Why you should always pursue turnover in business and forget about rate of profits.

[King Belieal]

There are some business people in my country that are very successful in business. I came to realize that one thing that they chase in their businesses is always turn over.

With these people, you can't enter their shop or engage them in negotiations and end up not buying. You must buy no matter how far your own price is from their fixed markup as far as they make a profit, no matter how little. Others have a fixed markup that they cannot reduce no matter what.

Chasing turnover rather than high fixed markups help you to have high sales volume which translates to higher profits.

 

[Suba]

Of course in business we have to consider price competition, if you increase the rate of profit then your customers will immediately move to another shop. But that doesn't mean we have to forget about the rate of profit, usually big traders will always take small profits, the most important thing is to cover all the costs they have incurred, and expect high turnover. If you only need $0.5 per unit but in a day your sales turnover can reach 10,000 units, how much profit will you make.

 

[Augusta]

Yes, high turnover means more profit no matter how small. it is good to have high turnover rate as your profit margin would increase too

 

[eLdavis]

So the question is how do you chase turnover in your business?

 

[King Belieal]

So the question is how do you chase turnover in your business?

Even though your profit margin is just 10%, make sure you focus on selling out in large quantities. If it is a service, be sure that you have so many clients that give you work. That would cover up for the low profit margin.

 

[eLdavis]

Even though your profit margin is just 10%, make sure you focus on selling out in large quantities. If it is a service, be sure that you have so many clients that give you work. That would cover up for the low profit margin.

Hmmm make sense, now I understand. So in other words I have to focus more on attracting more customers, which means putting more effort in advertising.

 

[King Belieal]

Hmmm make sense, now I understand. So in other words I have to focus more on attracting more customers, which means putting more effort in advertising.

As a graphics designer, if people are charging $10 per design. You can choose to charge $8 and instead focus on attracting more clients at that price. You would make more money than people that are holding on to $10 with few customers.