Straight Line to Profit

business

The word business is often succeeded by two words, “Profit” and “Loss”. Once while I got down at a small tea shop by the street and drank a cup of tea, I heard the shopkeeper calculating the previous month’s earning. He collected Rs.5 per person for tea and the same for snacks. He said he had about 100 to 150 customers per day, because of the shop was close to the bus shed. He collected about Rs.10 per person (assuming a person drinks both tea and a snack), that gave him approximately Rs.1500 per day, which makes about Rs.45000 per month (Assuming he has 150 customers and 30 days a month). I was shocked by this, well he has got a very good income. And then he added that he had this amount to spend on the materials for next month, the electricity bill, maintenance of the shop and the payment for workers. This gave him a take-home of about Rs.8000.

This experience made me rethink the way I look at “Profit” and “Loss”. Profit is calculated when you have a “take home” like the tea seller, greater than what he has invested. And if this profit meets his/her expenses, then he/she is in a comfortable situation. In case of the tea seller, he has a profit of less than Rs.1000 per month, taking into account his initial investment. This situation is what is called an uncomfortable situation. Business change from uncomfortable to comfortable when the investment amount is brought back and then the following profit provides a comfortable situation.

The experience also taught me the importance of Environment of Business. Unlike other shopkeepers, this particular had more number of customers. And this is because the environment or place he chose for doing business i.e., “near the bus shed” which gave him the customers who are drivers, travelers etc… Similarly, in every business, it is important to choose a market where you attract more customers.

Another experience which gave me a similar thought was in a Footwear shop. The shop was owned by one of close friends. He usually had customers, coming in and trying on a wide variety of shoes, one by one and there where people who drop by just for a trial and not in the intention to buy. But my friend has told his employees to be humble to each and every customer. I then had a conversation about how they manage such customers! He then told me that ‘Business is all about customer satisfaction’. Maybe there would be customers who just want to observe and doesn’t intend to do business with us but still we showcase our best in hopes of changing their mind. The employees control their anger and feelings against the worst customers, because business is like a boomerang, when you throw it correctly, it will always come back to you. Similarly, if you ensure customer satisfaction, then surely you would get new business and maintain the existing. He also taught me the importance of maintaining relationships with partners and customers. He added, he gets a regular supply of shoes at low rates because of this relationship. It’s because the partner knows he is a regular customer and the customers of the shop become regular when he has a good relationship with them. All this can be termed as a Straight line of Profit, where from the materials till delivery, business yields the profit. So, preserving the relationship is another way to get into the comfort zone which I mentioned earlier. And the last but not least lesson which I learned is about employee satisfaction, my friend convinced the employees to be polite to the customers and provided the good working environment. Comfortability of employees gave him dedicated employees and happy customers. A good leader should have the ability to identify the potential his/her employees, bring the best results out of his/her employees and make them feel like they are into this business together as a family. And hence, employee satisfaction becomes another straight line of profit.

Both this experience taught me the different aspects of earning profit out of business and having a straight line of business so that I could be in a “comfortable situation”.