Self-sufficiency is the basis of the activity of any successful enterprise. If this condition is not met, then bankruptcy awaits him. The only exception to this rule is state-owned enterprises.
general information
The principle of self-sufficiency is one of the most important elements of commercial calculation. He focuses the company on how to make a profit. And if profitability is added to it, then all conditions for expanded production will be fulfilled, using only our own resources for this. What do these words mean?
Self-sufficiency is a condition when the income of an enterprise covers existing economic costs. In a market economy, this is a necessary condition for existence. But it is best when there is not only self-sufficiency. Self-financing allows you to develop and improve.
How to determine the state of the enterprise? And then what to do?
For this, accounting is used. It allows you to numerically express the state of the enterprise. Previously, all the data was grouped into one book and, having become acquainted with it, one could more or less know the state of affairs. Now, as information technology develops, tracking development and ongoing processes has become even easier. In addition, this can be done in real time. Thanks to this, you can quickly respond to various problems.
Automated control systems can even inform in advance that a certain material or raw material is ending, and it is necessary to purchase it. If there is self-sufficiency, this suggests that everything can be purchased without problems. But only in the quantity as before.
Alternative
Suppose an enterprise owner has resources, funds, and human capital. The subject of economic activity works on self-sufficiency. This does not suit the owner, and he decides to seek an alternative application to what he has. He can retool production facilities and retrain staff or hire a new one. In this case, a very likely change is the situation. And not necessarily for the better. This risk should always be considered.
But if we consider the situation in the command and administrative economy, then even if there are good ideas and calculations for changing the profile of activity, the realization of the potential is very unlikely. This is due to the fact that the company should produce only certain products that will be used for consumption or for subsequent use in the production chain.
