How To Measure A Business’s Profitability

The financial well-being of your business is based on multiple elements, one of the most prominent of which is the amount of money you’ve generated. You have of course the gross revenue that you should subtract from your overhead costs and expenses to calculate the actual profits.

It’s for this reason that business owners should learn about how profitable their business is currently, in the past, and future. It will help them avoid money pits or know when to “fold them” in terms of supporting a startup.

What’s Profitability in the First Place?

Profitability is the percentage or ratio between a business’s profit and its expenditures. It helps you figure out the financial health of your business and what adjustments you should apply moving forward.

You can calculate your income by how much your business generates money through activities and operations. You can then figure out what your expenses are by calculating the number of resources you consume as your business operates. This includes money, time, and inventory.

How to Measure Profitability

In broad-stroke terms, you can measure how profitable your business is by dividing your profit or income (your gross revenue minus your expenses) by your revenue then multiply it by 100 to get a percentage figure.

  • Small Businesses Should Pay Attention to Profits: Small businesses in particular should pay attention to measuring how profitable their business is to ensure their future survival and to make adjustments in marketing and production from the start instead of late down the line.
  • Pro Forma and Project Income Statements: Measure the profitability using a pro forma income statement. This statement measures expenses and income for the upcoming period. Or you can acquire project income statements to know if a business change or paradigm shift is favorable or not.
  • Return-on-Assets Measurement: Do a return-on-assets measurement to compare revenue and assets. Divide net income before taxes by total assets, then multiply the result by 100 to determine your return on assets.
  • Ensuring Cost-Efficiency: The higher the number of the measurement the more efficient you are with your business resources. You can make your business more cost-efficient by basing your business decisions on this metric.

How Can You Use This Information?

Business owners can use the info to assess how viable their business model is through an income statement. This report details the expenses and profits of your company through any given accounting period. Every business decision should be supported by an informed opinion.

Profit margins and figures help you determine if your projects are working or failing. There are times when it’s okay for a company to not be profitable for years until they do start generating an income like with Amazon, but it’s with the understanding that it’s a gamble regardless.

Why Proper SEO Delivers The Highest Quality Business Leads

The key factor to online success may depend on three simple letters: SEO. It means optimizing your website so that it’s fully visible to search engines (mainly Google). Aside from social media, the number 1 website people go to remains Google.

You also need to optimize for other sites like Bing, Yahoo, and so forth as supplementary traffic drivers, with a focus on Google specifically.

The Importance of Optimization for Business

Why does proper search engine optimization deliver the highest quality business leads? It’s because even if your website isn’t an e-commerce one, it needs exposure to remain relevant in a changing online landscape.

  • A Required Online Presence: Most businesses have an online presence, mostly on social media because anyone can make accounts on Facebook, Twitter/X, Instagram, YouTube, and TikTok for free. They still need an optimized website as their central hub for online marketing regardless.
  • Potential Impact on Your Business: You can gather “leads” or potential customers by using your optimized website garnering targeted traffic from Google search results and Google Ads to inform, educate, advertise, and even directly sell your products and services to all those visitors that could be converted to paying customers.
  • Foundational SEO During Web Development: You can establish search signals in the form of keywords to establish your website’s relevance on a given industry or field as you build your website one page after another. You can gather more contextual relevancy through building a blog article archive and online press releases.
  • Don’t Get Lost with the Jargon and Terminologies: It might be intimidating for a startup business owner with no IT knowledge to try his hand at optimizing his website on his own until he can gather enough capital to pay an expert for it. However, he can always start by making a typo-free page with no broken links and a user-friendly interface.
  • The Advanced Google Panda Sorting Algorithm: Google Panda is the algorithm that gauges what ends up in the search engine ranking pages. You or your SEO expert should know how to appeal to that AI algorithm, particularly how it smartly gauges whether your site is relevant to a search or not.
  • Avoid Spamming and Old SEO Tactics: Today’s search engine optimization tactics can becomes tomorrow’s spamming behavior, so you should always keep up with the latest SEO trends and avoid keyword stuffing that used to work in the past. Today, it’s all about content creation, keyword analysis, and backlink building.

In Conclusion

For the uninformed, SEO has something to do with search engines and gaining visibility through Google search. Most businesses would rather just pay for Google Ads to put up their businesses in organic search results.

However, for startups and small businesses, they might not have the ad spend for Google Ads. They can instead better spend their resources in organically ranking high in Google search results to target their customers specifically.

Key Elements Of A Well-Designed Business Plan

Are you an aspiring entrepreneur? Have you wondered how to start a business from scratch? Or have you started one before but unfortunately, failed at making it big? You don’t have to feel bad as most successful entrepreneurs have their fair share of difficulties and failures.

One thing you must consider before putting up a business is crafting a business plan (liiketoimintasuunnitelma). Here are some things that it should contain:

  • Company Description

You have to know your company’s goals, objectives and identity. This will direct all other aspects of your business. Every decision and plans will be anchored to who you are as a company.

  • Market Analysis

Other that knowing your own, you also have to know your target market. Do some research on what they like or dislike, their purchasing abilities, the products or services that they need, and their habits. It is also helpful to know the current trends within the community

  • Funding

Your funding will be a huge factor in determining how fast your business progresses. Initially, the financial investment that you put in will be your main concern. A business must have sufficient funding in order to thrive that’s why a stable financial plan has to be established from the beginning of every venture.

