How to Enhance Your Business by High Turnover Strategy
There is no doubting the fact that the reason why people are in business is to earn profit but some entrepreneurs, particularly, in the developing countries falsely take it for granted that the best way to maximize their efforts is to sell their products at very exorbitant prices.
Business development experts, contrary to this erroneous belief, are of the opinion that the surest way to enhance profit in any business concern is to, first of all ensure its growth in a gradual manner. This, can, no doubt, be achieved and sustained through a steady increase in turnover. They also admit that the rate at which a business entrepreneur replenishes his or her stock is the sure determinant factor for the scope of the business with especial focus on the profit margin.
Instead of running after higher profit margin with low turnover, it is quite advisable to sell the products at lower profit margins so as to increase the rate of turnover particularly for the fast moving consumer goods. A business man or woman who adopts the latter business strategy is in a better position to make progress in the effort than the former. In order to realize the expected growth rate, the issue of location has to be taken into consideration this is because a strategically placed business establishment can better attract more clients than those that are located in a more remote and inaccessible areas while the prices of goods are capable of either encouraging or discouraging buyers from buying a particular product.
It is equally a matter of fact that the increase in the rate at which a business man or woman fills the stock can entail an increase in the productive capacity of the establishment thereby attracting a competitive edge in his or her chosen industry. This will also help to realize surplus income from decrease in the cost of both labor and production.
Turnover is the rate at which stock of goods are frequently converted into cash for further purchases while an increase in sale can normally induce an increase in stock if the proceeds are ploughed back into the business. There is, however, link between an increase in the turnover and growth of a business endeavor while the higher the rate of turnover, the higher the growth rate. There is, of course, a strong connection between the rate of turnover of a business and its growth rate. If an entrepreneur sells more and ploughs back the returns back into the business, there is a better opportunity of increasing the profit margin that will lead to the growth of the business.
It is quite unfortunate that some business men and women normally allow their propensity for profit to lose sight of the gains that are accruable from this business strategy and this stagnates much of the efforts that can potentially contribute ideally to the economic base of the nation.
It will be wrong to assume that most business entrepreneurs are unaware of the fact that an increase in the rate of turnover will eventually lead to business expansion but rather they refuse to embrace it because of the culture of insincerity to which they are used. It is only when entrepreneurs adopt business strategy that leads to growth of their efforts that the national economic rediscovery can be attained.