After walking too far and forgetting why to start, many business owners will make such mistakes. After the profits of the company, they begin to rush to do large-scale and do not hesitate to expand with high-interest loans. These practices often deviate from the initial heart of doing business. machine design
Text / Item Bao Hua | Source: “Living” machine design
In addition to the expansion of investment scale, there are many things that can be done with the money. For example, increase spending on R&D, talent, quality, and compliance to strengthen the company’s strength reserves and development stamina; continue to do business strategy, create and provide better value for the market for products or services; increase corporate cash redundancy, Improve the overall ability to resist risks.
It should be noted that in the process of a company having money to grow, it will inadvertently appear to have the tendency of self-expansion of costs or expenditures just as individuals have money to spend. For example, in many aspects of the company, it is hoped that the grade will be upgraded and the overall image will be improved, resulting in higher costs. In this way, in the event of the increased market competition, it will squeeze the profitability of the company. machine design
In pursuit of development, the company’s strategy must not forget the foundation of survival profit provided by business strategy. For this reason, as companies continue to make large-scale processes, they may wish to pay attention to fluctuations in per capita profitability and return on assets and look at whether there has been a serious downturn, and whether they are due to increased competition or reduced costs, or because of increased costs. too much.
To cope with the challenges of development, the company’s strategy must adhere to the bottom line, and truly “do not make profits bigger, don’t make it big and not profitable.” Otherwise, with the development of the company, it is most likely to inadvertently fall into such a cycle, and the scale is constantly increasing. With the expansion, the production capacity has become increasingly surplus, the debt ratio is getting higher and higher, and the profit is becoming less and less, which makes it unsustainable to operate. machine design
A business owner mentioned that as the company grows in size and has expanded across regions, the result is frequent travel, running around, the living space of individuals and family members has been greatly squeezed, and they feel that they are not happy. Another boss said that as the business grows, management matters become more complex, and they are often struggling to deal with it. Even when they think of going to the company, they feel uncomfortable.
Discussing corporate strategy, hoping to develop well and live, inadvertently people will pay more attention, seize all possible opportunities to do business, and even engage in large-scale expansion at high-interest rates. As a result, it is easy to deviate from the business strategy to survive the principle of survival, forget the heart of the strategy. The company is alive, critical, and defensible, seeking development. Beware of too much. machine design
Based on rational thinking, on the basis of sticking to the bottom line and having no worries for survival, companies may wish to do more new explorations, as long as they are able to properly try within the scope of failure. For example, looking for investment value-added opportunities, focusing on customer innovation and follow-up, paying attention to potential customers, exploring the potential market and potential customer needs, and making more forward-looking innovative project reserves. machine design
This idea can also be extended to the analysis of private lending. If this type of lending is viewed as an investment, it is necessary to examine the ultimate destination of the funds, and whether the project will actually survive after paying the interest on the promised loan. Otherwise, the lender will have to ask himself if it can be afforded in the event of a loss. This is based on the bottom line principle of temptation. machine design
In addition to being able to do business-related strength reserves, companies can also consider funds for arranging family life insurance. Of course, you can also do charity, love, give back, give back to society, etc., as long as the individual is completely willing, the parties involved in the process are happy and can produce practical results. Don’t worry too much about false reputation, you will have a good long-term psychological feeling. machine design