the purity of the Russian language, people are drawn to the west and enthusiastically perceive the local vocabulary. I will bring good example: while creating landing page for the sale of sets of cosmetics for hair (youth), 2 options were developed as part of a split test. One was written in simple and plain language, the second using all sorts of borrowed words: "selfie", "boyfriend", "briefing", "loser", "prime time" and so on. The result is 70% of purchases on the last version of the page. It is reasonable to use your own set of words for each segment of the target audience.

Useful, in my opinion, materials on this issue:

Useful resource in terms of getting up-to-date information about the nuances of the current legislation.

When editing , I often notice the authors' attempt to find the grail that opened this person path to prosperity. There are many arguments, features of certain leaders, businessmen. But does he know what quality prevails in most of the rich in this world who have achieved success themselves?

Perseverance and the will to start over and over again. Failure is experience.

Recently I came across the opinion that the founders were lucky, they say they stumbled upon transistors and things went well. Gentlemen, the founders of Sony produced a bunch of failed equipment, their masterpiece - the first tape recorder weighed more than 30 kilograms, and cost hoo. It was a failure of failures. But it was this failure that showed them what they needed to develop. household appliances. Therefore, when the Americans developed transistors without such failures behind them, they simply did not know where they could be used for civilian purposes. And the Japanese realized very quickly and found the money to buy the rights to use transistors.

Beat, beat and beat in one point. Have a long planning horizon. Let's say that others at one time did not finish the idea of ​​​​tablets, but they chose the time and ...

: it's only in appearance that the guy came up with Facebook and everything went well, but, no, before Facebook there were still services designed for a student audience. Mark studied his consumer, wrote code, worked on optimization under heavy loads, and all this baggage came in handy when creating social media. networks.

Start-up capital, connections… None of this will give a 100% guarantee of success. Most of those who take investments go bust.

Most "investors" and novice "businessmen" are counting on getting rich quick, on elementary schemes. As a result, they slide into various dubious events like

The result of a businessman's activity depends not least on his business and personal qualities. Many books and articles have been written about creating the right attitudes in life. The information that they contain will be useful to any person, no matter what he does. Well, if we move away from the personality of a businessman, and continue to search, what else does success in business depend on?

How to choose an idea

It is important for a novice businessman to choose the right idea for implementation. The selected product or service must be in demand on the market, available to the masses. In addition, the case should be of interest to you. Only then can you work with enthusiasm, with creativity.

A business that bores you will not be successful: working through force does not bring either satisfaction or money.

You also need to take into account the amount of costs. As a rule, a small business pays off faster and does not require large investments compared to the organization of a large production.

Here are some examples

Do not wait until you have all the conditions for an ideal business. Start with something simple. This season, such areas as the production of milk and dairy products (cheese making), meat are of particular interest. Growing vegetables, especially organic ones, brings a good income.

For those who are far from Agriculture, you can advise the scope household services, catering. Open an atelier for tailoring, repairing household appliances, mobile communications.

A separate topic is Internet business. If this is close to you, there are many opportunities on the network. Various video master classes teaching cooking and meditation are very popular.

Services are needed not only by housewives, but also by the entrepreneurs themselves. If you have special knowledge, you can advise them on taxation, personnel management and God knows what else. Useful knowledge will always find its consumer.

The Importance of Planning

Experienced people say that in many respects the success of the entire enterprise depends on the plan drawn up. You must refer to it like a compass all the way to your destination. Having a plan disciplines, does not allow you to deviate from the chosen course, and gives additional motivation.

Correctly composed strategic plan- the key to the development of your business, the same tool in your hands as a scalpel in the hands of a surgeon.

But here it is important not to overdo it and start on time. An idea that is good today may become irrelevant in a year, they will simply get ahead of you. If you are unsure about the viability of your plan, the best criterion will be tested in practice. The sooner you start and fail, the sooner you start something else.

It does not matter that today you started with small volumes. After all, in your plan there is not just a desire for development, but also concrete steps.

Learn

If you don't know what strategy is or why your pizzeria needs it, read the literature, go to courses. You should always be ready to learn something new. Regardless of age and education received in youth. Willingness to learn should just be part of the rules successful business.

Courses for entrepreneurs

By the way, for representatives of small enterprises within the framework of various government programs training in the basics of doing business is offered. Based on the results of training, certificates are issued, and those who write the best business plan can also receive a subsidy to start their own business.

Employee selection

The smaller your business, the more it depends on the human factor. Therefore, you need to be especially careful in the selection of personnel. It is in large organizations that the workflow is built in such a way that practically nothing depends on one person. And in a team of ten to fifteen people, everything is in sight. How to negotiate with people so that they work for you for the salary that you offer them? See the previous rule - it's never too late to learn.

