CityPress - - Business -

imon wrote to City Press to find out if his busi­ness was mak­ing a profit af­ter six months. This may seem like an ob­vi­ous ques­tion, but the re­al­ity is that in­creas­ing turnover doesn’t nec­es­sar­ily re­sult in in­creased profit if you have not priced your prod­uct cor­rectly.

It may be dif­fi­cult to see your prof­itabil­ity in the be­gin­ning when you keep plough­ing money back into the busi­ness – your busi­ness starts de­mand­ing more in­puts to meet the in­creased de­mand, so at what stage do you know if you are mak­ing real money?

Si­mon’s brick-mak­ing busi­ness, based in Wit­sieshoek in the Free State, has been run­ning for six months.

“I sus­pect my over­heads are high and I can’t bring them down, mainly be­cause I don’t have trans­port of my own,” he writes.

His bricks sell for R8.60 each, which he be­lieves is the cor­rect price for the mar­ket. “How can I make a profit with­out in­creas­ing the price? I want to help the poor to af­ford to build houses.”

Si­mon supplied a break­down of his costs to pro­duce 580 bricks, which takes about two days. Based on the in­for­ma­tion, Brian Sime­lane, lec­turer for the en­tre­pre­neur pro­gramme at the Gor­don In­sti­tute of Busi­ness Science, cal­cu­lated the fol­low­ing:


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