23 Mar 2014

Business owners have been challenged to plan for their operations to ensure profit maximisation.

In an interview, Kgalagadi District Council economist, Mr Ookeditse Boikepetse said many business owners did not realise their business was in trouble until it was too late .

He said that also, many businesses failed without their owners knowing what the cause of the failure was, or without even knowing that there was a problem. “Most businesses fail without their owners knowing what really caused the collapse of their businesses. All that those owners know is that they end up with no money and cannot pay their bills.”

These owners failed to monitor all aspects of their businesses. They did not consider financial statements necessary and think everything was fine as long as sales were increasing and there was money in the bank, he said.

Mr Boikepetse advised business owners to plan their profits to avoid possible failure of their businesses. He said profit planning would give them a platform to identify problems that could lead to failure of the business and gives them ample time to come up with solutions to the problem before damage has been done.

He said profit margins were so critical to the success of a business, any decline in them should trigger an immediate search for the cause. Furthermore, Mr Boikepetse said that because one of business owners’ goals is to make profit, they should plan the operations now to achieve their desired profit goal later.

He said that as business owners, they must start planning for the coming year several months in advance so they can put their plans into effect at the proper time. He said that for business owners to achieve their goal of profit maximization, they should establish a profit goal.

He said that the profit goal must be a specific target value or in simple terms the specific amount of profit one expects to achieve. Planning also includes determining the volume of sales revenue needed to make profit, through sales forecast.

He said forecasting could help business owners to know if their businesses were stagnant or growing. ENDS