  • Products

The products and/or services that you put out in the market are the main concerns of your consumers. Ideally, you formulate your product based on the results of your market analysis. Your consumers have to be convinced that your product is the best option in the market. Therefore, ensuring the quality of your product is important. More than that, consistency in producing products that satisfy the consumers is key to a successful patronage of your brand.

  • Operational Planning

Another important element in your business is your operations. Most of the time, an established system of operations is only achieved through surviving the test of time. A lot of businesses have gone through multiple trials and errors before they’ve perfected the system that fits their company. That system is complemented by a sustainable manpower which will be partners to every business. 

These elements are just some of the basic components that you can to consider before taking that leap. And remember, even the most successful businesses have faced challenges and weren’t spared from risks but they can always be calculated and anticipated with preparation such as developing a business plan.

How To Select The Best Keywords For SEO

The success of the search engine optimization (SEO) campaign greatly depends on the keywords used. Fail-safe keyword research strategies hold the key to seeing positive SEO results in a short period of time. 

This guide walks you through how to choose the best keywords for your advantage. 

  • Understand what it means with “right keyword”. 

Although the term “right” is subjective, it is suggested to keep an eye on the appropriateness of keywords based on your target audience and business goals. To be considered “right”, your keywords should captivate the interest of your target audience. Also, choose high-ranking keywords that are relevant and interesting to them.

  • Utilize keyword research tools. 

There are tons of keyword research tools that help you pick high-density keywords about your chosen niche. Whichever tool you use, start making an across-the-board list of keywords. Go ahead and take advantage of the free keyword research tools, like Keyword Surfer when searching for related keywords. 

  • Know the relevance of the keywords to your business. 

Posting contents that have nothing to do with your business is a total waste of time and resources. In your keyword research, you may generate keywords that are not relevant. It is your task to single out keywords that fit perfectly to your business, and discard mismatches. Stay focused on your SEO goal- that’s the rule of thumb.

  • Conduct keyword competition analysis. 

This process is tedious, but it is extremely important. Keyword difficulty analysis enables you to have an idea of whether or not a keyword has the potential to gain traffic and help build a site rank in Google. It is in this same process that you carefully look into the listed keywords vis-a-vis the top-ranking pages and site authority.      

Fortunately, there are a bunch of online keyword research and analysis tools that enable you to see keyword difficulty scores in just a matter of clicks. Use the keyword difficulty metrics in deciding which keywords to use. As much as possible, grab those high-difficulty keywords because they have a high chance to rank.

More importantly, focus on related keywords or phrases. Through creating topic clusters, you are also establishing a strong website authority. Work on both keyword ranking and online authority. 

  • Get a good grasp of keywords’ search intent. 

Based on search intent, keywords fall under four categories. Informational keywords are guides or answers to the audience’s questions. Navigational keywords, on the other hand, direct them to the site or brand that they intend to visit. Transactional and commercial keywords pitch sales and purchase intents. 

Why Do So Many Business Startups Fail?

Instead of getting your money from wages, why not start your own business? Yeah, it’s easier said than done. However, when you open your own business, you become your own boss. You’ll have to undergo a lot of sacrifices to achieve success, and success comes at many levels.

With that said, why do so many business startups fail? It’s a dog-eat-dog business world out there. Competition can get ruthless, anti-monopoly laws be damned.

Don’t Spin Your Wheels in the Mud

Become an entrepreneur today and learn the pitfalls of startups. Know what to avoid to make your startup survive and grow.

  • Refining a Business Idea: Many business startups fail because they have half-baked ideas. The nearest competition improves upon their original idea so they end up left in the dust even though they’re the originators of the concept, as in the case of Friendster failing and Facebook succeeding.
  • Use the Internet to Your Advantage: When conceptualized a new venture, you need to figure out the viability or sustainability of the business ideal you’ve come up with. Thankfully, thanks to the Internet, it’s become easier than ever to see if a business idea will sink or swim.
  • Do Tests and Research: Figure out what you want to sell online or advertise through social media. Maybe you wish to spread a message to an audience using a blog or a even a microblog like Twitter. Many online business startups fail because there’s a lack of an impact test or even basic research.
  • Do to Your Competitors What They’d Do Unto You: Your cutthroat competition was able to survive while other business startups fail because they’re willing to steal ideas from other businesses and then refine it to make it their own. In turn, steal their online tactics, expired domains, and marketing as well (but in a legal way that won’t lead to a copyright lawsuit).
  • Launch Your Business: It takes a lot of capital, work, and paperwork to launch a business in a given city, state, or country. However, by laying solid foundations and refining the viability of your business concept, you’ll soon gain a self-sustaining startup built from the ground up.

The Score of Business Startups

Businessmen who’ve established their startups into conglomerates successfully know how to avoid the common issues, perils, and failures that lead startup companies to become money pits. Have a general idea and don’t get bogged down by the details too early in business development.

They’ve sought success not through affirmations and motivation advice but rather through laying solid foundations for their startups. Most business startups fail due to a lack of preparation and then further modification and development of an already solid sales concept.