How Do We Earn Profit By Starting Our Own Business?

Many people in the world are keen to start their own business. There are some valid points, which should be noted before taking up the challenging role of entrepreneurship. It advised not to start a company to become your own boss. According experts there are three ways in which a firm can earn profit. First, is that you must have something unique that nobody else has. The second is that you must have invested a lower cost than anyone else and the final being the understanding of a particular category of customers than anyone else. These reasons are furnished to suggest that the customers coming to buy a product are nearly unpredictable and to assume success you should have the mentality of a possible customer coming to buy your product. Therefore, the first thing is not always possible as it has so many other dependencies on the customers who are coming to buy the product.

To elaborate the second thing that is having rich parents is of great value if you are going to start your own business. In US, this is the best and surest way to get rich by making investments in business. This factor about the low cost of capital does not always hold well in the current society where there are lots and lots of rich people and capital becoming cheaper than ever before. The competitor can get an equal amount of capital as he can easily get a loan at 6% interest or something, which means cost of capital, does not have much value these days.

Finally, we are left with the third method, which is apparently the best way to earn a profit nowadays in the business that we do. This is achieved by high-end knowledge on a category of customers, which could boost the business to attain super-normal profits. These customers may be involved in business with several bigger companies and this is the chance that one must take advantage of the situation and get more and more knowledge on the behavior of such customers to grab their business.

A look into the starting of companies like the SAP and all which was started by few IBM German employees who had knowledge on the accounting challenges faced by large manufacturers when starting a business in Europe. They left IBM gaining the best of the best knowledge to make an accounting system for these large manufacturers, which became the foundation stone for their success in the future. The story of the SAP has one big lesson that it teaches that the engineers who started this company have been successful not because of their programming skill or technical knowledge, it was only because of their thorough understanding about the problems faced by their customers.

If people don’t understand the customers and if he or she wants to take up this challenge, then that person should consider taking a customer interacting job like a sales engineer or product manager rather than some internal programmer who does his work sitting in a cubicle in a company having customers involved in attractive businesses. The final thing to be done is that once there is a complete understanding on the customer’s needs we should quickly quit our job and start a new business on our own.