Why is running your own business so hard?

Let’s discuss the basic common sense of a businessperson. Interestingly, workers are unaware of the importance of capital turnover cycle 9.

For example, you only have 50,000 yuan to buy and sell goods, and the net profit is only 10%. How much money can you make from this kind of business?

Some people may intuitively think that labor is needed even if they earn less than 5,000 yuan. But this condition is insufficient, and profits cannot be calculated.

Because the profit margin is unimportant, the turnover speed of funds and goods is essential.

Let's go to the extreme. You can sell the goods in one day and have 5.50,000 to purchase goods the next day. How much capital will you have if you do this for a month?

80w, 16 times of 5w block

So, on the surface, if you have a turnover of nearly 8 million a month and a profit of 10%, many workers will think that you need 7 million to start this business, and the profit is not high, which is boring. But in fact, you only used 50,000 yuan to leverage 8 million in transaction volume through high turnover and received a 1,500% return on the principal.

How important is speed? For example, if the shipping time becomes two days, the monthly profit will not drop by half but by 80%. At the end of the month, you only have 200,000 funds on hand, which is 150,000 profits. The saying "fast fish eats slow fish" is very meaningful. Fast fish refers to the first to discover and seize market opportunities. To put it bluntly, market opportunities are blank markets and are the most suitable for compound interest expansion9. The fastest pioneers can make huge profits with minimal investment, creating many overnight turnarounds.

And what will happen if it is too slow? Fixed expenses and labor costs that were not mentioned just now will come into play. To simplify the example, fixed expenses such as monthly rent are 50,000, and I want to make a product with a gross profit of 100%. This is high enough. If you purchase 50,000 yuan, you will earn 50,000 yuan if you sell it in half a month. You will make even more money if you sell it in one month. If you sell it in two months, you will lose 50,000 yuan. To put it bluntly, why do you lose money if you buy 100 yuan and sell 200 yuan? Fixed expenses are often An essential reason for the collapse of small businesses is the inefficiency of capital flow and the inability to generate sufficient profits.

So, we often hear complaints about opening factories for trade because profit margins are low and labor is expensive. Then, we watch them buy houses and land to expand their scale. You can also see their products. It’s strange for one to earn two yuan. Where did the profit come from? The boss must be lying. The boss may not lie to you but hide some information, such as the efficiency of capital flow, which is the key to making money.

Businessmen say that cash flow is blood. This sentence is far more critical than many people think. Because once there is a problem with their funds and the flow stops, the losses may be ten times or a hundred times higher than the funds stopped.

The abovementioned is just the most basic and insignificant aspect of business operation. It belongs to the category of doing traditional business honestly. The levers used are far different from other ways of playing games. After experiencing these gamble-like possibilities, looking at the hopeless dead wages every month can make business people desperate, which is one of the reasons why they sleep on the floor and don't work.

Finally, let’s talk about the critical point. The example of compound interest expansion may be a bit misleading. This post mainly discusses the efficiency of high turnover funds in bringing profits. Even if there is no compound interest, if you purchase 50,000 yuan a day, the turnover will be 5.50,000 yuan, so the monthly turnover is 165,000 yuan. The financial report reflects that the monthly profit is 150,000 and the cost is 1.500,000, but your initial price is only 50,000, which is the most counter-intuitive.

-Dividing line

Many people say that what I said is nonsense. The settlement cycle 9 is different. Who doesn’t know? I want to say that many workers do not realize this cycle is changeable. They regard one month as the default settlement cycle as a constant parameter.

Why? Because wages are paid once a month, and it’s stamped in my mind.