Accounting technicians scheme west africa
Download 3.37 Mb. View original pdf
|
- Navigate this page:
- A.7.1 Planning against Business Failure
- A.8 Importance of Profit in Business
| (j) Growing too fast Fast, unchecked expansion can be more risky than slow growth for any business. Growing too rapidly brings with it the risk of loss of control and overstretching of the businesses resources and financial base. (k) The illusion of starting out as a big company Many businessmen do not like to be seen as small investors, hence, they embark on big projects that they cannot manage effectively. A.7.1 Planning against Business Failure It should be understood that there is no magic solution to guarantee business success. However, the following considerations should assist in the improvement of chances for success. i) Development of business plan ii) Obtaining accurate financial information about the business in a timely manner. 11 iii) Having a profile of the target customer iv) Having a profile of competitors v) Developing a suitable and effective control system vi) Networking with other business owners and managers in similar industries vii) Remembering that, someone will always have a lower price than you viii) Developing a strong management team through effective recruitment, training and attractive reward system ix) Realizing that consumer tastes and preferences keep changing x) Being well informed of the resources that are available. A.8 Importance of Profit in Business Although Peter Drucker and some other authorities have opposed definitions that focused principally on business from the profit perspective, the value of profit in any business endeavour cannot be underestimated or underrated. There is no debate on the fact that the economic end purpose of business is to make profit. In any capitalist economies like countries in the West Africa sub region, the importance of profit in a business can be summarised as follows a) It guides an investor as to which type of business to establish. b) It is an objective means of evaluating the performance of business. c) Realising the risks involved in business, profit constitute the critical attraction for venturing into business. d) Profit is the principal factor to firm’s survival, growth and expansion. It is only when profit is made that the firm can survive, grow and expand. The profit made can be ploughed back into the business to enhance the sustainability of the firm. e) Profit is the means of boosting the wealth of the owners of the business. f) Profit is the parameter used by investors to buy shares in a public limited company. g) Profit enhances the ability of the business to embark on social responsibility, with its attendant benefits. h) Profit is one of the criteria used for resource allocation in industry. i) Profit is used to set performance standards and by implication, it is used to institute control mechanism of organisational activities. j) Labour unions use profit as a basis of determining their level of demand. Download 3.37 Mb. Share with your friends:
|