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:
FOR PRODUCTION OF 580 BRICKS