Proper business management is impossible without a well-thought-out personnel policy. Even if, besides you, only two people work in the organization. After all, they are the face of your company. It is your employees who must impress, inspire confidence, and earn a good reputation for the company.

How to find clients

Think about your target audience. Who is your product or service for? Be sure to keep feedback with clients. What else can you do for them? Their opinion will not only help you correct possible shortcomings, but also give you some new idea.

In large firms, entire departments are engaged in this - they study the market, public opinion, they will even tell you what color the wallpaper should be on your site.

It is quite another matter if you know your seven clients by sight. Simple human communication will help you figure out how to expand the range and what prices to stick to in the coming months.

Ways of doing business

There are business rules that are relevant at all times, in any industry, under any legislation. These rules tell us to fair play with partners, and to offer customers the best quality for the best price. This will give you an advantage in long term because the reputation business world no less important than the number of zeros in the amount on your account.

Be trendy

Keep up with the times. This does not mean that you need to chase all the fashionable novelties, but you need to be in the subject. Do not be lazy to be aware of the affairs of your competitors.

If you have received a proposal for cooperation, do not refuse immediately, but try to calculate the possible benefits of the transaction. This applies to continuing education courses for employees, installation of more modern equipment or software.

If you really want to be successful in your chosen field, you can't stop there. Even to stay in place, you need to constantly make an effort. And if you, once having arranged everything, begin to rest on your laurels, you will quickly find yourself out of work.

You can often hear that business rules in Russia are different from the rules adopted in other countries. This is understood as bribery, corruption in state structures that are stifling young, unconnected businessmen in the bud.

If earlier, in the nineties, entrepreneurship suffered from crime, now main scourge businessmen - representatives of the authorities. Well, those are the realities. And those who start doing their own thing always have a choice - to leave the race, or to consider the obstacle as the next task that needs to be dealt with. Thus, confirming another rule of a successful business - perseverance and patience in achieving the goal.

Of course business success depends on general concept, preparedness of staff and developers, from the skill and intuition of the entrepreneur, from many other components. But let's talk about how important it really is that which is not striking in the first place, but forms opinions about the product and the company. Largely, business success depends on the details.

One of the most clear examples, will be an example of the Kalina company. Once her CEO Timur Goryaev explained to the workers how important it is to tighten the caps tightly and accurately on the tubes of the company's products. It would seem like a real trifle. But he is absolutely right. So, out of a thousand tubes, one will be closed carelessly, the one who bought it will tell that the products from Kalina are not best quality ten more. In the store, each of them will take a different product, those who also came for cream or toothpaste will note this and take the one that people buy. Gradually, the form will lose a significant part of its customers and it will become unprofitable to work. By the way, today Kalina is a federal-scale manufacturer. Of course, this is connected not only with caps, but the same approach is used in any issue, which is reflected in the little things, but leads to success and prosperity.

A reverse example is one of the young publishing houses that published a book about profit and growth of the enterprise, about how business success. The author really professionally described why it is not worth saving on product quality and how to evaluate the success of an enterprise, based on the opinion of the consumer and his willingness to recommend this product to friends and acquaintances. Too bad it was released on paper. Low quality, with a cover decorated with a picture downloaded from some site. Those who were looking for literature on business success and how to achieve it definitely bypassed this "cheap brochure". This publishing house no longer produces business literature.

The consumer notes and appreciates the attention to detail, concern for their convenience and are willing to pay for it. So, thanks to the details, the Milanese publishing house Modo & Modo, using a retro idea, began the production of moleskins, and then repeatedly increased sales and, consequently, their profits. Moleskins were called notebooks with covers pasted over with cotton fabric. In the past, they were popular with representatives creative professions, famous artists, writers and poets. But by registering trademark, the owners did not limit themselves to the idea of ​​promotion on the glorious past. Their products stood out from the competition, thanks to the many little things that made their products convenient. Durable yet flexible cover, inside pockets, ribbon bookmark, elastic closure. All these details allowed to increase sales for the year from five thousand to two million.

But not only clients are sensitive to details, but also potential partners. For success in business, it is not enough to demonstrate stability and success with external attributes, such as expensive furniture and appliances in the office, cars, etc. You can lose a contract, it would seem, because of a mere trifle. So one of the large companies could not sign a production contract with the Japanese, because the toilet tank in the office was faulty. Anyone who thinks this is absurd is wrong. After all, a manager who did not foresee such a trifle can also fail by taking on more serious task or sell a shiny package, under which there may be a product of not the highest quality, it will not bring business success.

Entrepreneurs often waste their time, effort and significant funds on particulars that do not promise indispensable profit. Restaurateurs, for example, are looking for just such tableware or decorations that meet their expectations. It may take more than one year, but a business is not started without these little things, even if only a small percentage of customers notice and appreciate it. After all what business success depends on as not from these minor details.