Factors Affecting Profit Of Business

Factors Affecting Profit Of Business

Profit is like the lifeline in any business. In the initial stage of business, it can be possible that your business is not able to earn profit but even after some years of business, the profit is unable to make profit, it’s not a good sign. Even when a business is earning good amount of profit, then also proper care should be taken that it is maintained in a proper manner. Profit of business is affected by the revenue and cost based upon the price, quality and quantity of the goods. Here are some of the factors affecting the profit of business. If your business is not earning appropriate amount of profit then you should check which of these factors is affecting profit of business and improvise that to have better results.

Level of competition

One of the key factors affecting profit of business is the competition going on in the market. If you are having a business with monopoly then it is a sure thing that it is going to earn good amount of profit. Here the demand will be more inelastic and whole group will be depending just upon you for supply. In this case busyness will also have high prices as there is no alternative available. Business like Microsoft and Google has developed a monopoly power in the market with very less amount of competition. On a contrary if there is extreme competition in the market for your business then chances are there you will earn less profit in business. In this case you will have to give so many offers and discount to attract customers and those customers will also not be stable as when they will get less price somewhere else they will fling there. Hence competition is one of the major factors affecting profit of business.

Strength of demand

You are having business with monopoly but what is the use of public is not having demand. When there is high demand of your business in the ,market, profit will be rising to the sky but on a contrary if there is not demand profit will fall to the ground level. Demand will be high if you are having some fashionable product or something which is in trend. You need to modify your products according to the trends to maintain your profit level. If you don’t want profit of business to get low then walk with the recent demand and trend.

Advertising

Advertising affect the mind of people very soon and hence it also affect [profit of business very easily. If you are constantly advertising your product then people will see it and then buy it to try eventually which can affect profit of business. On a contrary if your opposition does the same thing and you are not advertising then your product will not be able to survive with the competition and make loss and if not tackled easily also shut down.

Wallace
Wallace is a finance geek as he loves his numbers. Always sharing new facts and statistics with the readers in the form of engaging and easy to understand articles
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