This article will discuss profit, the conditions for maximizing profit and how various types of enterprises need to operate in the market.
Everyone knows that a business should bring not only income, but also profit. Otherwise, it is considered ineffective. At a loss, only those enterprises that are state-owned or receive financial assistance from the state, non-profit, can afford to work. All other forms of business are designed to benefit their owners.
At the same time, it is quite difficult to obtain the necessary profit, the conditions for maximizing which are to increase the sales market and reduce costs, especially in sectors where competitor enterprises are well developed.
Breakeven point
Profitability can be measured from the breakeven point. It shows the boundary level of all costs for the production of a certain volume of products. If the income level is less than this point, then the company is unprofitable. In the case when the income level corresponds to the breakeven point, the company covers all its expenses, but does not make a profit. And only when the profitability is above this boundary point, it makes a profit and is considered cost-effective.
It is quite difficult to make a successful enterprise in the modern market: a high level of competition, an imperfect legislative and legal base, and monopolistic sectors of the economy. Due to such circumstances, breaking up and being profitable is hard enough for a new enterprise.
Managing personnel must know what profit consists of, the conditions for maximizing revenues and reducing costs.
Some manage to bypass the scale of many large companies that have been operating since the 90s in a few years. How do they do it?
Production optimization needed
Possessing information and knowledge about profit, conditions for maximizing profit, management management allows you to optimize all work processes, following the golden rule of business: minimizing costs and maximizing income. If the actions of managers are aimed at achieving such a result, then the success of the enterprise will not be long in coming. Although on the market of unfair competition, this alone will not be enough, as tricks by competitors are possible, which contribute to an unfair distribution of resources, capital, supply and demand in the market.
For different sectors of the economy and types of enterprises, there is their own knowledge about profit, the conditions for maximizing which will differ to one degree or another.
What does a simple company need to know?
If we consider a small company that provides services, for example, for the installation of windows for individuals, then it must be understood that it conducts its business in a market that is crowded with competitors. What will be the conditions for maximizing the profits of the company?
In fact, all the companies that are involved in the installation of windows are customers at the same factories for the production of window products. But you know from your own experience that at different companies the installation cost along with the price for windows differs far from 100 rubles. Why is this happening? Of course, each company has some agreements with manufacturers, which determines the cost of the product itself for each buyer. In addition, to cover its costs, the company lays in the cost the necessary level of profitability.
Restructuring to help
In order to reduce costs, it is first necessary to restructure the company. There should not be unnecessary personnel who do not pay for themselves with their work. It is necessary to calculate the load for each installation worker, operator, cashier and other employees.
After this, it is necessary to identify the level of costs for the maintenance of fixed assets: rental of premises, light, electricity, water, telephone. There is always the possibility of savings: if the rented space is too large, then abandon it in favor of a smaller one, which will be cheaper.
100% workload increase productivity
Also, to maximize profits, it is necessary to load workers at 100%, there should be no production downtime.
In a supersaturated market, enterprises are in great need of occupying as much space as possible in the market, and they are experiencing a very high level of competition. The main condition for maximizing the profit of a competitive company is the quality of the goods and lower cost, such methods can quickly increase profits.
In order for the company to receive the necessary profit, the maximization conditions listed above are best observed and taken comprehensively.
What does a monopolist enterprise need to know?
Monopoly is considered one of the types of imperfect competition. Related to this is the presence of special conditions, the observance of which can lead to maximization of profit.
In economic theory, there is an opinion that nothing can force a monopolist to improve, except for the state. By and large, the way it is, but the owners of the enterprise themselves can demand large profits from the managerial staff, which leads to the inevitable optimization of both the structure and production processes.
Lack of competition slows down normal development
Due to the fact that there are no special competitors, the least attention is paid to product quality. Because even with the deterioration of some characteristics and qualities of the goods, they will still buy it, since there are no substitute goods on the market.
Therefore, the main condition for maximizing the profit of a monopolist is a gradual reduction in the level of costs. This can be both production costs, and overhead and administrative costs.
It is necessary to reduce the level of production costs
In order to reduce production costs, such enterprises are introducing new technologies that can be used to produce more products in 1 unit of time, while spending the same or less resources.
Also, the monopolist can produce the maximum possible automation of production, which will reduce labor costs by firing employees who are no longer needed, thereby increasing their own profits.
The conditions for maximizing profits and minimizing costs that are suitable for such an enterprise are also applicable to other business structures, but not all methods of the latter are suitable for monopolistic enterprises.
Do not forget that the state monitors the monopolies around the clock, so they need to carry out such actions without leaving the legal field.
