If you are one of the many companies wondering how to have a more profitable business, you are in luck, because in this post you will find the solutions you are looking for
We are currently experiencing a very difficult economic situation, which makes it difficult to pursue growth strategies that involve gaining market share. Despite all the companies that have closed, others have opened and, in addition, those that already existed have seen their sales decline both economically and quantitatively. That is why it is better to focus on making the business more profitable and not on stealing market share from the competition.
What is profitability?
It is very important that phone number for business you are clear about what we mean by profitability.
Well, to put it simply and clearly, a business is profitable when it gets more out of less . This means that a profitable company has to be efficient in how it invests its money to obtain its profit margin.
Whether your company is large or small, you will always have made an investment: in machinery, fitting out the premises, computers, purchasing products, etc. And you will have financed part of that investment with your own resources, that is, with your own capital.
What I just told you from a more purist and technical point of view is called:
Return on equity (ROA): measures the profitability of the business by comparing the profit from the activity that we obtain with the assets, that is, with the investment . It is important to bear in mind that the profit from the activity does not include interest or corporate tax, because the financing structure (more or less debt) and tax planning are considered to be something unrelated to the operation of the business.